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City AM gives advise on how to deal with the impending NE

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Oh my word ...

When first I read the "pay a bit extra off" advice earlier this article I thought it had dredged the bottom. Who on earth wouldn't do this anyway (regardless of NegE or not)?

But no ... the "folks that know stuff" were only warming up to ...

Quote

 

Credit crutch

While it’s not ideal and will be costly, Castle says one option is to buy yourself out of the property.

“If you are desperate to move, and the difference in value between your home and the outstanding mortgage isn’t sky high, you could consider clearing the shortfall with borrowed money,” he says.

If you don’t have the funds, you could consider taking out an unsecured loan – which obviously comes with its own risks, and would increase your total debt.

Castle also warns that an unsecured loan is likely to be more expensive than borrowing against your home.

 

The advice that equates to 'You are in a big pile of unsecured debt, get some more unsecured debt to cover it'. NegE is, after all, unsecured debt.

*sigh* no wonder we are in such a mess with muppets like this publishing drivel.

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16 minutes ago, cashinmattress said:

Folk that would choose this option are probably already up to their ears in Brighthouse finance..plus you-name-it store cards.

Going from a prime consumer to being consumed by sub-prime.

Edited by Lord D'arcy Pew

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31 minutes ago, thewig said:

Problem: DEBT

Solution: more DEBT

That article is extremely hilarious. Just like you say, they advise piling the difference between your mortgage and the sale value into another loan. Also hilarious is the title of the page (seems to be different from the title of the article and associated readable URL): "Positive thinking on negative equity...". Yup, positive thinking is gonna help you out of several tens of thousands that you can't afford...

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53 minutes ago, thewig said:

Problem: DEBT

Solution: more DEBT

Debt is Wealth innit.

 

Edit: Ok I read the article and I get the impression that negative equity is some mythical beast that only exists in legend, most of us know what could be coming, and getting more debt to pay for the  debt is terrible advice to quell the naive readers fears.

 

Quote

“If you don’t need to move, just keep making repayments on time and your bank won’t be too concerned,”

So wise, I wonder how easy this would be when IR's start to creep up higher and higher...

Edited by JustAnotherProle

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1 hour ago, JustAnotherProle said:

So wise, I wonder how easy this would be when IR's start to creep up higher and higher...

When IRs rise it certainly won't help to have a large unsecured debt rather than your large secured debt (albeit in negative equity). Those personal loan rates are gonna sting baaad. Horrible advice.

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People can't buy more mortgages because: negative equity, affordability etc, but the banks still have to make money somehow, hence promote personal loans in the article.

Its not about giving advice or helping anyone.

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1 hour ago, tm_81 said:

People can't buy more mortgages because: negative equity, affordability etc, but the banks still have to make money somehow, hence promote personal loans in the article.

Its not about giving advice or helping anyone.

The banks will make more money by rinsing the mortgagees over the terms of their existing mortgage. Alternatively bridging loans at extortionate rates. I don't see an easy ride.

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3 hours ago, JustAnotherProle said:

Debt is Wealth innit.

 

Edit: Ok I read the article and I get the impression that negative equity is some mythical beast that only exists in legend, most of us know what could be coming, and getting more debt to pay for the  debt is terrible advice to quell the naive readers fears.

 

So wise, I wonder how easy this would be when IR's start to creep up higher and higher...

Given how committed the BoE are to delaying the invevitable rate rises, when it happens I don’t think there’ll be any “creep” about it.

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1 hour ago, TheCountOfNowhere said:

It's happening.

What's happening? It's the same thing that has been happening over the past 6 years or so. The only thing is, they have actually made money cheap and went into debt overdrive. Everyone has been saying they need to raise rates for a looong time now. They didn't. They now can't. It's a case now of keeping this system going for however long it takes and by doing whatever it takes. They are fully committed, as painful as it is for me to admit that. 

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10 minutes ago, whome_yesyou said:

What's happening? It's the same thing that has been happening over the past 6 years or so. The only thing is, they have actually made money cheap and went into debt overdrive. Everyone has been saying they need to raise rates for a looong time now. They didn't. They now can't. It's a case now of keeping this system going for however long it takes and by doing whatever it takes. They are fully committed, as painful as it is for me to admit that. 

It feels like rates are more likely to go up sharply in response to a shock, than in any prescribed format that the BoE have in mind.

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25 minutes ago, Horseradish said:

It feels like rates are more likely to go up sharply in response to a shock, than in any prescribed format that the BoE have in mind.

Like what? It's all a bit hopeful, mysterious, wishy-washy. I have had a feeling for years, prevented myself from buying a house because of it. I don't think that was a wrong feeling at the time. There has been a few cases to knock the economy into a crash e.g. China downturn in 2016, multiple EU states on the verge of folding, etc. What has changed as a result? Nothing, the can keeps getting kicked down the road, only now it's being helped further by strong winds.

It's now a debt economy. That was the decision the power that be locked on to. It will be protected at all costs, regardless of inflation. ZIRP, QE, HTB, TFS, or whatever other scheme/deregulation they choose to bring out next.

When it does crash though, it's going to be very messy and I think those responsible should be getting jail time.

Edited by whome_yesyou

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Don't worry, the end or article says

Quote

High demand and short supply make it unlikely London will suffer a steep fall. So if you don’t have to move house yet, wait it out until prices rise again.

Its really strange, you'd have thought that if there were high demand and short supply that you wouldn't be any need to even be writing an article about negative equity.

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Of course, all those people with a 40% (London) Equity Loan only have to take 60% of the downside. Small silver lining? Though on the other hand they probably only had 5% down, and that itself was probably MEW'd off their mum & dad's house.

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5 hours ago, whome_yesyou said:

.

When it does crash though, it's going to be very messy and I think those responsible should be getting jail time.

Might be a series of downswings each lower than the other punctuated by hopeful limited upswings.

But not fast enough to help our generation much. 

Still very painful.

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13 hours ago, tm_81 said:

People can't buy more mortgages because: negative equity, affordability etc, but the banks still have to make money somehow, hence promote personal loans in the article.

Its not about giving advice or helping anyone.

+1 agree completely, the clue is in the name of the publication!

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12 hours ago, zugzwang said:

Negative equity. One of the loveliest phrases in the English language.

Only because "Laissez-faire" is French

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46 minutes ago, Diver Dan said:

I remember the adverts for consolidation loans that said things like "You might even have some left over for a holiday and a new car!" 🙄

Indeed.

Get a bit of sun then move into your car.

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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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