How Much Can You Borrow?

[djchewmacca]

What would you think if the government were to make strict rules on borrowing from a bank?

If a FTP'er was unable to borrow 6x or more his annual salary then houses prices may be forced to come back down to an affordable level. In my opinion tighter controls of lending should be made law. But obviously the government don't see it that way.

What do you think?

[FTBagain]

Right now I can borrow as much as I want!! Paying it back is the problem!!

They say the pen is mightier than the gun, so I guess robbing a bank by signing a form ...Hmmm

Now if we all went and lied on a form and did a runner to Rio, I bet the banks would tighten their lending criteria.

[djchewmacca]

Right now I can borrow as much as I want!! Paying it back is the problem!!

They say the pen is mightier than the gun, so I guess robbing a bank by signing a form ...Hmmm

Now if we all went and lied on a form and did a runner to Rio, I bet the banks would tighten their lending criteria.

We could quite easily get a mortgage for over £80,000. I would have no idea how we would be able to pay it back when you have got to consider bill etc...

Maybe they think you'll win the lottery in the near future.

[mhifoe]

We could quite easily get a mortgage for over £80,000. I would have no idea how we would be able to pay it back when you have got to consider bill etc...

Maybe they think you'll win the lottery in the near future.

It's easy really. All you have to do is cut out some of the luxuries.

Food for example.

[djchewmacca]

I think of it like this, some VI's and EA's believe house prices can only go up. So how much are banks going to allow you to borrow? Is it going to be 10x or more your salary?

It's really worrying. That's why I think there should be strict rules on borrowing. Personally I have more common sense by not getting myself into massive amount of debt but others are more naive.

There's this guy I work with, he's only on a basic salary. Him and his partner are looking at buying a property. They've been looking at houses which are currently around the £80k - £90k mark which is really expensive from a FTP'ers point of view. If myself and my partner went for such a mortgage we would be left in poverty. I really hope he comes to his senses before he actually goes ahead and buys anything.

[apom]

Self Certified mortgages is a rubbish form of fraud.

You are still obtaining funds by deception..

but you are paying it back..

If you commit fraud.. go the whole hog and try and avoid paying it back...

"I managed to borrow 9 times my salary... How clever am I....?"

"Prat... now I have to wait for you and your moronic friends to go belly up"

[djchewmacca]

If a naive couple were to go ahead and get an expensive mortgage because the bank or EA said that this is what they can afford. Do you think the lender should be made liable?

[Salsa]

I feel that I could afford to pay back a mortgage at about 165k. The bank would give me near on double that. And it is true, I could afford those payments for a few months as long as interest rates never go up, or I never have ambitions to own a car, or new clothes or in fact probably even old clothes.

Still you have to go through a bit of hardship to own a house, and I don't think 25 years is that long to wait for a new pair of shoes

And there's always Charity Shops - I know a lot of people who earn 50k that are forced to shop in them, or something......

Seriously though, if you had said to your friends 5 years ago, right I'm going to get a mortgage for 300k and buy a nice 5 bed detatched house you would have been called mad. Why is it less mad now when it costs that much for a 2/ 3 bed in London, and people think that it is fine?!?!?!

[apom]

If a naive couple were to go ahead and get an expensive mortgage because the bank or EA said that this is what they can afford. Do you think the lender should be made liable?

Personally I think to an extent that they are responsible.

The lenders are aware that markets change.

They are aware that interest rates are likely to go up aswell as perhaps down.

and people trust them.. they are professional and will sell the debt as affordable.

If they sell themselves as professional then perhaps they should be professional about it.

and anyone out there who thinks they can afford 6 times their salary.. no they can't

[Shamus]

I think people's perceptions of the value of money have gone way mad... Why is it that many folk think that £200k for a small terrace or semi (in my area) is reasonable or £130k for a 1 bed flat? People at work also go on about how everything else is so cheap and getting cheaper. You can spend £20 on a DVD player, get sofas and white goods at discount prices but struggle to service a monthly mortgage for 25 years and every increasing bills/council tax. How many dvd players do we all need anyway?

[North London Rent Girl]

I think people's perceptions of the value of money have gone way mad... Why is it that many folk think that £200k for a small terrace or semi (in my area) is reasonable or £130k for a 1 bed flat? People at work also go on about how everything else is so cheap and getting cheaper. You can spend £20 on a DVD player, get sofas and white goods at discount prices but struggle to service a monthly mortgage for 25 years and every increasing bills/council tax. How many dvd players do we all need anyway?

Yeah, there's something odd about the creeping cheapness of consumer goods. In the States, consumer goods are cheap as chips but they have this really low quality of life - lots of people up to their ears in debt, 10 days holiday a year, rubbish quality food, no public health service, no public transport - it's like the cheap toys are by way of compensation for their shitty lives. Hope we're not going that way here.

[Jason]

Yes, for individuals. If people want to borrow more for things such as BTL, they should start a company and produce a business plan!

[Mushroom]

Yeah, there's something odd about the creeping cheapness of consumer goods. In the States, consumer goods are cheap as chips but they have this really low quality of life - lots of people up to their ears in debt, 10 days holiday a year, rubbish quality food, no public health service, no public transport - it's like the cheap toys are by way of compensation for their shitty lives. Hope we're not going that way here.

You'd better believe it.

Those at the top, the "elite" have so decreed.

Governments merely obey.

As several of us here have said before, "bread and circuses".

Just keep your own individuality and your inner being.

[Cheston Pelvis]

An interesting question. I voted that there should be strict controls over what you can borrow, though how one polices such a practice is another matter. For your average Joe (myself included) I would think being forced to hand in a certified copy of ones P60 with any mortgage application would be a good start (if they don't do already - I admit ignorance in this area) - at least one will then be forced to prove the level of income they are claiming they earn. The only thing I can think of that knackers this argument is performance-related bonuses are also included in the P60 figures (at least they are where I work) so if you've had a good year... However, like I said, it would be a good start.

I'm not sure how to clamp down on self-certified mortgages though...

[devils advocate]

What would you think if the government were to make strict rules on borrowing from a bank?

If a FTP'er was unable to borrow 6x or more his annual salary then houses prices may be forced to come back down to an affordable level. In my opinion tighter controls of lending should be made law. But obviously the government don't see it that way.

A completely bonkers idea;which is why this shower of charlatans who call themselves a Government will soon adopt it as policy to distract the electorate from their latest ****-up.

If I have savings of £100k, and my neighbour has none, but we're both on the same salary, should a bank be forced to cap its lending to both of us at the same amount? If neighbour's salary is derived from his employment as a coal merchant (a declining business if I ever saw one) and mine is that of a local government officer, who is more likely to be earning the same salary in a years time? If said neighbour has a history of defaulting on loans, and I have a history of paying them back, are we the same credit risk to the bank?

A banks lending criteria should be based around a borrowers perceived ability to repay. If the bank gets it wrong, its their own bl**dy fault.

[desperate housewife]

I think definitely there should be strict controls i.e 3.5 times salary, the very fact the banks have decided to throw this in the air and let you borrow what you want is part or even most of the reason house prices are so high. I really wish they would just get their act together, see whats going on and gets these controls back in place.

[djchewmacca]

A completely bonkers idea;which is why this shower of charlatans who call themselves a Government will soon adopt it as policy to distract the electorate from their latest ****-up.

If I have savings of £100k, and my neighbour has none, but we're both on the same salary, should a bank be forced to cap its lending to both of us at the same amount? If neighbour's salary is derived from his employment as a coal merchant (a declining business if I ever saw one) and mine is that of a local government officer, who is more likely to be earning the same salary in a years time? If said neighbour has a history of defaulting on loans, and I have a history of paying them back, are we the same credit risk to the bank?

A banks lending criteria should be based around a borrowers perceived ability to repay. If the bank gets it wrong, its their own bl**dy fault.

There's a old saying... 'Don't bite off more than you can chew'

Pretty much the same as borrowing more than you can really afford. I mean c'mon, there are tonnes of naive / vulnerable people in the world who can be easily lead. You need to have stricter controls over borrowing. I have a mate who doesn't work who was allowed to get a credit card. I've know my mate for quite some years and I told him not to get the card because I know what he is like. He's spends money like it's his own and doesn't think of how he can pay it back. There have been things I would like to buy and haven't because I can't afford them. I could quite easily get a bank loan, but won't.

[Smurf1976]

A completely bonkers idea;which is why this shower of charlatans who call themselves a Government will soon adopt it as policy to distract the electorate from their latest ****-up.

If I have savings of £100k, and my neighbour has none, but we're both on the same salary, should a bank be forced to cap its lending to both of us at the same amount? If neighbour's salary is derived from his employment as a coal merchant (a declining business if I ever saw one) and mine is that of a local government officer, who is more likely to be earning the same salary in a years time? If said neighbour has a history of defaulting on loans, and I have a history of paying them back, are we the same credit risk to the bank?

A banks lending criteria should be based around a borrowers perceived ability to repay. If the bank gets it wrong, its their own bl**dy fault.

The government could set a MAXIMUM borrowing level and in the case of your neighbour the bank is under no obligation to lend at that level. If they had any sense then they would lend them less, a lot less, than you but in both cases within a regulated limit.

If the banks get it wrong then it could bring the entire financial system down and in that even a job in local government, or anywhere else, is history at least in terms of maintaining anything like today's pay levels. Hence the importance of maintaining some safety to prevent mass defaults.