Wednesday, April 18, 2007

Sub-prime creativity made in UK

Rent-a-room mortgage launched

This is much beyond simply scraping the bottom of the barrel! This is criminal mis-selling! On the fun side, mortgage lenders will never stop amazing me for their creativity and spin ability.

Posted by confused76 @ 05:09 PM (474 views)
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7 thoughts on “Sub-prime creativity made in UK

  • “Borrowers need a minimum salary of £25,000 and can borrow up to 4.25 times their income if single, or 3.25 if in a partnership. The rent-a-room allowance means a £25,000 income is counted as £29,250, allowing a single person to borrow £124,312”

    Yeah, and 124K will get you lots of two bedroom properties these days in the south.

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  • I think rent-a-bunk is next!

    Imagine the spin.
    With concern growing over the state of the first time buyer market and the amount of money new homeowners are prepared to borrow, John Charcol has launched a new rent-a-bunk mortgage to help consumers get more safely onto the property ladder.
    The new style mortgage will allow prospective purchasers priced out of the property market to stack a single room full of bunk-beds and rent out bed space.
    This is a great way for priced out first-time-buyers to get on the property ladder said Jeremy Vine of Earley bird catches the worm investmentz. Vine said, “its possible to get at least 4 dozen Poles in your average double bedroom. They’re quite thin don’t you know”!

    I actually quite like Charcol as they were very approachable when I wanted to borrow money to open premises for my own urine extraction facility.

    It would appear that the “rent-a-room” scheme is a glossy way of saying the property market is well and truly Fuck*d.

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  • Mr Plumbase says:

    Whatever next! £40,000 beach huts!

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  • fahrenheit451 says:

    And what happens when the girlfiend upgrades to fiancee, with a view to self destruct if not improved to wife + baby.
    (Sorry if it a bit MCP but taken from the original joke-room).
    Rent-a-room goes out the window, wife + baby move in – all hell brakes loose.

    Sub-Prime … Sub-Prime … Sub-Prime … here we go again …

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  • Yep – will work to some degree – until Gordon Brown changes his mind and removes this tax exemption.

    Scheme was originally brought in to assist Key Workers who lived out of a metropolitan area and worked odd hours – so when commuting could rent a more local room.

    There are no figures as to how popular this actually is and whether it does any good.

    Can see it being popular for University towns though – so not all bad I guess – but rent would only be for 35 weeks rather than 52.

    So £81 a week for 52 weeks or £121.50 a week for 35 weeks. I wouldn’t pay £121 a week for rent – would you?

    The maths doesn’t add up either – why would a FTB have a desirable property with enough rooms in the right location to warrant letting a room out to a stranger? And there is no gaurantee of a solid income stream from renting – which means the so called extra income of £4,00 would actually not be there and would have to be covered by the FTB – leading to one stressed out FTB!!!!

    Bad logic!!

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  • So, the point of renting out a room is because you’ve borrowed 4+ times your earnings and are therefore struggling to make the repayments without getting some extra income in.

    So, now, this mortgage company allows you to include this extra income in your salary multiple, so you’re borrowing even more money and so your payments are even higher and so the benefit of having a lodger is in fact totally negated. Cool – more people buying who really can’t afford it and they can’t even get a lodger in when things get dicey, because they’ve already done it! They could let out their own bedroom and sleep in the shed I suppose…

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  • dohousescrashinthewoods says:

    If people are doing this already then surely it is already a feature of current levels of borrowing.
    Isn’t adding it on “double-counting”?

    On a different tack, if this is tax free cash, can one “rent a room” to someone who doesn’t seriously live in the house?
    Plenty of people need to rent somewhere for tax and postal purposes. £350 a month is cheaper than a “real” place you don’t live in and makes nice tax-free income for the owner.
    Surely such an idea has been tried and busted?

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