Jump to content
House Price Crash Forum
Sign in to follow this  
tomedd

Mew Explanation Please

Recommended Posts

Guest Charlie The Tramp
Hi all, excuse my ignorance, i'm new to this site, but could someone please explain what MEW stands for and what it is?

Ta.

Mortgage Equity Withdrawal.

Your mortgage is only let`s say £25k, your property is valued at £200k, you remortgage for £125k and hey presto you have a £100k to spend as you like.

The problem is you have to pay the £125k back. ;)

Share this post


Link to post
Share on other sites
The problem is you have to pay the £125k back. ;)

No you don't. Because the house will double in value again over the next 7 years. At which point it is worth 400k and you only owe £125k, so you remortgage to owing 225k.

And 7 years after than the house will be worth 800k, so you remortgage to £425k.

And 7 years after that (so 2029) it will be worth 1.6m, so you can take another million out.

And 7 years after that... you get the idea. MEW is the most amazing, fantastic, superb invention ever. It means nobody need ever work again because house prices will keep on going up, forever.

It's slightly unfortunate if you don't own the house, but you'll be OK because Gordon won't let house prices go up.

HTH!

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
It's slightly unfortunate if you don't own the house, but you'll be OK because Gordon won't let house prices go up.

Is that a Typo ? :unsure:

Share this post


Link to post
Share on other sites
Is that a Typo ? :unsure:

Nope nu-labour have now replaced the word 'down' with 'upless' black is officially white in Air strip One's third most populous province of Oceania.

Edited by enrieb

Share this post


Link to post
Share on other sites
Is that a Typo ? :unsure:

No.. GB said in a seech in 1997 that a part of the stability of the country was stable house prices so he wouldn't let them go up. Stupidly I believed him, and waited until 2002 to buy. Grrr.

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable
No you don't. Because the house will double in value again over the next 7 years. At which point it is worth 400k and you only owe £125k, so you remortgage to owing 225k.

And 7 years after than the house will be worth 800k, so you remortgage to £425k.

And 7 years after that (so 2029) it will be worth 1.6m, so you can take another million out.

And 7 years after that... you get the idea. MEW is the most amazing, fantastic, superb invention ever. It means nobody need ever work again because house prices will keep on going up, forever.

It's slightly unfortunate if you don't own the house, but you'll be OK because Gordon won't let house prices go up.

HTH!

Now I know how it works, I'll be rich in no time.

Share this post


Link to post
Share on other sites

MEW means my house is worth mega amounts...I want the money it has made me now to spend, I was wise, I was clever I made myself so much money from doing nothing and buying at the right time...I want to spend it, now I can buy a big car, a home in Spain, a BTL I am rich, rich, rich nobody can take that away from me. :unsure:

Share this post


Link to post
Share on other sites
No you don't. Because the house will double in value again over the next 7 years. At which point it is worth 400k and you only owe £125k, so you remortgage to owing 225k.

And 7 years after than the house will be worth 800k, so you remortgage to £425k.

And 7 years after that (so 2029) it will be worth 1.6m, so you can take another million out.

And 7 years after that... you get the idea. MEW is the most amazing, fantastic, superb invention ever. It means nobody need ever work again because house prices will keep on going up, forever.

It's slightly unfortunate if you don't own the house, but you'll be OK because Gordon won't let house prices go up.

HTH!

Sorry, but that is rubbish.

If your house doubles in value, in theory you can increase your mortgage

and borrow more against it.

But in practice, you're limited by how much you can pay back. My house is

supposedly worth 4x what I paid for it, but my salary hasn't gone up 4x

so I can't borrow more without crippling payments. Perhaps people

can't do simple maths anymore?

Share this post


Link to post
Share on other sites
Sorry, but that is rubbish.

If your house doubles in value, in theory you can increase your mortgage

and borrow more against it.

But in practice, you're limited by how much you can pay back. My house is

supposedly worth 4x what I paid for it, but my salary hasn't gone up 4x

so I can't borrow more without crippling payments. Perhaps people

can't do simple maths anymore?

I think the post was satirical.

Share this post


Link to post
Share on other sites
Sorry, but that is rubbish.

If your house doubles in value, in theory you can increase your mortgage

and borrow more against it.

But in practice, you're limited by how much you can pay back. My house is

supposedly worth 4x what I paid for it, but my salary hasn't gone up 4x

so I can't borrow more without crippling payments. Perhaps people

can't do simple maths anymore?

Maths doesn't come into it, it is not what you can pay, it is how much you can make the people that lend it. ;)

If you can't pay it they can take it. ;)

Share this post


Link to post
Share on other sites

well thanks for your replies folks, and there i was, working for a living, I didn't realise making money was as easy as that.

I've just writen my resignation letter which i'll hand in on monday, then off to the bank.

Does anyone know the best place to buy 48 inch plasm screens from?

I suddenly feel a warm glow originating from somewhere in the wallet region.

I'm off out now to celebrate my new found wealth.

Cheers.

ps. Is there any requirement to pay back this free MEW money or does it keep regenerating itself indefinetly.

Share this post


Link to post
Share on other sites

Basically someone who has seen their house "value" rise from £75,000 to £175,000 decides that they will borrow the "equity" in their house because now they obviously are £100,000 better off. What many people forget to factor in is that they have to pay interest on this money and total repayments on an adjustable rate mortgage over 25 years are likely to cost them anywhere between £210,000 and £250,000 although it could be even more (or possibly less - though this is looking highly unlikely!). And then there's the chance that only a few years after MEWing the £175,000 house is only valued at £110,000.

Share this post


Link to post
Share on other sites

Once upon a time banks, building socities would only allow mew if it was ploughed back into the house - new roof, kitchen extension etc... the idea being that the extra lent money would add value to the property. Borrowing money via the mortgage is cheaper than other credit loans. Such loans often carried covenants that stated the loaned money could only be used for work agreed with the building society. Now however these loans against property can be used to finance holidays, new cars, plasma TVs etc... some would call this a slippery slope... I decline to comment...

Share this post


Link to post
Share on other sites
well thanks for your replies folks, and there i was, working for a living, I didn't realise making money was as easy as that.

I've just writen my resignation letter which i'll hand in on monday, then off to the bank.

ps. Is there any requirement to pay back this free MEW money or does it keep regenerating itself indefinetly.

Well you do have to pay it back at some point, but thanks the magic of house price appreciation you will be a squillionarie by the time you have to make the repayments so relax and buy more consumer products.

If only we had though of this in the 80s we could have remodeled our kitchens, built a loft conversion and made ourselves rich and spent our way out of recession.

Maybe we should promote Kirsty Allsop to international development minister, she could advise all the third world countries to paint their shanty towns in neutral colours, knock through the living room wall into the kitchen and convert the loft space into an extra bedroom. Third world debt would be eliminated overnight as hordes of btl investors snap up the bargain properties and as an added bonus bono would have to shut the ****** up.

Share this post


Link to post
Share on other sites

Maybe we should promote Kirsty Allsop to international development minister, she could advise all the third world countries to paint their shanty towns in neutral colours, knock through the living room wall into the kitchen and convert the loft space into an extra bedroom. Third world debt would be eliminated overnight as hordes of btl investors snap up the bargain properties and as an added bonus bono would have to shut the ****** up.

:lol::lol::lol::lol::lol:

Share this post


Link to post
Share on other sites
MEW means my house is worth mega amounts...I want the money it has made me now to spend, I was wise, I was clever I made myself so much money from doing nothing and buying at the right time...I want to spend it, now I can buy a big car, a home in Spain, a BTL I am rich, rich, rich nobody can take that away from me. :unsure:

...said in the voice of Humphrey Bogart in 'Treasure of the Sierra Madre' :lol:

Share this post


Link to post
Share on other sites
Sorry, but that is rubbish.

If your house doubles in value, in theory you can increase your mortgage

and borrow more against it.

But in practice, you're limited by how much you can pay back. My house is

supposedly worth 4x what I paid for it, but my salary hasn't gone up 4x

so I can't borrow more without crippling payments. Perhaps people

can't do simple maths anymore?

That's OK - as long as house prices go up each year by more than the interest on the mortgage, you can borrow against it to service the mortgage AND have spare cash to spend. So you never need to work at all - indeed, this scheme makes people who actually work for a living look a bit silly!

It's a bit like the way you can fly if you just stand in a box and lift it up.

Share this post


Link to post
Share on other sites

So is there any benefit of MEWing as opposed to a standard loan. Are the IRs lower as it is secured against the house?

Share this post


Link to post
Share on other sites
So is there any benefit of MEWing as opposed to a standard loan. Are the IRs lower as it is secured against the house?

Yes. In most cases people are not getting an extra loan, they are "just" increasing the LTV of their mortgage.

Example buy 100k house by borrowing 95k. House now "worth" 200k, borrow another 95k and you are back up to 95% LTV.

So getting extra cash at the mortgage rate.

A friend remortgaged last year to get a better deal and the call centre worker was surprised she didn't want any "cash back", the default call centre script was "and how much money do you want?".

Share this post


Link to post
Share on other sites
So is there any benefit of MEWing as opposed to a standard loan. Are the IRs lower as it is secured against the house?

Thats why so many people did it. MEW at 5-6% APR or whatever rate you could get. Problem is, you're spreading the cost of the loan over the period of the mortgage. I know someone who MEWed to go to Jamaica on holiday (?). It better have been a good one, he's paying for it for the next 20 years!

Ever noticed how many of these MEW adverts on TV seem to suggest:

"in debt? Have some more! While you're at it, have a new car! (Another depreciating asset)"

Share this post


Link to post
Share on other sites
well thanks for your replies folks, and there i was, working for a living, I didn't realise making money was as easy as that.

I've just writen my resignation letter which i'll hand in on monday, then off to the bank.

Does anyone know the best place to buy 48 inch plasm screens from?

I suddenly feel a warm glow originating from somewhere in the wallet region.

I'm off out now to celebrate my new found wealth.

Cheers.

ps. Is there any requirement to pay back this free MEW money or does it keep regenerating itself indefinetly.

I actually know of people who genuinely thought that they didn't have to pay it back. Much of the language used implied that MEW was free money - or money that you had already made. Terms like 'equity release' give the impression that your house has made this money all on its own and all you are doing is taking some of it out now, just like is was a post office savings account. The fact that you suddenly owed a whole lot more was somehow masked by the still affordable monthly payments - a result of steadily lowering interest rates. Only when interest rates start climbing again does it suddenly become apparent how deeply you've dug yourself into the do-do.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 295 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.