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canny man

Negative Equity Loans

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Maybe I'm dumb at maths, but I saw an ad today on the TV that offered a secured consolidation loan of up to 125% of the difference between your home value and your outstanding mortgage. It was Picture or Ocean, I wasn't really paying attention.

Doesn't this mean instant negative equity?

Should this be legal?

How desperate must you be to take this on?

I despair

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Imagine if you will going to the bank to find out if you can remortgage your house to raise some capital for repairs and such only to be turned down because your wife hasn't been paying the bills for the past year or so and you now owe £7,000 in mortgage payments. After chucking the wife out and calling every service you can think of (water, gas, electricity, insurance etc) and searching for paperwork you find out you owe a grand total of £47k

That's exactly the situation a friend found himself in and what was his first thought on how to deal with the situation....Ocean Finance.

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Imagine if you will going to the bank to find out if you can remortgage your house to raise some capital for repairs and such only to be turned down because your wife hasn't been paying the bills for the past year or so and you now owe £7,000 in mortgage payments. After chucking the wife out and calling every service you can think of (water, gas, electricity, insurance etc) and searching for paperwork you find out you owe a grand total of £47k

That's exactly the situation a friend found himself in and what was his first thought on how to deal with the situation....Ocean Finance.

I have a funny feeling there will be a lot more tales like this in the near future.

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If it's UP TO 125% of the difference between the outstanding loan and value, it isn't necessarily negative equity.

Home value £200k

Outstanding loan £100k

Difference £100k

125% £125k

Still £75k equity

I think :huh:

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If it's UP TO 125% of the difference between the outstanding loan and value, it isn't necessarily negative equity.

Home value £200k

Outstanding loan £100k

Difference £100k

125% £125k

Still £75k equity

I think :huh:

Maybe it's my dodgy maths, but in your example, there's an outstanding loan of 100k plus new 125% loan of 125k, total debt 225k against 200k home value. Looks negative to me....

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Maybe it's my dodgy maths, but in your example, there's an outstanding loan of 100k plus new 125% loan of 125k, total debt 225k against 200k home value. Looks negative to me....

Well spotted, but I did say UP TO 125% in capitals because a lender shouldn't be stupid enough to risk not getting their money back.

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  • 301 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%



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