Pent Up Posted July 19, 2011 Share Posted July 19, 2011 Was speaking to a friend of a friend recently. Hes looking at buying a house, he is currently living with his mum and his partner and two very young children live there also. He is obviously desperate to get out and have a home for his family rather than sponging off his mum which is understandable. Although I do believe he pays a fair amount of keep to her. He's in his mid 20s. I know what pay band he is on which put him on between £20k and £22k gross. He wants a 3 bed house which will cost him around £200k in this area. (he actually saw a house at £195k he wants) Mummy has kindly given him £30,000 for a deposit as he has nothing saved. So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" I didn't actually think this was possible anymore?! Quote Link to comment Share on other sites More sharing options...
moesasji Posted July 19, 2011 Share Posted July 19, 2011 Was speaking to a friend of a friend recently. Hes looking at buying a house, he is currently living with his mum and his partner and two very young children live there also. He is obviously desperate to get out and have a home for his family rather than sponging off his mum which is understandable. Although I do believe he pays a fair amount of keep to her. He's in his mid 20s. I know what pay band he is on which put him on between £20k and £22k gross. He wants a 3 bed house which will cost him around £200k in this area. (he actually saw a house at £195k he wants) Mummy has kindly given him £30,000 for a deposit as he has nothing saved. So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" I didn't actually think this was possible anymore?! Both the broker and the friend of a friend are clearly insane. A repayment-mortgage at 5% on £165k is £1075 a month (IO=£825). How the **** would he be able to pay that kind of money on such a salary supporting wife and small children (assuming he is a single earner?). Even on double that salary you would struggle to pay this! Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted July 19, 2011 Share Posted July 19, 2011 Both the broker and the friend of a friend are clearly insane. A repayment-mortgage at 5% on £165k is £1075 a month (IO=£825). How the **** would he be able to pay that kind of money on such a salary supporting wife and small children (assuming he is a single earner?). Even on double that salary you would struggle to pay this! Slight correction, the friend is insane, the broker is a crook hunting commission. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted July 19, 2011 Share Posted July 19, 2011 (edited) Slight correction, the friend is insane, the broker is a crook hunting commission. im not so sure with properties doubling in the UK every seven years and them currently being 15% below 2007, thats about 450K by 2014* Seems pretty shrewd to me and as Phil might just say, a nice little earner * 550+ In Maidstone Edited July 19, 2011 by Mary Cassatt Quote Link to comment Share on other sites More sharing options...
Pent Up Posted July 19, 2011 Author Share Posted July 19, 2011 Both the broker and the friend of a friend are clearly insane. A repayment-mortgage at 5% on £165k is £1075 a month (IO=£825). How the **** would he be able to pay that kind of money on such a salary supporting wife and small children (assuming he is a single earner?). Even on double that salary you would struggle to pay this! He is a single earner. Girlfriend does a bit of casual Saturday work at a cattery (iirc) I think the rate he mentioned was 3% and £800 per month. so I assume a tracker although I cant actually press him directly as he not really someone I'd normally talk to unless he is talking with the friend of mine. I did say he could rent the place much cheaper and he said something along the lines of having nothing to show for it. Maybe he doesn't really understand all the costs associated with living in his own place. At most I'd put their net income at £1400 per month leaving £600 over to pay all the bills, fuel and feed and clothe a family of four. And that's assuming interest rates don't rise. This ones a gauranteed repo if he gets away with it. Quote Link to comment Share on other sites More sharing options...
MrFlibble Posted July 19, 2011 Share Posted July 19, 2011 So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" And some believe we are on the path of recovery having learnt from our mistakes. This example would say otherwise. The broker should be arrested and sent to prison for attempted fraud. The buyer seems like a typical desperado who feels he must stretch beyond all reasonable means to afford a place of his own. Some would call him an idiot but I believe society is complicit in this to a large degree along with the other ponzi participants egging him on. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted July 19, 2011 Share Posted July 19, 2011 He is a single earner. Girlfriend does a bit of casual Saturday work at a cattery (iirc) I think the rate he mentioned was 3% and £800 per month. so I assume a tracker although I cant actually press him directly as he not really someone I'd normally talk to unless he is talking with the friend of mine. I did say he could rent the place much cheaper and he said something along the lines of having nothing to show for it. Maybe he doesn't really understand all the costs associated with living in his own place. At most I'd put their net income at £1400 per month leaving £600 over to pay all the bills, fuel and feed and clothe a family of four. And that's assuming interest rates don't rise. This ones a gauranteed repo if he gets away with it. Have you considered tax credits and child benefit in those sums? He probably has more per month than you think. Quote Link to comment Share on other sites More sharing options...
pezo Posted July 19, 2011 Share Posted July 19, 2011 (edited) Was speaking to a friend of a friend recently. Hes looking at buying a house, he is currently living with his mum and his partner and two very young children live there also. He is obviously desperate to get out and have a home for his family rather than sponging off his mum which is understandable. Although I do believe he pays a fair amount of keep to her. He's in his mid 20s. I know what pay band he is on which put him on between £20k and £22k gross. He wants a 3 bed house which will cost him around £200k in this area. (he actually saw a house at £195k he wants) Mummy has kindly given him £30,000 for a deposit as he has nothing saved. So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" I didn't actually think this was possible anymore?! I'm in about the same wage bracket and have just over 30k in savings and was told 3 months ago I could get a loan for 190k. Me: "where do get your money from?" Broker: "the lender" Me: "is it a flat fee or a % of the loan?" Broker: "%" Me "so just to be clear your insentive is to sell me as big a loan as you possibly can?" Broker "no we have to be sensible about it, so how much do you want a loan for?" Me: "as little as possible" broker "ok if you took the loan for 190k you could afford houses like this..." Me "i have already said I don't want a loan for 190k, I don't think your listening to what I'm saying, I think I better go." Edited July 19, 2011 by pezo Quote Link to comment Share on other sites More sharing options...
Pent Up Posted July 19, 2011 Author Share Posted July 19, 2011 Have you considered tax credits and child benefit in those sums? He probably has more per month than you think. No I didn't think of those and as far as I know he does receive both although I have no idea how much it would amount too. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted July 19, 2011 Share Posted July 19, 2011 No I didn't think of those and as far as I know he does receive both although I have no idea how much it would amount too. i think it pushes it up from 20 to about 80K Quote Link to comment Share on other sites More sharing options...
fluffy666 Posted July 19, 2011 Share Posted July 19, 2011 Have you considered tax credits and child benefit in those sums? He probably has more per month than you think. Depends - if the wife does not work more than 16 hours a week and they have no childcare bills they might not get that much.. Out of interest, I put some giesses through a calculator site: Final Tax Credit award for period: £3,322.06 (yr) £63.54 (week) So perhaps £300/month in tax credits. And £160/month in child benefit. Still.. Weage: 1300/month Benefits : 450/month IO payment: -800/month C tax: -100/month Gas/Leccy -100/month Insurances -50/month They would probably survive - just - as long as tax credits were not cut, and interest rates never went up. But they'd struggle to save anything, or run a car. What they really need is cheaper housing.. Quote Link to comment Share on other sites More sharing options...
exiges Posted July 19, 2011 Share Posted July 19, 2011 Mummy has kindly given him £30,000 for a deposit as he has nothing saved. He's living rent free, and yet has saved nothing, but thinks he'll be able to magic up the money for a 9x mortgage. I can't see a problem there. Quote Link to comment Share on other sites More sharing options...
SarahBell Posted July 19, 2011 Share Posted July 19, 2011 Ask him who the broker is "because you're desperate to get on the ladder too" Go along with a secret keyfob camera and record him offering to do the same fo ryou. Report him to the Financial Services Authority Quote Link to comment Share on other sites More sharing options...
Chunk Posted July 19, 2011 Share Posted July 19, 2011 He's in a prime position to move to the top of a housing association list. If he's so desperate to have 'something to show for it' then he could also do a shared equity through them. It's downright irresponsible to put your family in a position where you can only sustain payments on your house for the next few years. There is no shame in living in accomadation owned by a charity but todays society is obsessed with having their name on a deed to a property. Quote Link to comment Share on other sites More sharing options...
Unsafe As Houses Posted July 19, 2011 Share Posted July 19, 2011 (edited) Was speaking to a friend of a friend recently. Hes looking at buying a house, he is currently living with his mum and his partner and two very young children live there also. He is obviously desperate to get out and have a home for his family rather than sponging off his mum which is understandable. Although I do believe he pays a fair amount of keep to her. He's in his mid 20s. I know what pay band he is on which put him on between £20k and £22k gross. He wants a 3 bed house which will cost him around £200k in this area. (he actually saw a house at £195k he wants) Mummy has kindly given him £30,000 for a deposit as he has nothing saved. So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" I didn't actually think this was possible anymore?! You're based around Chelmsford I think? There are plenty of cheaper 2/3 bedroom homes around there in less desirable areas and he should aim for those - but I guess if he's just a friend of a friend he won't thank your for advising him to look for a cheaper house than 195k cos you don't think he can afford it. Edited July 19, 2011 by Unsafe As Houses Quote Link to comment Share on other sites More sharing options...
plummet expert Posted July 19, 2011 Share Posted July 19, 2011 Was speaking to a friend of a friend recently. Hes looking at buying a house, he is currently living with his mum and his partner and two very young children live there also. He is obviously desperate to get out and have a home for his family rather than sponging off his mum which is understandable. Although I do believe he pays a fair amount of keep to her. He's in his mid 20s. I know what pay band he is on which put him on between £20k and £22k gross. He wants a 3 bed house which will cost him around £200k in this area. (he actually saw a house at £195k he wants) Mummy has kindly given him £30,000 for a deposit as he has nothing saved. So he went to see a broker, now obviously any sensible/sane broker would kind tell him that a 9x income loan is not a good idea even if a bank would lend it. But apparently this one told him that all he needs to do is get false payslips made up then pay in about £2000k per month for three months before applying for the mortgage so the statements add up. So that is what he is planning to do. I asked if he can afford such a big loan and he said he "thinks so" I didn't actually think this was possible anymore?! Dear Friend of a Friend, You would have to be sectionable to take out a 9x salary mortgage! Of course living with Mum and kids is very difficult, but the mortgage would be a concrete necklace you would live to to regret and make you even more unhappy over time. Imagine paying it at 8% in 5 years time? The interest alone would be the whole salary after deductions. A repayment mortgage would not even be payable from the whole salary! Best to rent somewhere... Quote Link to comment Share on other sites More sharing options...
Pent Up Posted July 19, 2011 Author Share Posted July 19, 2011 You're based around Chelmsford I think? There are plenty of cheaper 2/3 bedroom homes around there in less desirable areas and he should aim for those - but I guess if he's just a friend of a friend he won't thank your for advising him to look for a cheaper house than 195k cos you don't think he can afford it. Yes Chelmsford area, although this guy actually wants to buy in Billericay which is ridiculously over priced and not even that nice. He could go just a few miles away to Basildon and get a 3 bed for less than £150k but TBH I wouldn't want my kids growing up around there. It would be a bit awkward to be advising an almost total stranger on how to live his life. Plus I've tried that with other people who I do know and it rarely works out well, I just people make their own mistakes now. Quote Link to comment Share on other sites More sharing options...
W1zard Posted July 19, 2011 Share Posted July 19, 2011 Why do these idiots never see the correlation between the salary multiple needed and the repayments required before asking themselves if the figures they see before them seem normal / reasonable / manageable / scary etc. It seems no one knows how to establish how over priced homes are even when they are shown the repayments needed. Quote Link to comment Share on other sites More sharing options...
lid Posted July 19, 2011 Share Posted July 19, 2011 9x salary? @ 5% He will be paying back £1075 x 12 x 25 = £322500 which is almost double the £165000 In order to earn £322500 net he 's gonna have to earn over £400000 gross - assuming tax & NI doesn't go up He earns 22k So is it not 18x salary Or am I missing something? Maybe if houses had to have a total amount repayable figure to begin with we wouldn't be in this shitty mess? Quote Link to comment Share on other sites More sharing options...
lid Posted July 19, 2011 Share Posted July 19, 2011 But then again I suppose that wouldn't be good for the banks, and we can't have that Quote Link to comment Share on other sites More sharing options...
rantnrave Posted July 19, 2011 Share Posted July 19, 2011 He's probably been told that inflation is going to solve all his problems. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted July 19, 2011 Share Posted July 19, 2011 Depends - if the wife does not work more than 16 hours a week and they have no childcare bills they might not get that much.. Out of interest, I put some giesses through a calculator site: Final Tax Credit award for period: £3,322.06 (yr) £63.54 (week) So perhaps £300/month in tax credits. And £160/month in child benefit. Still.. There you go, you just found another £6K of gross earnings. With 2 kids, he should just kick his partner out and make the council pay for them. Makes much better financial sense for him. Quote Link to comment Share on other sites More sharing options...
Dorkins Posted July 19, 2011 Share Posted July 19, 2011 Maybe if houses had to have a total amount repayable figure to begin with we wouldn't be in this shitty mess? Many people are operating on the assumption that HPI will hand them free equity year after year. Few imagine they will have to actually pay it all off themselves, using money they earned by going to work. I know it doesn't work mathematically, but this is how people think. Quote Link to comment Share on other sites More sharing options...
monks Posted July 19, 2011 Share Posted July 19, 2011 But then again I suppose that wouldn't be good for the banks, and we can't have that Is that Purple Aki in your avatar ?? I lived opposite him for 2 years at Uni (Grove Street near Womens Hospital - he was in a halfway-house type of place) and used to see him playing imaginary tennis / shadow boxing with himself (including getting "knocked out" by his "opponent"), and howling at the moon. Got me in a brief head-lock one day as I walked past him... Quote Link to comment Share on other sites More sharing options...
lid Posted July 19, 2011 Share Posted July 19, 2011 It is - a proper wrong'un if ever there was - didn't he try to feel your biceps? Quote Link to comment Share on other sites More sharing options...
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