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Mapatasy

Remortgaging makes debt problems even worse

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There's no free lunch.

Of course it is cheaper to borrow from your house to pay off higher interest rate loans on credit cards, because you  are concerting a non-secured loan to a secured loan. The interest rate is the "risk" for the lender.

Edited by 200p

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But this is how so many live. Remortgage to spend money on cars, holidays, meals out, fancy clothes etc. While your shrewd investment keeps earning you tens of thousands of pounds each year, you can just repeat the process.

My wife used to deal with divorces. She saw so  many middle-aged couples who despite owning their own homes, had virtually nothing to share once the debts were cleared, as all that HPI had been spent on living well beyond their means.

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Your average punter is a complete mug - always falling for the "best 2 year deal" approach. They seem totally oblivious to the elephant trap that they keep walking into.

The lenders must love it.

When I last moved and applied for a mortgage the sales pitch was definitely trying to guide me towards one of their two year deals. I just wanted the lifetime BOE tracker at base rate + 0.79% (with a one off £1000 fee) tucked away at the bottom of the product list, but he kept trying to scare me with lines like "what if interest rates rise?". Sheeesh, I was only asking to borrow 1 x my income.

Five years on I'm glad I stuck to my guns.

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4 hours ago, Broken biscuit said:

Your average punter is a complete mug - always falling for the "best 2 year deal" approach. They seem totally oblivious to the elephant trap that they keep walking into.

The lenders must love it.

When I last moved and applied for a mortgage the sales pitch was definitely trying to guide me towards one of their two year deals. I just wanted the lifetime BOE tracker at base rate + 0.79% (with a one off £1000 fee) tucked away at the bottom of the product list, but he kept trying to scare me with lines like "what if interest rates rise?". Sheeesh, I was only asking to borrow 1 x my income.

Five years on I'm glad I stuck to my guns.

 

Pretty sure that most of those two year fixes are front loaded too, with the fees often amalgamated into the loan meaning that by the end of the fix you have made very little impact in paying down the principal on the loan.  But hey - there's always gonna be another cheap as chips 2 year fix coming along, right?

No doubt they'll be driving around in a new car all the time due to a PCH 2-year car lease too - they may not have anything to show for their two years of payment at the end of it but it was 'cheap' and there will be another lease deal available.

 

Low monthly outgoings on house and car and you have a house making more money than you and perpetually a nice new car to drive around in - they must be financial geniuses!  :lol:  All thanks to the magic of near-zero interest rates.  One can only imagine the carnage amongst these dumbos when rates are forced up.

 

 

 

 

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15 hours ago, Mapatasy said:

http://www.aol.co.uk/money/2017/04/11/remortgaging-makes-debt-problems-even-worse/

"A new study has revealed that a third of homeowners who have remortgaged in the past five years have done so to free up cash - borrowing an average of £43,918 more. The study found that a third of people were using a remortgage to consolidate existing debts"

Oops! ;)

But they're just tapping the seam of magic money that  their financial savvy has created for them! :lol:

Huh?  What do you mean it's a loan (secured against the house) that has to be paid back!!!!!    :blink:

Edited by Sour Mash
spellung

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17 hours ago, Mapatasy said:

http://www.aol.co.uk/money/2017/04/11/remortgaging-makes-debt-problems-even-worse/

"A new study has revealed that a third of homeowners who have remortgaged in the past five years have done so to free up cash - borrowing an average of £43,918 more. The study found that a third of people were using a remortgage to consolidate existing debts"

Oops! ;)

How is it 'freeing up cash'? It's just taking on more debt. 

It's no more 'freeing up cash' than spending £40K on a credit card to 'free up cash'.

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19 minutes ago, lostinessex said:

Despite being a satirical website, the Daily Mash increasingly feels like the most accurate commentary on the an incrasingly bizarre world...

http://www.thedailymash.co.uk/news/business/bank-of-mum-and-dad-bailed-out-by-bank-of-nan-and-grandad-20170412125928

This isn't a satirical piece but it's definitely the funniest thing I've read in months (Stephen' question and the first reply by Mark):

https://www.property118.com/may-possibly-default-buy-let-properties/90246/

Stumbled across it the other day and it puts a lot into context I feel.

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14 minutes ago, Mapatasy said:

This isn't a satirical piece but it's definitely the funniest thing I've read in months (Stephen' question and the first reply by Mark):

https://www.property118.com/may-possibly-default-buy-let-properties/90246/

Stumbled across it the other day and it puts a lot into context I feel.

Ah, posting the keys back. Just like youve seen in the (American) movies.

Nice t see some awareness of the new powers/options available if the bankrupt is over 55:

https://debtcamel.co.uk/pension-safe-bankrupt/

“Where the debtor is over 55 and has access to an undrawn personal pension fund … the official receivers are asked to consider whether the insolvency test has been met and, at the date of the petition the debtor is unable to meet their debts. In bankruptcy the official receiver will consider whether it would be appropriate to seek an annulment of the order.”

See that lump sum available in our personal pension after 55? Banks will have it.

 

 

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25 minutes ago, Mapatasy said:

This isn't a satirical piece but it's definitely the funniest thing I've read in months (Stephen' question and the first reply by Mark):

https://www.property118.com/may-possibly-default-buy-let-properties/90246/

Stumbled across it the other day and it puts a lot into context I feel.

 

How the flip can you borrow hundreds of thousands of pounds and not have a clue about the law around defaulting on the debt?

And why are banks giving money bank credit to morons like that?

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1 minute ago, Sour Mash said:

 

How the flip can you borrow hundreds of thousands of pounds and not have a clue about the law around defaulting on the debt?

And why are banks giving money bank credit to morons like that?

Makes you really step back and think hey?!

Reassuring to know that these BTL geniuses will have nothing but that same genius to rely on to get them out of the sh1t when the market turns! ;)

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37 minutes ago, spyguy said:

Ah, posting the keys back. Just like youve seen in the (American) movies.

Nice t see some awareness of the new powers/options available if the bankrupt is over 55:

https://debtcamel.co.uk/pension-safe-bankrupt/

“Where the debtor is over 55 and has access to an undrawn personal pension fund … the official receivers are asked to consider whether the insolvency test has been met and, at the date of the petition the debtor is unable to meet their debts. In bankruptcy the official receiver will consider whether it would be appropriate to seek an annulment of the order.”

See that lump sum available in our personal pension after 55? Banks will have it.

 

 

Yes... but only certain private sector employees. Exclusions case:

your only undrawn pension is a “defined benefit” scheme, sometimes known as a “final salary” scheme. The Official Receiver is only interest in personal pensions, sometimes known as  “defined contribution” or “money purchase” pensions.

 

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