Local Estate Agent Story...

[RJG18]

While visiting the parents yesterday I got an interesting story from them about a young (20-something) estate agent in our area.

My parents know his parents, and apparently the chap accepts that the market is very difficult and there are too few buyers, and that no-one can afford to buy. So with that said, the bloke has now borrowed a huge deposit from his parents, who have remortgaged their own house to raise it for him, and has used it to buy a flat for which the mortgage repayments come to almost exactly 100% of his take-home income. He will now live off credit cards, etc, to cover the costs of living, and apparently is quite relieved that he has made it onto the ladder (presumably felt it was a risk worth taking to avoid "missing the boat" ? ).

I must admit I was pretty shocked to hear this. It's one thing for an estate agent to try to trick buyers with this sort of thing, but to actually practice the insanity that you're preaching is another matter. I can assume that he was probably pressurised to "get on the ladder" by his parents, but even so..... you'd have to be quite stupid.

[BigDipper]

While visiting the parents yesterday I got an interesting story from them about a young (20-something) estate agent in our area.

My parents know his parents, and apparently the chap accepts that the market is very difficult and there are too few buyers, and that no-one can afford to buy.  So with that said, the bloke has now borrowed a huge deposit from his parents, who have remortgaged their own house to raise it for him, and has used it to buy a flat for which the mortgage repayments come to almost exactly 100% of his take-home income.  He will now live off credit cards, etc, to cover the costs of living, and apparently is quite relieved that he has made it onto the ladder (presumably felt it was a risk worth taking to avoid "missing the boat" ? ).

I must admit I was pretty shocked to hear this.  It's one thing for an estate agent to try to trick buyers with this sort of thing, but to actually practice the insanity that you're preaching is another matter.  I can assume that he was probably pressurised to "get on the ladder" by his parents, but even so..... you'd have to be quite stupid.

<{POST_SNAPBACK}>

Well at least he can claim to talk the talk and walk the walk

[Mart]

100% of his take-home ?? Sorry, how long does he think he can last on credit cards? £500 pcm on bills, food and general living expenses will be £6K in 12 months !!!

[Culpability Brown]

Bankruptcy is the only plausible outcome for this idiot.

[right_freds_dead]

a sad story

[RJG18]

I agree that the only outcome for this individual is disaster. But it's amazing that the stupid behaviour is only now recognised for the idiocy that it is. A year or two ago the majority opinion in the UK seemed to be that a young person MUST get on the ladder at any price, to avoid being left behind and priced out forever. There are tens of thousands of people in the UK who are now in the same position as this sorry individual. People who are paying the vast majority of their takehome income to service the mortgage on a tiny property that they overpaid for, and at the time were told that it was the prudent thing to do, while all the time running up ever increasing debt levels on credit cards to cover the cost of living.

They were told by everyone (parents, friends, the bedia, BBC, estate agents, financial advisers, so-called economists) that "property never goes down", and "there's a gorwing shortage of property, buy now before it's too late", "don't worry about overpaying now, as the profits you make will soon cover it... I paid £10,000 for my house in the 1970's and now it's worth £650,000..... etc"

[he who dares]

I can see this poor chap scavenging for food in his neighbours dustbins in the next couple of months when those ir's start to rise and his take home pay no longer covers his mortgage and he can no longer move his debt around on 0% credit cards.

Paying for his monthly living expenses on credit???????

He will not be able to carry that on for long.

We are truly living in crazy times.

[29929BlackTuesday]

Jaw -dropping story.

A friend of mine who lost money in the last crash has just bought a house for way more than he can afford - Way More.

I've been trying to explain the state of things to him (and he agreed, even coming up with examples including his own experience) but in my absence he has been 'got at' by colleagues and 'friends' and has relented.

I'm actually sad about it because this bloke is as lovely and trusting as the day is long and is now in trouble. His mortgage EVEN WITH INTEREST RATES AS LOW AS THEY ARE is too much to give him any leeway at all. Can't afford to go out at all.

It's poor devils like this who are the sad story in this debacle. Like civilian casualties.

Happy May Day for yesterday (or Happy Beltane if you follow English Folk traditions) by the way!

[RJG18]

Paying for his monthly living expenses on credit???????

<{POST_SNAPBACK}>

I don't think this is as rare or shocking as it sounds. I know of quite a few people who seem to, towards the end of each month rely on the credit card to pay for the supermarket shopping. And I would think that paying for "exceptional/one-off" bills on the credit cards is now the norm. If you find a "Joe-average" family and ask them what they would do if the Ford Focus developed a fault and had, say, a £600 repair bill, I would bet the majority would pay this on their credit card, with no plan or timescale as to how or when to pay it off. They simply would have no other option.

I also think we're now seeing this with regular bills. As people phone bill, gas bill etc, come in, I think people seem to be relying more and more on credit cards to cover such basic living expenses.

[Marina]

He will be redundant in 6 months and then will either sell advertising space on commission or will become a recruitment consultant (on commission).

I worked above a recruitment agency a few years ago. You wouldn't believe the things they got up to. Every now and then a roar would go up as a bell was rung. If you did a deal you got up and rang the bell - everyone roared and applauded.

One morning the boss took all the poor saps out into the car park. They hadn't been performing apparently. We looked out of the top windows at them in amazement. Apart from shouting at them like a drill serjeant - things like 'WHAT DO WE NEED TO DO? and them all shouting like Pavlov's dogs 'TRY HARDER!' and similar drivel, at the end he made them do what I can only describe as 'the funky chicken' round the car park to humiliate them and presumably to fire them up.

How much more are young people prepared to swallow?

[Bathsheba Everdene]

The problem comes when people are just paying off interest (or just making the minimum payment each month) but have no realistic prospect of ever paying off the debt itself. It still has to be repaid one day, even if you manage to move it from one 0% interest deal to another (while those deals are still available -- I've heard they're all going to come to an end soon).

[zzg113]

My parents know his parents, and apparently the chap accepts that the market is very difficult and there are too few buyers, and that no-one can afford to buy. So with that said, the bloke has now borrowed a huge deposit from his parents, who have remortgaged their own house to raise it for him, and has used it to buy a flat for which the mortgage repayments come to almost exactly 100% of his take-home income. He will now live off credit cards, etc, to cover the costs of living

There is nothing sad about this story. The bloke is a complete £ucking idiot. The parents are of course complicit in his stupidity.

[Nomadd]

There is nothing sad about this story. The bloke is a complete £ucking idiot. The parents are of course complicit in his stupidity.

<{POST_SNAPBACK}>

Correct. But the really 'sad' thing is that there are so many idiots like this about. Hence crazy house prices...

Nomadd

[zzg113]

Correct. But the really 'sad' thing is that there are so many idiots like this about. Hence crazy house prices...

Nomadd

<{POST_SNAPBACK}>

Agreed. Not so long ago, if a lender had found out that his deposit was 100% borrowed, they would have told him to p1ss off (as it would effectively take his loan to 100% LTV). I really feel the case for strong controls on mortgage lending is very compelling.

Edited May 2, 2005 by zzg113

[he who dares]

I don't think this is as rare or shocking as it sounds.  I know of quite a few people who seem to, towards the end of each month rely on the credit card to pay for the supermarket shopping.  And I would think that paying for "exceptional/one-off" bills on the credit cards is now the norm.  If you find a "Joe-average" family and ask them what they would do if the Ford Focus developed a fault and had, say, a £600 repair bill, I would bet the majority would pay this on their credit card, with no plan or timescale as to how or when to pay it off.  They simply would have no other option.

I also think we're now seeing this with regular bills.  As people phone bill, gas bill etc, come in, I think people seem to be relying more and more on credit cards to cover such basic living expenses.

<{POST_SNAPBACK}>

I agree with you rjg about people paying for bits and bats on their cc's but his whole monthly expenditure??? MADNESS.

My story was similar to what you say, up until we had kids the wife and i were doing fine and dandy bought our second house, 3 bed semi for 65k in 1999(never in debt, always lived within our means and always had savings to fall back on, oh and both had cc's but never used them, probably had a £500 limit on them back then! circa 98/99)

Fast forward to 2004 and two kids later and we were slowly going under bit by bit, not because we were living an extravagant lifestyle, simply that the cost of everyday living and bringing up kids was beginning to skyrocket and we had found our selves on the 0% cc merry go round, juggling 2k from one to the other but paying it off slowly.

The point being is that i am on an "average" wage (for the north anyway) the wife was a senoir microbiologist on "average wage" but even we were slowly going under, what with exhorbitant nursery fees, petrol bills/cost of running 2 cars (we lived way up in the hills so running a car costs a fortune)council tax going up and yes monthly mortgage payments going up because we had to mew twice (simply to pay back some debt accrued, not to buy a plasma tv or a caribbean cruise)

The thing is we just could not win after having the second child as both of us working full time it was putting strain on us as a family and the costs of full time nursery and the before and after school/holiday clubs for our eldest was crippling us, so we figured that us both working was a waste of time as we were only about £100 per month better off. So the wife gave up working and we were in the situation where my monthly wage was swallowed by everday household expenditure but if we needed to repair the car or the car insurance was due, yep you guessed it we banged it on the cc.

As we were struggling I wonder how people do it who have much lower paying jobs? Probably struggling just as much as us or more so.

The solution?

Sold up in dec 04 and str'd/banked the cash and am waiting for some sanity to return to the uk.

I appreciate that in the early years of having a young family you are expected to struggle a bit but not when you are both working, struggle on a single income yeah, thats what my parents did but not on two ok wages, the whole system is fcuked up and you cannot win either way.

If you own a house and have kids in the uk they have got you exactly where they want you-By the BO11OCKS and it is only getting worse.

[No Muggy Bear]

I agree with you rjg about people paying for bits and bats on their cc's but his whole monthly expenditure??? MADNESS.

My story was similar to what you say, up until we had kids the wife and i were doing fine and dandy bought our second house, 3 bed semi for 65k in 1999(never in debt, always lived within our means and always had savings to fall back on, oh and both had cc's but never used them, probably had a £500 limit on them back then! circa 98/99)

Fast forward to 2004 and two kids later and we were slowly going under bit by bit, not because we were living an extravagant lifestyle, simply that the cost of everyday living and bringing up kids was beginning to skyrocket and we had found our selves on the 0% cc merry go round, juggling 2k from one to the other but paying it off slowly.

The point being is that i am on an "average" wage (for the north anyway) the wife was a senoir microbiologist on "average wage" but even we were slowly going under, what with exhorbitant nursery fees, petrol bills/cost of running 2 cars (we lived way up in the hills so running a car costs a fortune)council tax going up and yes monthly mortgage payments going up because we had to mew twice (simply to pay back some debt accrued, not to buy a plasma tv or a caribbean cruise)

The thing is we just could not win after having the second child as both of us working full time it was putting strain on us as a family and the costs of full time nursery and the before and after school/holiday clubs for our eldest was crippling us, so we figured that us both working was a waste of time as we were only about £100 per month better off. So the wife gave up working and we were in the situation where my monthly wage was swallowed by everday household expenditure but if we needed to repair the car or the car insurance was due, yep you guessed it we banged it on the cc.

As we were struggling I wonder how people do it who have much lower paying jobs? Probably struggling just as much as us or more so.

The solution?

Sold up in dec 04 and str'd/banked the cash and am waiting for some sanity to return to the uk.

I appreciate that in the early years of having a young family you are expected to struggle a bit but not when you are both working, struggle on a single income yeah, thats what my parents did but not on two ok wages, the whole system is fcuked up and you cannot win either way.

If you own a house and have kids in the uk they have got you exactly where they want you-By the BO11OCKS and it is only getting worse.

<{POST_SNAPBACK}>

Oh yes, my point exactly in all this madness. You have hit the nail on the head for me.

My peers always say that by getting caught up in the joint salary mortgage that you can get the house you want. But you have to sacrifice the chance to have kids. There is no way I am working full time to be £100 better off per week. doen't make sense. Glad to hear you did something about it. A lot of people plod along and accept the situation as the norm. I thought that getting a good job (as a woman) would make my future family better off. But the times have changed where the extra income earned by the woman is already well accounted for and makes little difference. Why does it cost £500 per child at nursery (cos we can afford it?) no! Its a big chunk of your salary (one third if you earn £25k pa). Nurseries must be raking it in!

[Gen-X]

Oh yes, my point exactly in all this madness. You have hit the nail on the head for me.

My peers always say that by getting caught up in the joint salary mortgage that you can get the house you want. But you have to sacrifice the chance to have kids. There is no way I am working full time to be £100 better off per week. doen't make sense. Glad to hear you did something about it. A lot of people plod along and accept the situation as the norm. I thought that getting a good job (as a woman) would make my future family better off. But the times have changed where the extra income earned by the woman is already well accounted for and makes little difference. Why does it cost £500 per child at nursery (cos we can afford it?) no! Its a big chunk of your salary (one third if you earn £25k pa). Nurseries must be raking it in!

<{POST_SNAPBACK}>

My partner is a nursery nurse, I can tell you the staff barely get above minimum wage.

The main reason is the government sets the ratios of qualified staff to children, i.e. 1 member of staff per 3 under 2's

Therefore maximum revenue of £1500 per month for each staff. Take out national insurance, building costs, insurance, equipment, building leasing, it does not leave much left.

[he who dares]

No Muggy Bear, it is rubbish isn't it? You simply get to the stage where you think is it worth it? all this rushing around/stress/hassle/missing out on watching your kids grow up, all for a few quid a month extra for grabber gordon to squeeze a bit more tax out of.

Well we are not playing the game anymore, family is more important.

That is a fair point gen x.

The problem being is hard working families having the mum forced back to work as they cannot survive any other way, it's only after a couple of months when you tot your finances up that you realise you are working effectivley for nothing.

£500 a month for nursery fees is extortion as if you are a homeowner on the "average wage" you get pretty much nothing back in tax credits etc as you are always just above the threshold for qualifying for any worthwhile benefits.

The wholechildcare/taxation system under labour is totally biased as the average earner is getting taxed more and having his/her own personal wealth redistributed to sandra slapper who sits on her ar5e all day popping out kids for a hobby and claiming for all she is worth!

I totally agree with you about third world wages for the nursery nurses it is scandalous, these girls are doing a great job looking after our children and being paid a pittance. How come it is so much better in sweden/norway etc they have got the whole childcare system sussed, Why is it the uk is happy sending kids into the arms of strangers from morn till night with barely a glimpse of their guilt ridden mum who is FORCED back into being a wage slave.

We are breeding a generation that will be emotionally crippled by being abandoned at birth and shoved into the arms of a stranger and for what???

So mum and dad can just about put a roof over their heads.

Thank you very much Mr.Blair/Brown for the wonderfully strong uk economy that puts profit before people.

Edited May 2, 2005 by he who dares

[Pudniw]

As Dr. Bubb points out, you don't need any qualifications to become an EA, if I remember right you could have a criminal record and still play a part in someones biggest financial decision.

I know an EA like that, about 21 and too daft to understand what a slow market will mean to his job security. Wonder what his finances will be like in 4 years time?

[Nelly]

I have never ever heard of anything as stupid as this story. I have no sympathy what so ever for him or his ridiculous parents. I still cant beleive what i've read.

[Loanshark]

I have never ever heard of anything as stupid as this story. I have no sympathy what so ever for him or his ridiculous parents. I still cant beleive what i've read.

<{POST_SNAPBACK}>

A young impressionable man working as an EA durring a boom without property must have been under a lot of pressure to join the party.