I1L2T3 Posted June 11, 2011 Share Posted June 11, 2011 I'm a fairly new buyer and can see the value of my house fall . What Will The bank do to help ? Am i thé only one ? What will the bank do to help? I'm really puzzled about that question. Why should they help you? Do you expect them to give you some free money to make up the difference? Do you want them to raid saver accounts to shore you up because you've made a financial mistake? Bottom line here is that there are too many people who fail to realise the gravity of the situation when they take out a mortgage. You are taking a long term loan out secured against the place you will probably need to live in for years and years. It's a legal, binding contract that should not be taken lightly and I really hate this attitude of people taking on huge financial risks and expecting others to bail them out when it goes wrong. Sorry for the rant but I just spent 3 years getting virtually no interest on my savings while the feckless are kept on life support in homes they could never have afforded in real life. And many of those people will have lied to get their mortgages anyway. :rant: Link to comment Share on other sites More sharing options...
John X Posted June 11, 2011 Share Posted June 11, 2011 And many of those people will have lied to get their mortgages anyway. :rant: Is this still the case? I would have thought they would have tightened up after the '80s. A mate of mine used to lie to his partner (in whose house he lived) about how much he earned as a motorcycle dispatch rider, so she suggested he buy half of her house to show commitment. He was pooing his pants, because I told him he'd be found out by the building society he was going to for a mortgage, as he'd have to show some evidence of his earnings. To my complete astonishment he got the mortgage he wanted by signing a piece of paper saying he earned x thousand pounds a year when he was earning less than half of that. You can use your imagination as to how this story ended up. If you have to show three years accounts if you're self-employed, to get a crappy Makro card, how come it's so easy to get a loan for hundreds of thousands of pounds? John X Link to comment Share on other sites More sharing options...
crookesey Posted June 11, 2011 Share Posted June 11, 2011 That would depend on a number of issues. Is your mortgage on a repayment or interest only basis? I'm getting the impression for the small detail you've given, that you're on interest only and you did this through a broker? I would therefore imagine that you also don't have an investment plan in place. If all of the above is true, it's not a good situation to be in. Speak to your mortgage company and speak to them about going onto a repayment basis and seeing if the interest rate that you're on is the one that is best suited for you. If this is affordable for you, then it may well be your option and in your best interests. If you are on a repayment basis, then great - at least you're "chpping" away at the capital (although probably not a great amount if it is a relatively new mortgage). This will obviously go well for your worry too. Over time, it will reduce your capital, giving you a good amount of equity for when prices increase (hopefully 2012). Regards the rate you're in, you're worrying about payments increasing? Am I safe to think that you're now on the banks variable rate? As for the original question, the bank won't do anything to help should you wish to sell your property.... they'll want their money back - simple as that. Wrong, the only issue that is important is the wording of the mortgage offer that the OP signed, I have yet to meet anyone who has read every word on the terms and conditions of offer, I have as I was involved in the residential mortgage market, many moons ago. Link to comment Share on other sites More sharing options...
I1L2T3 Posted June 11, 2011 Share Posted June 11, 2011 Is this still the case? I would have thought they would have tightened up after the '80s. A mate of mine used to lie to his partner (in whose house he lived) about how much he earned as a motorcycle dispatch rider, so she suggested he buy half of her house to show commitment. He was pooing his pants, because I told him he'd be found out by the building society he was going to for a mortgage, as he'd have to show some evidence of his earnings. To my complete astonishment he got the mortgage he wanted by signing a piece of paper saying he earned x thousand pounds a year when he was earning less than half of that. You can use your imagination as to how this story ended up. If you have to show three years accounts if you're self-employed, to get a crappy Makro card, how come it's so easy to get a loan for hundreds of thousands of pounds? John X Yes it has been for real. Mortgages taken out with no proof of income accounted for a surprisingly high proportion of mortgages from mid-90s up until about 2-3 years ago when banks started to cut down on lending anyway. Lots of liars out there unfortunately. Many too stupid to realise they have been duped by brokers and lenders into fraudulently applying for credit, basically a criminal offence. Link to comment Share on other sites More sharing options...
John X Posted June 11, 2011 Share Posted June 11, 2011 Many too stupid to realise they have been duped by brokers and lenders into fraudulently applying for credit, basically a criminal offence. I can't see the point in it. If you obtain a mortgage with repayments based on what you earn, at some point you'll have to make those repayments or lose the house! John X Link to comment Share on other sites More sharing options...
I1L2T3 Posted June 11, 2011 Share Posted June 11, 2011 I can't see the point in it. If you obtain a mortgage with repayments based on what you earn, at some point you'll have to make those repayments or lose the house! John X It's probably worth risking if 1. House prices continue to rise forever 2. Interest rates stay low forever With those conditions a house was basically an ATM. You could fund a nice lifestyle by releasing equity. Credit from other places was easy to get as well - credit cards, loans, motor finance, kitchen/bathroom companies etc... etc... etc... I think a lot of people were sucked in believing ever that rising house prices and permanently cheap loans would continue to happen. They had no reason to believe otherwise. Gordon Brown had abolished boom and bust after all. And people were force fed endless property investment and development programmes on the telly that always told you that bricks and mortar were the way. I can see why people who should have known better were taken in. Link to comment Share on other sites More sharing options...
truman Posted June 13, 2011 Share Posted June 13, 2011 It's probably worth risking if 1. House prices continue to rise forever 2. Interest rates stay low forever With those conditions a house was basically an ATM. You could fund a nice lifestyle by releasing equity. Credit from other places was easy to get as well - credit cards, loans, motor finance, kitchen/bathroom companies etc... etc... etc... I think a lot of people were sucked in believing ever that rising house prices and permanently cheap loans would continue to happen. They had no reason to believe otherwise. Gordon Brown had abolished boom and bust after all. And people were force fed endless property investment and development programmes on the telly that always told you that bricks and mortar were the way. I can see why people who should have known better were taken in. Over the long term I suspect house prices will be higher than today...even with the recent drop mine is worth about 4 to 5 times what it cost me 18 years ago and my mortgage rate is less than it was then... the only cash I have borrowed against it went straight back in in the form of improvements...as a home first and a long term investment second I'm reasonably happy with it... Link to comment Share on other sites More sharing options...
Cyclone Posted June 13, 2011 Share Posted June 13, 2011 If house prices rise in line with inflation then it's basically meaningless (although it has the effect of deflating your debt). Link to comment Share on other sites More sharing options...
truman Posted June 13, 2011 Share Posted June 13, 2011 If house prices rise in line with inflation then it's basically meaningless (although it has the effect of deflating your debt). Using this calculator http://safalra.com/other/historical-uk-inflation-price-conversion/ my house has increased way above that...can't vouch for it's accuracy though...I suspect most house prices have increased accordingly over the same period... Link to comment Share on other sites More sharing options...
biotechpete Posted June 13, 2011 Share Posted June 13, 2011 If you're on a fixed rate mortgage, the likelihood is your payments will decrease on a current standard variable rate. So if you can afford the payments now you're probably more or less OK for at least a few years. The absolute worst case scenario is inflation spiraling and rates going to 12% when you can't afford to repay and have to sell amid a price crash because others are suffering the same fate when you'd be left with massive negative equity. IMHO, more likely is that rates will remain at historically low levels for a good time yet, rising steadily. Some experts predict we will get to a base rate of 1% by the middle of next year and rates will rise steadily after. Given that banks have substantially increased the gap between BOE base rate and mortgage lending rates, post crash, then there is some chance that that gap will close again and mortgage rates will not necessarily rise at the same rate as BOE (although I'd expect increases initially). I remember before the crash that the base rate was at about 5.5% and SVRs at about 7.5% but fixed rates around were lower even than the base rate. It could take years to get back to a 5.5% BOE base rate, if it ever happens. Rates in Europe even during the boom were much lower than here and closer economic inter-dependency will inevitably mean that we are tied to goings on in europe. Link to comment Share on other sites More sharing options...
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