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To Think Hpc Will Not Happen While Btl Is Alive

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Mods, not sure if this thread should go in Annecdotals/Mortages.

Met an ex coworker Today who recently purchased a big house in London(outer zone) worth £900K. Knowing his income, may be 5 -7% of the house, I was surprised how he managed it. He

Mentioned using Bridge to let. Is Bridge to let available to use as a BTL deposit? What is Bridge to let? How does it work?

If people use financing like this then they don't even have to wait to raise a deposit. Any amount of MMR loan tightening will have no effect? How will a crash ever happen?

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Mods, not sure if this thread should go in Annecdotals/Mortages.

Met an ex coworker Today who recently purchased a big house in London(outer zone) worth £900K. Knowing his income, may be 5 -7% of the house, I was surprised how he managed it. He

Mentioned using Bridge to let. Is Bridge to let available to use as a BTL deposit? What is Bridge to let? How does it work?

If people use financing like this then they don't even have to wait to raise a deposit. Any amount of MMR loan tightening will have no effect? How will a crash ever happen?

Bridge to let is used when you buy at auction, or if there is some (structural) work to be done on the house, or if you've bought a commercial to convert into residential. For all these you can't get a conventional mortgage until you've sorted everything out.

The idea of someone on £50k buying a property for a million on a bridge - when they don't even want to actually live in it - is completely bonkers.

The interest on the loan is going to be at least £4k per month. At £50k that is more than their take home pay.

It is probably auction, in which case they should have the finance ready in a month or so, so perhaps the real-world cost of this bridge is about £8k in interest plus maybe £10-15k in fees. So maybe £20k.

I'd accept this sort of cost/risk for a residential / dream house. But for BTL - why not buy 4 x normal properties.?

I've come to accept that a crash isn't going to happen. At best, prices may reduce over a 20 year period a la Japan.

I think that is what they're trying to engineer. Possibly a lot of the action in sterling, as well...

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How will a crash ever happen?

When credit tightens. Find a way to do £200bn of this stuff in 18 years and you have something worth looking into, in the meantime you have one anecdote about one funky loan. Chill. If you're trying to read the tides by watching a single wave break, you're doing it wrong.

Edited by Idlewild

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I've come to accept that a crash isn't going to happen. At best, prices may reduce over a 20 year period a la Japan.

That might have been the case in 2012 when prices had stabilized, they could easily have fallen for decades at that point but now we have the london mega bubble and the shires falling suit, prices are beyond insane now.

Another collapse is on the cards, sooner rather than later.

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I really hope the original posts details are true as this shows that under the cover the banks are acting fast and loose again.

We know this won't last too long before it all comes tumbling down again.

I have seen a few new big Landrover's buzzing around the roads during the last couple of months. For me this confirms the top is well and truly in/past.

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Credit tighten? Seems to be expanding at a rapid case, cheap money everywhere.

LPMVTXK%2Bto%2BJanuary%2B2016.png

Data tells a different story (source is the Bank of England interactive database) Secured lending growth is back but excepting the spell between 2008 and 2012 it looks to be at a lower level than at any time all the way back to the beginning of the data series in 1993. Further Bank of England reporting that basically all the post 2008 growth is BTL and Treasury and Bank of England look to be trying to strangle the BTL growth. If you've any evidence that secured credit is loose right now and that is leading to borrowing driving prices, I'm all ears. Even current BTL ain't even all that loose - 75% LTV against, rental cover of 125% against an interest expense calculated not on the actual rate but a notional rate of 5% or more for some lenders, (and some lenders already requiring rental covers of more than 125%).

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