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Young Home Owners Are Worried About The Level Of Debt They Have Taken On.

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Young home owners worried about level of debt Young home owners are at risk losing their properties if interest rates go up, report warns

Up to half of young home owners are concerned about the level of debt they have taken on and fear they may lose their homes if interest rates increase, a report has warned.

Younger property owners are more likely to have relied on measures such as mortgage terms of more than 25 years, loans from family and friends and help from the state such as the Help to Buy scheme to give them an extra leg up on to the housing ladder using only a low deposit, research from consumer group the HomeOwners Alliance found.

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So the 'honeymoon' period of home ownership subsides and suddenly the bare-faced reality of the sh1t they've got themselves into finally descends. <_<

edit: Grammar

Edited by bomberbrown

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"Wait, emergency interest rates aren't forever? Well I never! And what's that, I have to pay it all back? Not with interest surely?"

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I almost had a little sympathy for those buying before the 2007 as they were just financially illiterate.

But being as ive bailed them out and these parasites have done their bit in propping up the housing market i look forward to the day they get evicted.

Max Kaiser was saying how the young lack empathy these days, im a perfect example of this! :)

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Yeah yeah yeah, rates are going nowhere.

The BoE updated average household lending rates for May 2014 in its database this morning. The figures in red below are provisional, but they show the steady upward creep in mortgage rates is continuing (whereas deposit rates, also updated today, are still falling).

Must admit I thought the 95% LTV (mainly HTB2) rates would maybe fall a little after the New Year, but I was wrong.

MortRates0514.gif

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Hmmm, you're both right - my comment was more aimed at people losing 'their' homes. Not gonna happen.

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I almost had a little sympathy for those buying before the 2007 as they were just financially illiterate.

But being as ive bailed them out and these parasites have done their bit in propping up the housing market i look forward to the day they get evicted.

Max Kaiser was saying how the young lack empathy these days, im a perfect example of this! :)

+1

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Hmmm, you're both right - my comment was more aimed at people losing 'their' homes. Not gonna happen.

King Canute has spoken.

How many possessions are there at the mo?...is it 700 per week?

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Worrying before taking on the debt was probably a better plan that worrying about it afterwards. Because then you can, yknow, not do it.

snap

Edited by cybernoid

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The BoE updated average household lending rates for May 2014 in its database this morning. The figures in red below are provisional, but they show the steady upward creep in mortgage rates is continuing (whereas deposit rates, also updated today, are still falling).

Must admit I thought the 95% LTV (mainly HTB2) rates would maybe fall a little after the New Year, but I was wrong.

MortRates0514.gif

Not a bad mark up on savings rates, is it?

I almost had a little sympathy for those buying before the 2007 as they were just financially illiterate.

But being as ive bailed them out and these parasites have done their bit in propping up the housing market i look forward to the day they get evicted.

Max Kaiser was saying how the young lack empathy these days, im a perfect example of this! :)

Im the opposite. I had no sympathy for those buying before 2007 because the last early 90s crash resulted in mass repossessions and thus they couldnt claim ignorance. Those buying post 2009 have seen the government will bail them out and has thus set a precedent. Why shouldnt they expect to be bailed out?

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Hi everyone.

I am going to court on Friday as I have built up heavy arrears on my mortgage account due to being self employed and not being able to afford the payments. I was told by Accord mortgages that it is a hearing that will accept viable proposals though after reading Accords witness statement, it seems clear they are looking to repossess the property.

I have a couple of things I might be able to do before Friday that could save this from happening. 1) put it up for let 2) provide evidence of purchase orders summing in the region of £15,000. But this is literally all I got.

I am generally quite annoyed I have this mortgage and it was something that was put on me as soon as I turned 18. I cannot blame my parents as they thought they were doing what's best for me, but truth be told, I don't think I have ever had more than 6 months of stress free life in the 7 years I have had it and as a result, I missed out heavily in my 18-25 years of age. I have never really been able to afford without making huge compromises or borrowing heavily. The one good thing to take away from it at this stage is that for 25, I am very down to earth when it comes to it and have A LOT of life experience, relatively speaking. action-smiley-033.gif

It has taken 7 years but it has finally gotten to breaking point and Friday is the day of reckoning.

What has annoyed me the most is how I came about getting a mortgage. It was in the days of self-cert, money lending fananza. I went self cert under the advice of my broker/solicitor and a mortgage deal was found for me. Back then I was working a cash in hand £200/week job labouring (which is of course only temporary). I was young and didn't understand any of it. My parents were well off at the time so I guess they always assumed they would be able to help should I need it. Needless to say, they aren't so well off any more. I borrowed £100,000 with a deposit of £25,000. 35 year buy to let, interest only @ 3.5% fixed for 3 years. current, variable @ 5.99%. When the solicitor was going through it all with me, I remember seeing a figure of over £350,000 which I assume was some sort of total repayment figure. And she literally just said, "we don't need to worry about that figure". Even to this day, I have no idea how to go about actually paying off the mortgage. On the few time I have managed to make over payments, they have just put my account into credit, not reduced the overall figure.

Looking back, I feel the whole thing was bull. My parents were naive, which is strange as they made their money in property and hotels. They were ripped off, I was ripped off.

Anyway, just getting it off my chest really. Not a very good week at all. I hope you are all having a better one!

Thanks for reading.

EDIT: I've actually just had a look into how interest only mortgages work.. how is it even legal..

http://forums.moneysavingexpert.com/showthread.php?t=4990700

This Guy took out a buy to let mortgage at 18, and lived in it himself for 7 years.

Now he's 25 and in trouble me thinks.

Edited by Lord D'arcy Pew

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"Larry you have what others can only dream of. A self cert interest only mortgage. Do whatever you can to make it work. Borrow some money from mum and dad, whatever it takes but dont get it repossessed at any cost.

Rent the damn thing out. Surely the rent will cover the interest only costs right?

Good luck. "

Right...maybe...hopefully.

Guy doesn`t seem to know what kind of mortgage he has, is it BTL or is it Interest Only, whatever that is?

Edited by dances with sheeple

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With the late teens/early twenties just opting out and staying in their old bedroom, and this guys age and up to about 35 totally screwed with all the debt they have I can`t see much hope for those at the top of the Ponzi expecting a big windfall.

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Obviously lots of people will be due compensation in the future for miss-sold schemes such as Help to Buy. They were told it was a "mortgage guarantee" and the governbankment were going to help them.

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Yep, probably had a party with beaming parents in attendance when he signed the paperwork. Hopefully a lot of people in NE will just say f*uck it and walk away from their debt.

"Happy Birthday Son, you're a man now"

Poor kid...

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Where's my compensation for decade+ renting?

You expect my to have sympathy for the enemy outbidding me for the past 10 years, who are still complaining. Even worse recently, with young couples gurning at the camera for press articles on how clever they've been to buy under HTB. They're "home-owners" now - mostly paying prices which are Twilight Zone crazy.

Particularly annoying since HTB and a new bomad frenzy (and btl frenzy from those who say its not earning anything in the bank.) Let them refinance, pay arrangement fees, see teaser deals revert to SVRs, pay the guarantee fee.

Well, based on the loan value for standard SVR mortgage I've just looked at on my Banks website, you would actually be looking at £400k interest on a £400k loan over the next 25 years (that's if interest rates stay as low as they currently are - which I don't think anyone believes will happen.)

Now, look at some of the daft £450k terraced houses. I can easily see those dropping by at least 10-20% in value over the next 5 years; maybe much more. But even at just over a 10% fall and no rises in interest rates, that's your £50k deposit gone (plus the loss of the interest it could have earned in an ISA/etc..) And in the first 5 years of mortgage payments, at £2.6-2.7k per month? Well, you've only paid off £26k of your house. But remember the interest on the loan? That's cost you another £121k in just the first 5 years. So, after 5 years, you are ~£180k down on a £450k house - if interest rates don't go up at all and your house only drops in value by about 12%. The reality is likely to be something much more severe, IMHO - a 30% fall in prices and interest rates at just 2% higher than today gives a loss of over £300k on a £450k house in just five years. And what have you got for that £180k-£300k of investment? Just £26k worth of equity in a house (and minus all your other costs for 5 years - moving costs, stamp duty, maintenance, etc., you don't even have that!)

So that, to me at least, is what is so frightening about buying in the current market. Not a single young person under the age of 35 I speak to can afford to buy at current prices. And for those that do, the doubling and trebling of houses prices needed to wipe out the enormous amount of interest they'd paid in the first 5-10 years of ownership is just not going to happen. Scary stuff indeed.

I stick to the Lionel Ritchie rule, the once, twice, three times a lady rule. Its a rule of thumb rather thn an article of faith so you'll have to excuse the broad generalisation.

Borrow £10,000 (once) results in a typical repayment of £20,000 (twice) which for a typical basic rate taxpayer means earning £30,000 (three times). Or, to put it in plainer terms, an additional £10,000 offered is equivalent to a years work at average salary and even better offer £10,000 less and you could retire a year earlier. Instead we fixate on lending multiples at gross earnings which neglects tax and interest.

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"Larry you have what others can only dream of. A self cert interest only mortgage. Do whatever you can to make it work. Borrow some money from mum and dad, whatever it takes but dont get it repossessed at any cost.

Rent the damn thing out. Surely the rent will cover the interest only costs right?

Good luck. "

Right...maybe...hopefully.

Guy doesn`t seem to know what kind of mortgage he has, is it BTL or is it Interest Only, whatever that is?

Later says

Currently my repayments are £524.00/month before any arrangement fee. If I rent it out, my repayments will be £611.50 plus arrangement. The property has a maximum let value of £565/month.

Ive been saying it all along, buy to let does not work at these prices.

Interesting to see the other posters 'does not compute' reactions. Its like

"Property bad, property bad, property bad."

"But, property good tho right?"

"No. Property bad, property bad, property bad."

"I see. But, property good though right?"

"No. Property bad, property bad, property bad."

"Yeah thats what I said. Property good."

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