Jump to content
House Price Crash Forum
Sign in to follow this  
2005

Deferred Cost Of Ownership

Recommended Posts

Any one else seen this..it caught my eye today but smacks of desperation if you ask me.

Basically the scheme works like this:

The house 'costs' £139,950

The buyer purchases the property for £111,960 NOW

WITH AN AGREEMENT TO PAY THE DIFFERENCE WITHIN THE NEXT TEN YEARS OF WHEN THE PROPERTY IS SOLD (IF SOONER)

It isn't shared ownership...it is a deferred balance payment which must be met.

So basically the buyer is locked into the full 'cost' of the property even though they can't afford it and will be paying the additional balance in a falling market.

Would any one actually fall for this?

Share this post


Link to post
Share on other sites

of all the hair brained schemes this is the worst.

instead of reducing the price to meet market demand, they defer the overb,own price like they are doing the buyer a favour.

ridiculous.

Share this post


Link to post
Share on other sites

Unless the developer has a very close relationship with a lender then this will not work. When the buyer exchanges/completes lenders insist on seeing evidence of the deposit, 100% mortgages are practically dead at the moment. The big fear for all lenders, whether using securitised money or not, is truck loads of bad debts coming out of 100%/100%+ mortgages.

Share this post


Link to post
Share on other sites

I think the problem is that the lenders are in with the builders on this and really think they can pull this off, by making sure house prices never fall. The banks have largely mangaged over the last decade, as there have been no shortage of buyers. Now the trick becomes more difficult to pull. So the builders are getting in on the act too - all hands to the pumps.

These schemes have been being offered for 6 months now, so people must be going for them. But they are such a glaringly bad idea, that it makes me wonder exactly who they are.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.