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Levy process

Where Can I Get Insurance Against House Price Falls?

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Anyone help me?

I'd like some cheap insurance against house price falls. Basically I'd like a policy that pays out 100% of any drop below the price I buy a house for now. I'm assuming on the basis of all the Bull "It' won't crash" and "Bears are wrong" type forum spam we've been having recently that they will be able to provide such a policy for me?

Please post details of your best offers Bulls. After all, if you're so sure about prices not falling, you'll be happy to sign away your property empires to me to cover any losses I might make buying now as you advise?

Let's be having you...

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Anyone help me?

I'd like some cheap insurance against house price falls. Basically I'd like a policy that pays out 100% of any drop below the price I buy a house for now. I'm assuming on the basis of all the Bull "It' won't crash" and "Bears are wrong" type forum spam we've been having recently that they will be able to provide such a policy for me?

Please post details of your best offers Bulls. After all, if you're so sure about prices not falling, you'll be happy to sign away your property empires to me to cover any losses I might make buying now as you advise?

Let's be having you...

From last year, I don't know if they are still doing it, but if there was a demand, I'm sure they would be

http://www.thisismoney.co.uk/mortgages/mor...1&in_page_id=58

With house prices falling in some parts of the country, first-time buyers worried about negative equity can get a mortgage that protects against it from broker John Charcol and Newcastle Building Society. The 4.99% five-year fixed rate mortgage is available with a 5% deposit and will guarantee to pay off any negative equity that the property has suffered when it is sold again.

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The trouble with you bears is that you always want someone to hold your hand through life's lessons.

That's why you can't work things out for yourself.

Negative equity is one lesson people want to avoid!!! Hence the reason many won't buy at this point in the cycle!

Edited by OzzMosiz

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I would have thought the answer to this was obvious. I guess the bears have more to learn than I realised.

I think what TTRTR is saying is that the answer is not to buy at all in the current fragile market.

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I think what TTRTR is saying do a BTL property (HMO) and continue to rent at the same time, aslong as the rent covers the morgage and repairs plus some the amount of money you make on BTL should cover the falling prices....

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I think what TTRTR is saying is that the answer is not to buy at all in the current fragile market.

But he can't actually say it as it is a bearish comment - does this mean TTRTR is considering moving from the dark side? :lol:

CS

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Negative equity is one lesson people want to avoid!!! Hence the reason many won't buy at this point in the cycle!

An insurance scheme against negative equity is not an insurance against price falls. I can't find this negative equity policy to find the exact details. But there are a lot of ways in which such a scheme could be created allowing a low premium without really offering much protection.

First, for an owner to get into negative equity, the house has to devalue sufficiently to wipe out their initial equity. These schemes will probably cost more the less your initial equity is.

Secondly, the scheme as discussed on the web was for "five years". So, if you're in negative equity at the end of five years, the insurance should apply. Except, do you get a lump sum to top up your equity, or do you actually have to sell your house at a loss to claim. So, you'd have to want to move at the end of five years, and this may not be appropriate for all. So if the insurance is of this form, only some of those who experienced negative equity would claim.

Thirdly, if the insurance is for a repayment mortgage, then a certain percentage of the house's value would be paid off each year, increasing equity. So not only would the initial equity have to be cancelled by house price deflation, but any repayments would have to be wiped out too. When calculating how much such a premium would cost, this would have to be factored in as well.

Fourthly, negative equity only comes from nominal, rather than real price falls. Wage inflation is unlikely to reverse, so if inflation (including wage inflation) took off, then the real value could have fallen considerably without any nominal drops. Again, no way to claim.

Finally, who would establish the value of the house. As mentioned in discussions about negative equity guarantees for new build flats, the insurer would probably use their own surveyors to establish the value of the house.

Of course these points could be countered if anyone can find such a policy and list the real conditions.

Billy Shears

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But he can't actually say it as it is a bearish comment - does this mean TTRTR is considering moving from the dark side? :lol:

CS

He is clearly not stupid and he bought low. However I would be interested to know whether he is buying now.

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He is clearly not stupid and he bought low. However I would be interested to know whether he is buying now.

I never wished to intimate TTRTR is stupid - quite the contrary - I often don't agree with his confrontational comments but he is clearly knowledgable and succesful

Perhaps he will tell us - or are we to read between the lines?

CS

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better article for Newcastle and John Charcol

John Charcol

If anyone enquires, let me know if they still have their offering - sounds good!

Protection from negative equity. If, during the fixed rate term, the mortgage has been paid wholly or partly by the Mortgage Payment Assistance policy for at least 6 months, the borrower has a 3 month window during which they can give notice of intention to sell the property. This doesn’t commit them to a sale but providing a sale completes within 17 months of the initial claim on the Mortgage Payment Assistance policy any negative equity as a result of the sale will be written off by the lender with no further obligation whatsoever on the borrower. The borrower will be responsible for the sale costs.

So, you have to have had your mortgage paid "wholly or partly by the Mortgage Payment Assistance policy for at least six months". Not exactly a general insurance against negative equity is it? Especially given these reports in the press about it being very difficult to claim on these policies in the first place.

Billy Shears

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Anyone help me?

I'd like some cheap insurance against house price falls. Basically I'd like a policy that pays out 100% of any drop below the price I buy a house for now. I'm assuming on the basis of all the Bull "It' won't crash" and "Bears are wrong" type forum spam we've been having recently that they will be able to provide such a policy for me?

Please post details of your best offers Bulls. After all, if you're so sure about prices not falling, you'll be happy to sign away your property empires to me to cover any losses I might make buying now as you advise?

Let's be having you...

Whilst the wording in your standard tenancy agreement doesn't offer you money if prices fall, I can happily tell you that should prices fall, your tenancy agreement will fully indemnify you against any falls. You will be free to move at short notice & will not have to cover any falls in the value of the property.

Naturally this has a price, the fact that your end of the bargain of the tenancy agreement is that you will not be a party to any price rises either. What we have here, is a simple no risk, no reward situation. Or indeed you could say the insurance premium is the waiver of entitlement to price rises.

I would however like to draw your attention to the availability of 100% mortgages. By virtue of their existence, I think you have an insitutional ratification that the likelyhood of punishing price falls is remote.

Try getting a 100% loan on your next stock market investment!

Edited by Time to raise the rents.

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Try getting a 100% loan on your next stock market investment!

Agreed, but that's because companies go bust and the stock could be worth zero. Property, on the other hand, will never drop to zero value. It will always have a value - the question is how much; an issue which is taxing the brains of bulls and bears alike on this forum judging by the number of times you post.

Nor do I consider that the availability of 100% mortgages constitutes an institutional endorsement of the property market; we all heard that sophistry in the last crash. No, 100% mortgages exist simply because lenders are pimping for business in a highly competitive industry. They want market share and they don't give a damn if you are re-possessed because they will take and sell your home and then come after you for up to twelve years for the balance.

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Whilst the wording in your standard tenancy agreement doesn't offer you money if prices fall, I can happily tell you that should prices fall, your tenancy agreement will fully indemnify you against any falls. You will be free to move at short notice & will not have to cover any falls in the value of the property.

Well put TTRTR.

This is why I rent and I am so pleased you agree with my rationale!

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Whilst the wording in your standard tenancy agreement doesn't offer you money if prices fall, I can happily tell you that should prices fall, your tenancy agreement will fully indemnify you against any falls. You will be free to move at short notice & will not have to cover any falls in the value of the property.

Naturally this has a price, the fact that your end of the bargain of the tenancy agreement is that you will not be a party to any price rises either. What we have here, is a simple no risk, no reward situation. Or indeed you could say the insurance premium is the waiver of entitlement to price rises.

I would however like to draw your attention to the availability of 100% mortgages. By virtue of their existence, I think you have an insitutional ratification that the likelyhood of punishing price falls is remote.

Try getting a 100% loan on your next stock market investment!

Well, that didn't really answer my question, and if this was the great revelation that you were tantalising me with, I have to say I'm not as impressed as I was expecting to be.

Firstly, I'm not talking "as a tennant" because I am a "home owner" (in the same sense as you "own" property). But no, you felt the need to drone on about tennants again.

Anyway, let me spell out my point: I'm not talking about "punishing" price falls, I'm talking about any price falls. The fact that 100% mortgages are on offer doesn't impress me as a substitute for somebody who is actually prepared to put their money where their mouth is, and offer me an insurance policy against price falls. After all, you don't buy a life jacket for 95% of the weather; I'm talking about what most of the market DOESN'T expect.

It's quite simple really, if there really is a tiny risk of falls, then my insurance policy should be a breeze to provide, because I'll be paying some premium (small presumably, if the risk is really low) and the provider will be happily taking my money for "nothing" as he'd see it. Everyone would win: The provider gets "easy" money, and I get peace of mind. If on the other hand the premium would be large, because the risk is perceived to be high, or at least incalculable to a sufficient accuracy, then this would be all the proof I'd need that property price Bulls are talking a lot of hot air.

So, I'll put it to you, if you're so smart: What is the premium price for cover against house price depreciation per £1000 drop in value from purchase price would you offer me on the average property, per year? This is a serious question. If you can't work out an answer, then I suggest strongly that you shut up with all the high and mighty "I'll let wallow a while in your ignorance" etc. because I will have proved, almost mathematically, that your knowledge of the future of house prices is no better than mystic Meg's.

Let's hear it.

Edited by Levy process

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Well, that didn't really answer my question, and if this was the great revelation that you were tantalising me with, I have to say I'm not as impressed as I was expecting to be.

Firstly, I'm not talking "as a tennant" because I am a "home owner" (in the same sense as you "own" property). But no, you felt the need to drone on about tennants again.

Anyway, let me spell out my point: I'm not talking about "punishing" price falls, I'm talking about any price falls. The fact that 100% mortgages are on offer doesn't impress me as a substitute for somebody who is actually prepared to put their money where their mouth is, and offer me an insurance policy against price falls. After all, you don't buy a life jacket for 95% of the weather; I'm talking about what most of the market DOESN'T expect.

It's quite simple really, if there really is a tiny risk of falls, then my insurance policy should be a breeze to provide, because I'll be paying some premium (small presumably, if the risk is really low) and the provider will be happily taking my money for "nothing" as he'd see it. Everyone would win: The provider gets "easy" money, and I get peace of mind. If on the other hand the premium would be large, because the risk is perceived to be high, or at least incalculable to a sufficient accuracy, then this would be all the proof I'd need that property price Bulls are talking a lot of hot air.

So, I'll put it to you, if you're so smart: What is the premium price for cover against house price depreciation per £1000 drop in value from purchase price would you offer me on the average property, per year? This is a serious question. If you can't work out an answer, then I suggest strongly that you shut up with all the high and mighty "I'll let wallow a while in your ignorance" etc. because I will have proved, almost mathematically, that your knowledge of the future of house prices is no better than mystic Meg's.

Let's hear it.

I'll insure you: £1,000 per annum (for a property valued <£200k), minimum term: 25years.

Edited by Charles_Darke

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Guest prudence

You started this thread by asking how you could "insure" against falling house prices. You now seem to be castigating people for trying to call the market. Which is it? BTW, cupidstunt has told you what to do. Why did you ignore his reply? Is it too complicated for you? It's no good carrying on abusing npeople just because you don't understand about spread betting

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  • 302 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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