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ruisort7

New Type Of Mortgage?

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Hi

I read an 'article' in the Metro this morning singing the praises of a mortgage being offered that allows you to borrow less than you a normal mortgage - with the only every so slightly down side that you have to pay a percentage of any profits to the mortgage company. The 'article' seemed to think this was a great plan for FTBs priced out of the market.

Anyone have any more info on this? Or any thoughts on whether this will boost the market along a bit more?

Apologies if this has been covered before.

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We live in a market economy which adapts through the introduction of new products and services

This will be one of many that'll help perpertuate HPI

The Government could put the brakes on at any time - they choose not to...

Welcome to hell...

:lol:

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The mortgage company takes 15-35% of the profit OR loss. Therefore it is a derivative hedged loan allowing the homeowner to partialy offload downside risk.

http://en.wikipedia.org/wiki/Derivative_%28finance%29

The time to launch the type of product was 1997, they're idiots to do it now.

Im sure this type of mortgage has been around for a long while [barclays?]- I saw some consumer programe a few years back with tales of woe from people who took them out in 90's and how they ended up being ripped off badly

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Any chance of a "financial meltdown mortgage"?

It would work like this:

-Borrow whatever amount you need, say £1m for a nice flat in Stoke-on-Trent.

- You don't pay any interest, it just gets rolled up into the debt, which grows at say 5% p.a.

- When you die, the house is sold to pay off the debt (hopefully.....)

It would make property affordable for everyone, and we could have a new generation of homeowners and eternal HPI. Beautiful.

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Any chance of a "financial meltdown mortgage"?

It would work like this:

-Borrow whatever amount you need, say £1m for a nice flat in Stoke-on-Trent.

- You don't pay any interest, it just gets rolled up into the debt, which grows at say 5% p.a.

- When you die, the house is sold to pay off the debt (hopefully.....)

It would make property affordable for everyone, and we could have a new generation of homeowners and eternal HPI. Beautiful.

What you want is a negative amotrisation derivatived hedged loan. Buy a house today, rollover payments into the mortgage (negative amotrisation) whilst you pay very little compared to what the mortgage really costs, HPC comes, you sell the house later at a huge loss and some sucker picks up the tab (derivatived hedged).

Alternatively you could just rent.

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There is a scheme in Slough where buyers pay 80% of the value of a flat and the remaining 20% when they eventually sell.

The same sort of thing as key workers are entitled to. I wonder if the government will now push to offer key workers even more help to get on the ladder. 50/50 perhaps <_<

Here's the link http://www.glennflegg.co.uk/eDetails.asp?C...D=GFLANFL8I5420

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There is a scheme in Slough where buyers pay 80% of the value of a flat and the remaining 20% when they eventually sell.

The same sort of thing as key workers are entitled to. I wonder if the government will now push to offer key workers even more help to get on the ladder. 50/50 perhaps <_<

Here's the link http://www.glennflegg.co.uk/eDetails.asp?C...D=GFLANFL8I5420

These new financing products are one of the reasons why I think it may be different this time. They will introduce anything to make sure that initial affordability of new mortgages remains low enough. It's no good suggesting people are stupid to take them, people don't think that way.

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Guest Alright Jack

These new financing products are one of the reasons why I think it may be different this time. They will introduce anything to make sure that initial affordability of new mortgages remains low enough. It's no good suggesting people are stupid to take them, people don't think that way.

I agree. There is no limit to the money supply and this is yet one more piece of evidence as to what course of action the government has committed itself to. The end is when everyone realises this and votes with their feet on the currency.

I think there is some way to go yet though since few appear to have figured out what the government is doing. Hell, not even the HPC bears realise yet en-masse.

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Hi

I read an 'article' in the Metro this morning singing the praises of a mortgage being offered that allows you to borrow less than you a normal mortgage - with the only every so slightly down side that you have to pay a percentage of any profits to the mortgage company. The 'article' seemed to think this was a great plan for FTBs priced out of the market.

Anyone have any more info on this? Or any thoughts on whether this will boost the market along a bit more?

Apologies if this has been covered before.

If things are so rosy and affordable then why so many hybrid mortgage products popping up all over the place.....normal practice of standard mortgages would be fine for potential buyers as this has been the way for decades.

If things are not broken then dont fix it........Sure things are real fine.....so many lemmings.

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These new financing products are one of the reasons why I think it may be different this time. They will introduce anything to make sure that initial affordability of new mortgages remains low enough. It's no good suggesting people are stupid to take them, people don't think that way.

If all houses were mortgaged using derivatived hedged loans there would be less resistance to a HPC since it would cost people less, and there would be less reason for a boom because there would be little to gain. It would seem to me this would encourage prices to come into line with costs.

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IMO your average joe is going to understand these new products even less than the current ones

Financial ignorance has sustained HPI afterall...

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COULD BE GOOD:

In return for a much lower rate, selling all option on house price appreciation to the lender

Assuming the terms are right, it could make good sense

In the sense that it would be like a long term lease, with security of tenure and fixed monthly cost ad infinitum?

That sounds perfect for me.

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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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