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Mortgage Advice From Colleague


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About 2 years ago I went to see some newbuilds. They were well overpriced. I spoke to the salesperson - I said that there was no way I was going to pay the asking and that I probably wouldn't be able to get a mortgage anyway.

She said that might not be a problem as many people factor in future pay rises/promotions when applying for mortgages - I don't know what she meant by "people", either the borrowers on self cert (yes this was only two years ago) or the people providing the mortgage, and she seemed too much of an air head to bother continuing further with the conversation.

Pretty obvious to me at this stage that the whole pyramid was screwed. Amazing how long it is keeping going though. The inventive nature of these people trying to make the unaffordable affordable seems to know no limit.

:D:P

Hint:

LIAR LOANS....

[see below]

. :P

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If interest rates rise then at some point it will impact rents, but that doesn't mean that they'd go either down or up.

I'd like to know just how much of the rental market is owned out right and how much is "mortgaged". My feeling is that when rates rise the property market will tank. That will mean a large number of properties ending up in the hands of their owners ie the banks who'll want to reduce their losses. One way of doing that will be keeping them rented.

which is technically....illegal.

As for the Aunt Sally who apparently bought a London based house 3 bed semi in a good area....just wondering about the price she says she paid 2 years ago...£250K......that is well low....maybe she means EACH.

If she has achaeived this, then this is a fine example of HPC helping people....whereas HPI is a hindrence to people, Industry and getting on with lives.

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I have no idea how it will pan out if interest rates take a hike.

I do know that many if not most home owners will do everything they can to keep their home, extra jobs etc...

If you simply cannot keep or own your own home, the next best in the hierarchy is renting which is what people will look to do.

It would be a very last gasp for many to move their family in with parents and would only ever be a short term solution, with people looking to rnt or buy as soon as they could.

snip

apparently, 8% of mortgage holders already are...although actually finding the extar cash is not something anyone of them needs to do...bail outs cover the shorfalls and bankers taking the losses keep them in their homes..

Attitudes to banks may have reached a turning point with the current news about rate fixing....and this fraud is from 6 years ago...probably from way back...Goodness knows what they are hiding TODAY.

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There are some people on here who wouldn't recognise basic good manners if it ran them over in a car. Might be something to do with the anonymity. Anyway stuff 'em and don't be intimidated by them. As one of my kids like to say 'they've got issues'. What makes HPC so interesting is the range and perspectives of opinions on offer so don't be afraid to give yours. There are some fantastic posters and I've learned loads.

genuinely, I'm a northerner, and this IS good manners in my little world

I didn't mean to offend, rather than have a robust discussion

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If interest rates rise significantly, people will generally not take out mortgages... But will still need somewhere to live.

There will be a bigger demand for rented properties (nothing to do with landlords paying their mortgages), as demand increases so will the monthly rent rates as there will be panty of people queuing up to rent and pay the going rate.

Simple principle of supply and demand surely?

NO

there will be the same number of properties

if they are not owner occupied then they are rented out (as it is rational to seek an income off your assets)

they will be rented at the market rate

I see no reason why rents should rocket

if landlords cannot get sufficient rent to cover their costs then they will either have to rent at a loss or sell

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NO

there will be the same number of properties

if they are not owner occupied then they are rented out (as it is rational to seek an income off your assets)

they will be rented at the market rate

I see no reason why rents should rocket

if landlords cannot get sufficient rent to cover their costs then they will either have to rent at a loss or sell

Surely there will be less availble properties???

We have a growing population, houses are falling into disrepair / coming to the end of their usefull life, far fewer new properties are being built.

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The usual landlord gibberish

Rents are a function of wages and housing benefit at the time of the commencement of the agreement and there is thus a natural cap on the amount that can be charged. This is unlike mortgages which are a function of the perceived ability to pay over the term. Given the (i) overdebtedness of the population at large and the fact that the average household spend equals the average household net income, and (ii) that the government is committed to lowering housing benefits not raising them, it is highly unlikely that rents can be moved upward in any significant fashion in the foreseeable future.

I wish you good luck with your BTL empire, I suspect however that it will end in tears

Edit for clarity and typos

Edited by FaFa!
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Surely there will be less availble properties???

We have a growing population, houses are falling into disrepair / coming to the end of their usefull life, far fewer new properties are being built.

population growing at a rate of 0.3, 0.4 ish percent a year

houses get maintained, that's the way of things, if a landlord is sitting on an unsellable house and needs to let it out, he has to maintain it. Same for a home owner. A renter can just move on.

There are not 'far fewer' properties being built, there are fewer than say 30 years ago, but not far fewer, and the govt is relaxing planning regs so more will be built in the medium term

and additionally the occupancy ratio will see a negative shift over the next 40 years, as oldies in big houses give them up in various ways

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Rents are a function of wages and housing benefit at the time of the commencement of the agreement and there is thus a natural cap on the amount that can be charged. This is unlike mortgages which are a function of the perceived ability to pay over the term. Given the (i) overdebtedness of the population at large and the fact that the average household spend equals the average household net income, and (ii) that the government is committed to lowering housing benefits not raising them, it is highly unlikely that rents can be moved upward in any significant fashion in the foreseeable future.

I wish you good luck with your BTL empire, I suspect however that it will end in tears

Edit for clarity and typos

+1

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Hmmm, 'people are cash strapped so prices can't possibly go up' was the excuse for why we weren't going to see any price inflation over the last few years, even after the money printing and lax fiscal policy.

It didn't exactly play out like that ... I suspect that there's still room to squeeze people further on essentials though I wouldn't be investing in BTL at this point unless there were some strong local factors at play.

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genuinely, I'm a northerner, and this IS good manners in my little world

I didn't mean to offend, rather than have a robust discussion

Apology accepted. B)

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which is technically....illegal.

As for the Aunt Sally who apparently bought a London based house 3 bed semi in a good area....just wondering about the price she says she paid 2 years ago...£250K......that is well low....maybe she means EACH.

If she has achaeived this, then this is a fine example of HPC helping people....whereas HPI is a hindrence to people, Industry and getting on with lives.

Nope not each - £250k all in. Reduced from £275k. Couldn't afford the extra stamp duty or monthly repayments as our First Time Buyer Mortgage rate was 6% for the first 2 years. Now back down to a more manageable long-term fixed rate of 3%.

It's interesting as the house opposite us has just sold for £310k - but it has 4 beds, 2 baths and has been extended extensively at the rear of the property with a large kitchen and sun room. I'm surprised it went for that much and after looking on Find A Property there were a couple of 3 bed terraces on the market in the £270k region which is the same as 2 years ago... However, on Zoopla they recently sold for £250k :D

It is a nice neighbourhood so possibly retains that base value for being in the catchment area of one of the Top 10 primary schools in the UK and within Zone 6 for commuting. Interesting though.

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Nope not each - £250k all in. Reduced from £275k. Couldn't afford the extra stamp duty or monthly repayments as our First Time Buyer Mortgage rate was 6% for the first 2 years. Now back down to a more manageable long-term fixed rate of 3%.

It's interesting as the house opposite us has just sold for £310k - but it has 4 beds, 2 baths and has been extended extensively at the rear of the property with a large kitchen and sun room. I'm surprised it went for that much and after looking on Find A Property there were a couple of 3 bed terraces on the market in the £270k region which is the same as 2 years ago... However, on Zoopla they recently sold for £250k :D

It is a nice neighbourhood so possibly retains that base value for being in the catchment area of one of the Top 10 primary schools in the UK and within Zone 6 for commuting. Interesting though.

you said you had a shared mortgage...who are you sharing with?

I ask, cos most married couples would say WE have a mortgage.

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you said you had a shared mortgage...who are you sharing with?

I ask, cos most married couples would say WE have a mortgage.

Ha! Yes, good point but my husband isn't using this Forum. :lol:

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Good for you. I've had two friends given notice by landlords who've decided to cash in on their winnings/losings, creating havoc with schooling and life in general. Best of luck with your life and the kiddies when they come.
There are some people on here who wouldn't recognise basic good manners if it ran them over in a car. Might be something to do with the anonymity. Anyway stuff 'em and don't be intimidated by them. As one of my kids like to say 'they've got issues'. What makes HPC so interesting is the range and perspectives of opinions on offer so don't be afraid to give yours. There are some fantastic posters and I've learned loads.

For questioning her logic, the 23 year mortgage plan she's set out, expressed as superior reasons for buying over renting? If buying is best for her, then good luck to her, but having to suffer landlords and changes which are forced upon tenants sometimes isn't a good reason for why everyone should buy. She's already imagining a time she's finished paying it off and saving for a pension, without a hiccup during those 23 years, and I doubt she sees prices substantially falling further.

I suspect your sensitivity comes from not expecting, or wanting, to see house prices fall in London. Even though you, more than many, experienced a big change in recession QE cushioned lite.

24/02/2012:

You're not from around here, are you?

Doccyboy, London is not Dublin or Belfast. It really really isn't. Dublin and Belfast went mad and regained their sanity. I'm afraid that's just not going to happen as long as London property is considered a safe haven for the world. I think I mentioned on this forum hearing a radio interview where a seriously rich businesswoman from Qatar talked about 'buying' London and again I heard a commentator talking about how a high percentage of sales in London were to overseas buyers. God, I wish it was a bubble but I can't see how it would burst. One thing made me laugh, though. House over the road from me in London was nabbed for £350k, on the market three weeks, five bed. Owner had wanted to get shot of it having previously put it on asking £499 a couple of years ago. Lives up North. He probably could have got £400k for it this time around :lol:

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For questioning her logic, the 23 year mortgage plan she's set out, expressed as superior reasons for buying over renting? If buying is best for her, then good luck to her, but having to suffer landlords and changes which are forced upon tenants sometimes isn't a good reason for why everyone should buy. She's already imagining a time she's finished paying it off and saving for a pension, without a hiccup during those 23 years, and I doubt she sees prices substantially falling further.

I suspect your sensitivity comes from not expecting, or wanting, to see house prices fall in London. Even though you, more than many, experienced a big change in recession QE cushioned lite.

24/02/2012:

I well aware of the dire straits of long-term economics of this country and if the markets do go completely t*ts up then I'll have to bite the bullet and live with negative equity. Whatever. My house is my family HOME and that is the most important thing. I'll do what it takes to keep up with repayments, as long as I, and my husband, can afford them then it's all gravy! If not, then we'd have to sell and upsticks... but we'd be more likely to emigrate if things got that bad anyway. I'd rather be poor and homeless somewhere hot!

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I well aware of the dire straits of long-term economics of this country and if the markets do go completely t*ts up then I'll have to bite the bullet and live with negative equity. Whatever. My house is my family HOME and that is the most important thing. I'll do what it takes to keep up with repayments, as long as I, and my husband, can afford them then it's all gravy! If not, then we'd have to sell and upsticks... but we'd be more likely to emigrate if things got that bad anyway. I'd rather be poor and homeless somewhere hot!

So is mine, it just happens to be rented.

I'd prefer not to be poor and homeless anywhere.

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So is mine, it just happens to be rented.

I'd prefer not to be poor and homeless anywhere.

Well, me neither, obvs. But I am fortunate to have a big extended family all over the world (South US, Canada, Caribbean) so if things REALLY got that bad here in the UK (e.g. financial armageddon), :ph34r: I would not hesitate to start again somewhere else... I am not that enamoured by British life and culture anyway. <_<

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Well, me neither, obvs. But I am fortunate to have a big extended family all over the world (South US, Canada, Caribbean) so if things REALLY got that bad here in the UK (e.g. financial armageddon), :ph34r: I would not hesitate to start again somewhere else... I am not that enamoured by British life and culture anyway. <_<

Let's hope you manage to clear your debts before you go and not leave us saddled with them.

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Renting or buying which is better?

To be honest I've no idea.

I look at house prices and they are insane.

A rightmove search for a 3/4 bedroom detached house within 10 miles of where I live for under £375k gives me a choice between generic new build estate houses with terrible transport links or massively overextended ex-council houses.

According to some household finance stats posted here the other day I am in the top 10% in every category (income, assets, savings, debts) yet I'm a million miles away from being able to afford a "family" house in Cambridge so I've no idea where the people buying them are getting the cash from.

Then again I look at the rental prices and they are insane to. It is about £800-900 a month for a small house here, add on bills and living costs and I fail to see how anyone on less than £40k household income could save any money towards a deposit. And inflation is eating away at whatever money you are saving as well.

In short we are screwed either way!

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I well aware of the dire straits of long-term economics of this country and if the markets do go completely t*ts up then I'll have to bite the bullet and live with negative equity. Whatever. My house is my family HOME and that is the most important thing. I'll do what it takes to keep up with repayments, as long as I, and my husband, can afford them then it's all gravy! If not, then we'd have to sell and upsticks... but we'd be more likely to emigrate if things got that bad anyway. I'd rather be poor and homeless somewhere hot!

I suspect neg equity will be the least of all our problems.

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