We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Are you a "Recession virgin"?
Options
Comments
-
It doesn't matter that he didn't say "Buy now" in this thread, though he has in other threads.
It matters that he's telling people that Negative Equity isn't anything to worry about.
Quote: Negative equity is basically only a problem if you have a 100%+ mortgage with Northern Rock.
Wrong: It is something that people should worry about. It's a very big deal indeed and anyone who believes otherwise and actually buys because they think a simple refinance once they're in a crisis will save them is going to be placing themselves in a very sticky situation indeed.
The best advice for anyone who thinks they are going to be in negative equity and anticipates problems repaying their mortgage is to sell while they still have equity in their property and rent until their financial situation is better. Believing that they can just re-mortgage their solvency troubles away when they are in the hole is downright pie in the sky thinking.
Actually ED is a she. I agree with the other poster - nothing ED has said in this thread can be construed as 'Trolling'. I thought it was pretty sensible generic advice - certainly much more sensible than the ranting you seem to be doing.
I suspect the antagonism in your anti-ED posts are more related to her "Don't be fooled by doomster nonsense from speculators with a vested interest in a house price crash." comment. Perhaps this struck a little close to home?Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730 -
Advice should depend on circumstances !!!!!!. It may be impractical for an entire family to uproot and find a place to rent just because they may be heading for negative equity, not to mention the stress of selling, finding a rented home, selling costs, renting deposit, new schools, re-adjusting etc the list goes on.
Maybe sometimes its better to just it out rather then get shot of the family home.
There is not one piece of generic advice that should be given out, advice will need to be tailored to each individual case and set of circumstances.
I take your point, but no-one here can really give specific advice truly tailored to an individual's need so it should go without saying that advice here is in the general case by default.
Also, being stuck in a house struggling to pay the monthly mortgage debt when that house is worth less than the loan you are currently repaying isn't exactly a recipe for family happiness either. Sometimes you need to see what's coming and bite the bullet before you end up a victim of circumstance.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Dithering_Dad wrote: »Actually ED is a she. I agree with the other poster - nothing ED has said in this thread can be construed as 'Trolling'. I thought it was pretty sensible generic advice - certainly much more sensible than the ranting you seem to be doing.
I suspect the antagonism in your anti-ED posts are more related to her "Don't be fooled by doomster nonsense from speculators with a vested interest in a house price crash." comment. Perhaps this struck a little close to home?
No, it's fuelled by the notion that you can simply remortgage your way out of a serious financial situation. I would have thought that circumstances would have proven the foolishness of this way of thinking by now, but apparently the message still hasn't got through to some.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
No, it's fuelled by the notion that you can simply remortgage your way out of a serious financial situation. I would have thought that circumstances would have proven the foolishness of this way of thinking by now, but apparently the message still hasn't got through to some.
I believe Ed said that if people were struggling with their mortgages then they could go to interest only for a short time. Very sensible advice. Much more sensible than to panic and sell your house in a falling market just because there is the merest hint of negative equity (your advice).
I think I see the message you're trying to get across. Are you a property speculator by any chance?Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730 -
Dithering_Dad wrote: »I believe Ed said that if people were struggling with their mortgages then they could go to interest only for a short time. Very sensible advice. Much more sensible than to panic and sell your house in a falling market just because there is the merest hint of negative equity (your advice).
I think I see the message you're trying to get across. Are you a property speculator by any chance?
The message I'm getting across is that now is a rotten time to be buying into housing. If I was a property speculator who bought in any time recently, I'd be frantically trying to offload my duff investment.
Ok, let's go back to post #5 which I assume is the post which Edinvestor was addressing, though he didn't quote or reference it in his post.
carolt: No that's not true. It's also a big (ie insurmountable) problem if you want to remortgage. If you don't have at least 5% (or possibly 10% or could soon be more if lenders get even stricter) equity, you end up getting stuck on the bank's punitively high SVR, once your initial shorter term rate runs out. Unless you bought on a fixed 25 year rate - and let's face it, how many did that? - this is is very real danger, and one that many people in the UK will soon be affected by (1-3million, depending whose figures you believe).
If you think monthly costs suddenly going up by possibly several hundred pounds overnight is not an 'actual problem' then you must have deeper pockets than most of the UK. )
Post, #10, from ed:
Negative equity is basically only a problem if you have a 100%+ mortgage with Northern Rock.
The SVR at other lenders is not "punitive" - and those people coming off deals this year will be expecting a rise anyway.
Those who are on repayment mortgages could also switch to interest only for a while to reduce outgoings, or extend the mortgage term if necessary.
This isn't a case of Ed helpfully dishing advice out to someone who already finds themselves in negative equity and is looking for options; It's a blanket claim that negative equity is something that is unlikely to happen to most and is anyway easy to deal with by remortgaging. Therefore, nothing to be worried about.
That's completely duff advice. For someone who finds themselves in negative equity and unable to hang on in financially a remortgage might help but more than likely will not be enough.
To give people the impression that the possibility of remortgaging is some kind of safety net or parachute to mitigate negative equity is not just wrong but potentially could land them in financial woe if they actually believe it.
Anyone looking at looming negative equity right now (and that would be first and foremost FTBs) needs to take a long hard look at their finances - not just assume that they can find another magic mortgage deal somewhere that gets them out of the hole. Or have people been failing to notice what is happening in the mortgage market?
Oh, what's the point even bothering to 'debate' this with you? There's clearly a faction of people here firmly in denial of what's going on in the market and determined to have a go at anyone who dares upset their cosy little world view. Reality will burst your bubble sooner or later, most likely sooner.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
I took out a 100% mortgage on a £126,000 house 2 years ago. I am also a recession virgin....
Am I worried about it?
Answer = NO!
I overpay my mortgage 20% every month so this is helping to guard against negative equity to an extent.
My GF and I also both have "secure" decent paid public sector jobs.
Finally, we have been very careful over the last two years and will continue to in not taking on crazy amounts of debts, credit cards etc and are savers not spenders so have money put away "just in case".
EDIT
Forgot to say, we fixed our mortgage for 5 years (2 years ago so 3 left) so won't need to remortgage for another 3 years and won't need to move unless we choose to.0 -
I took out a 100% mortgage on a £126,000 house 2 years ago. I am also a recession virgin....
Am I worried about it?
Answer = NO!
I overpay my mortgage 20% every month so this is helping to guard against negative equity to an extent.
My GF and I also both have "secure" decent paid public sector jobs.
Finally, we have been very careful over the last two years and will continue to in not taking on crazy amounts of debts, credit cards etc and are savers not spenders so have money put away "just in case".
EDIT
Forgot to say, we fixed our mortgage for 5 years (2 years ago so 3 left) so won't need to remortgage for another 3 years and won't need to move unless we choose to.
At least you are taking sensible precautions and thowing cash into your mortgage.
People who have taken out high LTV mortgages within the last couple of years on a 2-year fixed rate, and have very little disposable income could be facing problems.
and anyone who took out a 125% mortgage within the last 12 months is totally f***ed!0 -
Oh, what's the point even bothering to 'debate' this with you? There's clearly a faction of people here firmly in denial of what's going on in the market and determined to have a go at anyone who dares upset their cosy little world view. Reality will burst your bubble sooner or later, most likely sooner.
If you don't want to debate the subject, then why post on a public forum that has thousands of member from all walks of life? You should instead go down to the pub and hold court with your peers, all of whom have the same background, life expectations and outlook as you and so will agree wholeheartedly with whatever you have to say.
The good thing about a public forum is that everyone can give their opinions and the truth is probably somewhere in the middle. I don't disagree with much of what you say - I just think it's unfair to personalise a debate (as you did with ED) when someone has a different viewpoint.
As far as 'bursting bubbles' and 'denial'. I started the Mortgage Free in Three Years challenge approx. 7 months before everyone woke up to the issues of huge debt levels, massive LTV mortgage, possible recession and credit crunches. Our little support group has overpaid over £1M of mortgage debt in one year - hardly burying our heads in the sand, more just quietly sorting out our finances without all of the fanfare you seem to require.Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730 -
Dithering_Dad wrote: »
As far as 'bursting bubbles' and 'denial'. I started the Mortgage Free in Three Years challenge approx. 7 months before everyone woke up to the issues of huge debt levels, massive LTV mortgage, possible recession and credit crunches. Our little support group has overpaid over £1M of mortgage debt in one year - hardly burying our heads in the sand, more just quietly sorting out our finances without all of the fanfare you seem to require.
A bit strange then that you defend Edinvestor's assertion that negative equity is nothing to worry about and can easily be sorted by remortgaging. Or did you actually follow the thread before commenting?--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
A bit strange then that you defend Edinvestor's assertion that negative equity is nothing to worry about and can easily be sorted by remortgaging. Or did you actually follow the thread before commenting?
I've been following the debate as closely, if not closer than yourself. The original premise was a discussion about recessions, but now you've focussed exclusively onto negative equity as being the major issue. It's not. As long as you have a job and no pressing need to move house, then being in negative equity is no biggie. Lots of people in the 80s/90s were in negative equity - they're now the ones who have seen +150% increases in their property prices and are sitting pretty.
By the way, if you are made bankrupt, having negative equity can make you better off because you often get to keep the house, rather than having to sell up and give the equity away to your creditors.
p.s. where did ED say anything about remortgaging? or is this something else she "must have mentioned on another thread"?Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.2K Mortgages, Homes & Bills
- 177K Life & Family
- 257.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards