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Supersized mortgages are back


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6 hours ago, longgone said:

OMG 

 

quarter million debt just 6 years after leaving school.  that will be more than half his income.  NUTS

In the eyes of the goverbankment he is the perfect citizen... a lifelong, obedient, compliant mortgage slave worker drone.

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14 hours ago, JohnLondon said:

My friends son has just managed to get a mortgage with Metro Bank. He’s 22yrs old, FTB on an annual income of £28,000 & has had a mortgage offer for £240,000. The purchase price of the property s £270,000

Id question those  figures.

After bills and whatnot, that will be more than than his disposable cash.

If he *did* get that mortgage then Metro are not long for this world.

 

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15 hours ago, JohnLondon said:

My friends son has just managed to get a mortgage with Metro Bank. He’s 22yrs old, FTB on an annual income of £28,000 & has had a mortgage offer for £240,000. The purchase price of the property s £270,000

Insane.  From what I remember, Metro Bank only do mortgages for London/The south?

Surely he must have a job where there's proof of large pay rises coming shortly. 9x joint income would be bad enough, but 9x single income?? he looses his job then what?

A quick look at their mortgages, 90% LTV would be 2.29% over 2 years.  It states 'Any type of contract workers accepted'. Also mentions AirBnB - they let you rent it out for up to 90 days etc. etc.  Sounds like a bank that might end as the next Northern Rock style collapse.

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1 hour ago, Andy T said:

Insane.  From what I remember, Metro Bank only do mortgages for London/The south?

Surely he must have a job where there's proof of large pay rises coming shortly. 9x joint income would be bad enough, but 9x single income?? he looses his job then what?

A quick look at their mortgages, 90% LTV would be 2.29% over 2 years.  It states 'Any type of contract workers accepted'. Also mentions AirBnB - they let you rent it out for up to 90 days etc. etc.  Sounds like a bank that might end as the next Northern Rock style collapse.

Ive never really seen that, not a any level of guarantee that a bank would lend against.

 

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1 hour ago, Si1 said:

My friends son has just managed to get a mortgage with Metro Bank. He’s 22yrs old, FTB on an annual income of £28,000 & has had a mortgage offer for £240,000. The purchase price of the property s £270,000

Thats 9.6 times.

The maximum loan size for 5.5 times income is £2 million if you have a 25% deposit.  It reduces to £1.5 million if you have a 20% deposit and it's £1 million if you have a 15% deposit. With a 10% deposit, the mortgage is capped at £500,000.

He would also need to be putting down ~60k as a deposit.

I still call BS. Or fibs.

 

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1 hour ago, Andy T said:

Insane.  From what I remember, Metro Bank only do mortgages for London/The south?

Surely he must have a job where there's proof of large pay rises coming shortly. 9x joint income would be bad enough, but 9x single income?? he looses his job then what?

A quick look at their mortgages, 90% LTV would be 2.29% over 2 years.  It states 'Any type of contract workers accepted'. Also mentions AirBnB - they let you rent it out for up to 90 days etc. etc.  Sounds like a bank that might end as the next Northern Rock style collapse.

Might???

https://ftalphaville.ft.com/2016/02/01/2151409/we-need-to-talk-about-metro-banks-weird-balance-sheet/

https://www.ft.com/content/edfdd1cc-d754-11e8-ab8e-6be0dcf18713

https://www.ft.com/content/4ced38de-4872-11e8-8ee8-cae73aab7ccb

https://ftalphaville.ft.com/2016/07/12/2169060/metro-banks-on-fire/?ft_site=falcon&desktop=true

All good esp. the last one.

 

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14 hours ago, pizza said:

Just done the maths on this.  Monthly payments on the best 2 year fixed deal I could find at 1.79% are £993.  Monthly after tax income is £1,869.  So more than 50% of take home pay spent on debt service.

He will probably have a mortgage term of 35 years or more, to get the monthly payment down to comply with MMR rules.

Welcome to the new "interest only"....

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On ‎27‎/‎11‎/‎2018 at 12:16, longgone said:

i took a mortgage out in 2003 and was asked for 3x payslips. i made sure i took a set which had plenty of overtime and other payments on them.  

they offered me 150k pretty sure it was only 3.5x earnings 

I thought it was always latest three payslips!

 

15 hours ago, pizza said:

Just done the maths on this.  Monthly payments on the best 2 year fixed deal I could find at 1.79% are £993.  Monthly after tax income is £1,869.  So more than 50% of take home pay spent on debt service.

It depends on the house. If he can let a spare room for £500 then it's more like 25%.

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3 hours ago, spyguy said:

My friends son has just managed to get a mortgage with Metro Bank. He’s 22yrs old, FTB on an annual income of £28,000 & has had a mortgage offer for £240,000. The purchase price of the property s £270,000

Thats 9.6 times.

The maximum loan size for 5.5 times income is £2 million if you have a 25% deposit.  It reduces to £1.5 million if you have a 20% deposit and it's £1 million if you have a 15% deposit. With a 10% deposit, the mortgage is capped at £500,000.

He would also need to be putting down ~60k as a deposit.

I still call BS. Or fibs.

 

I’ve seen the mortgage offer & I know what he earns. I didn’t believe it at first either when my friend told me but I’ve seen the paperwork. From my experience, what a bank/ lender states on its website & what goes on in reality can be very different 

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3 minutes ago, JohnLondon said:

I’ve seen the mortgage offer & I know what he earns. I didn’t believe it at first either when my friend told me but I’ve seen the paperwork. From my experience, what a bank/ lender states on its website & what goes on in reality can be very different 

It's normally the other way round though. I had an offer in principle from HSBC about five years ago. It was based on my salary, deposit and credit check. They then reduced this by about 12,000 once I found a place and gave some info about the costs (all very low, which makes me think they never intended to lend the original figure).

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16 hours ago, pizza said:

Just done the maths on this.  Monthly payments on the best 2 year fixed deal I could find at 1.79% are £993.  Monthly after tax income is £1,869.  So more than 50% of take home pay spent on debt service.

Thanks for that, of course interest rates can go up - so he and the bank are in a dangerous position.

 

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4 hours ago, Si1 said:

The link looks like 55 times! I clicked the link just to check they weren't that crazy.

 

I wonder if actually banks are lending 5 or 5.5 times to a small group of people (usually professionals, as in the link quoted, who may be assumed to have stable earnings and probably pay rises) because they are constrained elsewhere. They can only lend above 4.5 times to 15%, but perhaps lots have children, credit cards etc. so there are a large number borrowing much less than 4.5 times income.

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On ‎27‎/‎11‎/‎2018 at 11:22, spyguy said:

Thast not what I experienced when I remortgages 2 years ago with HSBC.

They checked everything. Wanted copies of bills, partners income and spend.

And this was for a 0.8 LTE 5 year fix.

 

 

Exactly my experience recently when organising my Daughters mortgage with my wife on it. Were very sniffy re her pension something like 5% but the Gov is throwing in 19% or something silly so thought no big deal. My wife always looked employed through my business of which I only won a third but they wanted all accounts etc when she is legally an employee like anyone else

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47 minutes ago, Kosmin said:

It's normally the other way round though. I had an offer in principle from HSBC about five years ago. It was based on my salary, deposit and credit check. They then reduced this by about 12,000 once I found a place and gave some info about the costs (all very low, which makes me think they never intended to lend the original figure).

Exactly my recent experience

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2 hours ago, JohnLondon said:

Rules have changed, mortgage offers are now binding which means they cannot just change their minds

Presumably subject to the details given when the mortgage in principle was offered being confirmed, otherwise we'd be effectively back to self cert.

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