EmpiricalBear Posted June 26, 2008 Share Posted June 26, 2008 Neighbour of mine, nice lady but married to a tradesman with a side business in BTL (he has quite a few grr). When married they hung on to her other house... I was aware she was thinking of selling but hubby believes that 'you can't go wrong with property'. Last year they went on three expensive holidays (MEW? I wonder). Last night she told me, shock horror, that her mortgage had just gone up 50%. She was on a 2 yr fix with good old Northern Rock. So, self employed guy... heading into a recession. Family owns too many homes. Drive gas guzzling pick up for work purposes. Mortgage up £500 per month, maybe more on the PPR, petrol up, leccy up. Guess what. No holiday this year! How many folks are there like this, who have far too many properties. Will they let the mantra that 'property always goes up' drag them into years of penury. There are many bankrupts to come I think. There is going to be an epidemic of them. Quote Link to comment Share on other sites More sharing options...
Hector's House Posted June 26, 2008 Share Posted June 26, 2008 We have one young chap here in the office already on a Debt Management Plan (MEWed to buy a caravan and then a large car to pull it around with as well as other debt like credit cards. He came unstuck cus the loans for the car and van were secured against his property and the mortgage lender started action after not getting a payment for 7 months). Another was one of the few who got a payrise or the yearly bonus and is still moaning that he can't get together the £1k he needs for a holiday he's going on in a couple of weeks. He's got close of £20k of debt (souped up car etc.) with no assets and has realised he's a long way from being able to afford to get on the property ladder. Both these lads have taken to gambling. A friend who has been into BTL for years has just admitted he'd wished he'd listened to my warnings a couple of years ago and not leveraged what he did have to buy more properties. At least he's finally realised which way the wind is blowing and I hope he can hang on to what he's got without rental voids sending him to the wall. It's all sad to see when you're close to it and I just thank God I managed to get rid of my debts in recent years. I can see this credit crunch getting very nasty for a lot of people. Quote Link to comment Share on other sites More sharing options...
Shiney Posted June 26, 2008 Share Posted June 26, 2008 A close friend of mine does the books for a BTL landlord with over 20 properties. Friend is actively looking for a new job. Quote Link to comment Share on other sites More sharing options...
juvenal Posted June 30, 2008 Share Posted June 30, 2008 Neighbour told me yesterday of a friend of hers, who has just told her she's gone into bankruptcy. The woman is question originally bought her right-to-buy council house for £18K. She's been MEWing for years, as the value of the house went steadily up. Now mortgage resets at higher prices, plus credit card debt has caught her out. Neighbour said the woman only ever had a modest job, but spent like someone who was well off. Now she's in rented accomodation and draws Housing Benefit. At the age of 60. Neighbour was shocked at all this, and resented the 'benefits' aspect. Why should the rest of us pay for stupid spending habits? How many more are there out there like this one? Quote Link to comment Share on other sites More sharing options...
Jim B. Posted July 1, 2008 Share Posted July 1, 2008 Neighbour told me yesterday of a friend of hers, who has just told her she's gone into bankruptcy. The woman is question originally bought her right-to-buy council house for £18K. She's been MEWing for years, as the value of the house went steadily up. Now mortgage resets at higher prices, plus credit card debt has caught her out. Neighbour said the woman only ever had a modest job, but spent like someone who was well off. Now she's in rented accomodation and draws Housing Benefit. At the age of 60. Neighbour was shocked at all this, and resented the 'benefits' aspect. Why should the rest of us pay for stupid spending habits? How many more are there out there like this one? Where I live it's a not a very affluent area yet everyone seems to have expensive cars, all the latest gadgets and so on. I expect there are millions of traditionally 'poorer' families that have been living above there means for the last ten years based on taking equity out. Quote Link to comment Share on other sites More sharing options...
delboypass Posted July 1, 2008 Share Posted July 1, 2008 Bloody hate benefits to catch all the idiots And paying taxes...giving money to a loony bin gordon brown to p1ss all over the world with nothing in return.. How i despise this Government, the last 10 years and lower classes, benefit theiving scum... 24 weeks is all anyone should get in a 2 year period and child benefit for up to 2 children only... Freaking taxes and death are all im guaranteed + ripped off by incompetent over paid w4nkers. Quote Link to comment Share on other sites More sharing options...
Tiger Woods? Posted July 1, 2008 Share Posted July 1, 2008 Neighbour told me yesterday of a friend of hers, who has just told her she's gone into bankruptcy. The woman is question originally bought her right-to-buy council house for £18K. She's been MEWing for years, as the value of the house went steadily up. Now mortgage resets at higher prices, plus credit card debt has caught her out. Neighbour said the woman only ever had a modest job, but spent like someone who was well off. Now she's in rented accomodation and draws Housing Benefit. At the age of 60. Neighbour was shocked at all this, and resented the 'benefits' aspect. Why should the rest of us pay for stupid spending habits? How many more are there out there like this one? Stupid? Sounds clever to me...given the current system. She's probably better off than if she had been frugal and not eaten into her housing equity. If you set up a system that rewards this sort of behaviour, what does one expect people to do? Quote Link to comment Share on other sites More sharing options...
Mikhail Liebenstein Posted July 2, 2008 Share Posted July 2, 2008 (edited) I've run into at least 3 bridging loan disasters. There seems to be a certain arrogance in Surrey, that somehow its special and prices can't go down, and so if you must have that new house, buy it now and worry about selling the old one later. Having been to look at a few house and also knowing some people who've done this, I can confirm that they are being right royally screwed by the credit crunch. Lesson number 1: never take out a bridging loan in a falling market. Seriously, given the 20% falls already in the less sellable properties (and some of these are less sellable) and given the large numbers involved (typical nice surrey 4/5 bed is circa £800-£1m), I fully believe that some of these people have already lost at least £300-400k in the combined equity of the 2 properties. To make it worse they all seem to have bought the new house in the tail end of 2007 and are now straddled as they are still selling in mid 2008. Ouch edited: added a t to bought Edited July 2, 2008 by mikelivingstone Quote Link to comment Share on other sites More sharing options...
The Conveyancer Posted July 2, 2008 Share Posted July 2, 2008 I've run into at least 3 bridging loan disasters. There seems to be a certain arrogance in Surrey, that somehow its special and prices can't go down, and so if you must have that new house, buy it now and worry about selling the old one later.Having been to look at a few house and also knowing some people who've done this, I can confirm that they are being right royally screwed by the credit crunch. Lesson number 1: never take out a bridging loan in a falling market. Seriously, given the 20% falls already in the less sellable properties (and some of these are less sellable) and given the large numbers involved (typical nice surrey 4/5 bed is circa £800-£1m), I fully believe that some of these people have already lost at least £300-400k in the combined equity of the 2 properties. To make it worse they all seem to have bought the new house in the tail end of 2007 and are now straddled as they are still selling in mid 2008. Ouch edited: added a t to bought I have never recommended a client take out a bridging loan in any type of market. No house is that wonderful to take such a huge risk Quote Link to comment Share on other sites More sharing options...
Telometer Posted July 2, 2008 Share Posted July 2, 2008 I have never recommended a client take out a bridging loan in any type of market. No house is that wonderful to take such a huge risk This thread has made me feel quite sick. Ouch. I feel sorry for poor people in that situation. It's not particularly sensible, but nobody could ever predict WHEN prices were going to tank. (People on here have been predicting it for half a decade, and people have t o get on with their lives.) Quote Link to comment Share on other sites More sharing options...
Dubai Posted July 4, 2008 Share Posted July 4, 2008 I have a mate who wanted to buy in the South of England (yeah, I know, but he's not investing, more putting down roots). He had a 20% deposit, and after knocking off 30k from asking, needed to borrow just short of 4x his gross. The bank (HSBC) knocked him back..... saying the loan was "unaffordable". This is good news as it indicates a sense of normalcy returning to the housing market. I think he had a lucky escape (he's decided to carry on renting), and it will stop desperate FTB's making foolhardy commitments that will cripple them later. All in all.... good news. Quote Link to comment Share on other sites More sharing options...
ianbeale Posted July 5, 2008 Share Posted July 5, 2008 We have one young chap here in the office already on a Debt Management Plan (MEWed to buy a caravan and then a large car to pull it around with as well as other debt like credit cards. He came unstuck cus the loans for the car and van were secured against his property and the mortgage lender started action after not getting a payment for 7 months).Another was one of the few who got a payrise or the yearly bonus and is still moaning that he can't get together the £1k he needs for a holiday he's going on in a couple of weeks. He's got close of £20k of debt (souped up car etc.) with no assets and has realised he's a long way from being able to afford to get on the property ladder. Both these lads have taken to gambling. A friend who has been into BTL for years has just admitted he'd wished he'd listened to my warnings a couple of years ago and not leveraged what he did have to buy more properties. At least he's finally realised which way the wind is blowing and I hope he can hang on to what he's got without rental voids sending him to the wall. It's all sad to see when you're close to it and I just thank God I managed to get rid of my debts in recent years. I can see this credit crunch getting very nasty for a lot of people. much as it saddens me to say gambling is probably better than buying a 185k house that is loosing about 60quid a day Quote Link to comment Share on other sites More sharing options...
Dunspeculatin Posted July 5, 2008 Share Posted July 5, 2008 Local anecdotal: Family on £32k pa, 6 kids, frequent mewers to top up the wages and pay off accumulated credit card and other debt. Last house valuation £265k, current realistic valuation £220k if they're lucky, last remortgage refused so necessitating a secured loan with Firstplus. Got to survive on salary now and pay the debts too - only a matter of time until they go under. Amateur btl and developer, bought run down house overpriced at £350k at top of the market last summer, done about £60k worth of work, can't afford to finish it, can't sell it, can't afford to keep living in it. Had dreams of selling it for half a million with solar panels and all mod cons; that was last year - the reality is, having dug out a driveway to block-pave, it's now filled with shingle. Tried to sell btl in January, much price reducing and 3 months later no sale and no rent for 3 months, back to looking for tenants - scewered on all fronts, yet another candidate for the Personal Insolvency website. Finally, local ea and partner have just put their house on the market having reserved 2 villas off-plan in a development in Africa intending to live in one and rent the other out and live off the proceeds. After hefty deposits, they have to come up with 2 lots of £100k in a year's time to complete the deal yet the house is on at last year's price plus £20k. These two are really nice people, we don't want anything bad to happen to them but what can you do? They just don't understand and one of them is in the business for chrissakes - I just hope they pull it off even though in my heart of hearts I think they're scewered too - very sad. It is all very very sad Quote Link to comment Share on other sites More sharing options...
worried Posted July 6, 2008 Share Posted July 6, 2008 friend bought house in Jan08 is struggling, already needs a mortage holiday!!!! has no money left for basics like FOOD! Quote Link to comment Share on other sites More sharing options...
kiwi Posted July 6, 2008 Share Posted July 6, 2008 (edited) ****** em buy their house at repo auctions on the cheap... seriously cant feel sorry for anyone who plays margin game without understanding it.... labour is screwed they will get the blame here. this is going to be a classic. Edited July 6, 2008 by kiwi Quote Link to comment Share on other sites More sharing options...
Miss Madam Posted July 7, 2008 Share Posted July 7, 2008 Anecdotal one: a couple I know bought on a two year fixed, the mortgage comes up for renewal in October. They stretched themselves in a massive way to get on the ladder, because, you guessed it, if they didn't do it then, they would miss the boat... He is a software developer, good money, she is a nurse, on very low wage. The only house they could afford necessitates a 30 mile a day commute for each of them (he on the train, she in the car). Travelling with them to a friends' party this weekend we were discussing their situation, they are really struggling now (too much month left at the end of their salaries) apparently they'll be fine as long as petrol prices and the gas bill don't go up this winter. So no worries there then. I really felt like asking them if they watched the news. Anecdotal two: a good friend of mine is a fine craftsman who has done a great deal of work on other people's houses to help them flip for a profit, after five years of this - watching the owners make a packet, he decided to do this for himself and use his skills to do a house up and make a profit for himself. He stretched himself on a liar loan (he's self employed), interest only, and can barely afford to buy materials to finish the house. He now realises that the house is worth less than when he bought it, and even after its been tarted up, he'll be lucky to break even, so he's looking at renting it out, but to cover his costs he needs to charge £600 a month per bedroom! I can't help but think that this one isn't going to end well... I could think of two or three other examples.... Quote Link to comment Share on other sites More sharing options...
greenalien Posted July 7, 2008 Share Posted July 7, 2008 The only house they could afford necessitates a 30 mile a day commute for each of them (he on the train, she in the car) If they invest in a small motorcycle/scooter each, they'll save a fortune... Quote Link to comment Share on other sites More sharing options...
Home_To_Roost Posted July 10, 2008 Share Posted July 10, 2008 This guy keeps phoning me up, and asking if I need my carpets cleaned . Work is hard to come by. Quote Link to comment Share on other sites More sharing options...
Mikhail Liebenstein Posted July 10, 2008 Share Posted July 10, 2008 (edited) A couple I know hadn't sold their first house, but having fallen in love with a property in the madness of last summer decided to go on bridging loan funded purchase splurge. The second house was double the price of the original property, but was partially funded through some inherited money, about £700k in cash. Now they can't sell the first house and it transpires that almost everyone I know who has seen the new house reckons they have overpaid for it by about £350k - classic builders house I'm afraid. So currently they are sitting on what they believed was about £2.2m worth of property. Anyway they have dropped the price of first house by £120k and given that the second house is almost certainly worth under a million, I reckon their £2.2m is actually more like £1.7m with about £1.1m of mortgages - all before any further falls. So in summary they have so far effectively wiped out the equity in their first home, plus £100k of the inherited money. Of course that is assuming the modest falls so far seen in the index; if in practice the falls needed to clear the unsold stock are 25-30% more, then I predict they'll be wiped out. So bye bye inheritance and hasta la vista 10 years worth of equity. That's a crunch!!!!! Edited July 10, 2008 by mikelivingstone Quote Link to comment Share on other sites More sharing options...
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