Am I missing something...

kriss_boy

ali007 wrote: »

If that happened then my girlfriend and I could afford to buy one to rent out. So could my parents, and my brother, and neither of us are particularly well off. USING WHAT TO BUY IT WITH? IF PRICES CRASHED THAT MUCH YOU'D BE IN NEGATIVE EQUITY & NO-ONE WOULD LEND YOU A PENNY. AND WHO WOULD TENANST BE? FOLK ON HB WHICH MIGHT TAKE 3 MONTHS TO COME THROUGH, LEAVING YOU TO PAY MORTGAGE IN MEANTIME? .

What makes you think I dont have another deposit already? Or that I couldnt afford to blitz and pay off my mortgage twice as quickly as currently agreed?

I think the danger all stems from people mortgaging themselves to the hilt. Sure, rises in fuel and food eat into disposable income pretty substantially but if youre living on the breadline in the first place was it wise to go for the 3 bed detatched instead of the 2 bed semi?

My girlfriend and I could afford to support the other if heaven forbid one of us lost their jobs because we dont have an expensive car to pay off, nor do we squander our money on the latest flattest TVs or mobile fones.

If our house does drop in value I'll stick a 2 bed extension on this place and happily hold tight for 10 years.

pinkshoes

It all depends on your personal circumstances.

We bought 18 months ago, in a nice area, with everything we wanted, and a mortgage less than 3x our joint salaries. Renting was hell, and to me it doesn't matter how much our property drops in value, because firstly we have no plans to move/sell, and secondly, there is no way I would ever go into rented again. Some people are lucky enough to have good landlords, but lots of us aren't, and having a home that feels like home is really important to me.

It's not those that bought with 100% mortgages that I have no sympathy for; it's those that took a fixed low rate, with no thought as to what will happen when the fixed rate ends, and they can't afford the variable rate, nor can they remortgage due to a drop in prices giving negative equity. There's no excuse for poor planning.

carolt

Absolutely agree. We were looking to buy up until the beginning of last year, when we changed our minds due to the additional spurt in prices making the maths insupportable. But when we were looking at buying a house that would have been a stretch for us at that, we were only considering it with a very long term fixed rate (at least 10 years, probably 15) and insurance in case of losing jobs etc. Also based only on 1 salary, so that once the second salary was included, affordability could only improve. Also, we were only considering places suitable for the long term.

I fail to understand how people expected to just lurch successfully from one short term fix to another without coming unstuck at some point.

neverdespairgirl

kriss_boy wrote: »

I really dont see what this is a massive deal. Its all relative. Who is effected in all this? The idiots who all paid 80K for a crappy 1 bed ground floor flat in a rough area?

The idiots in London who paid £250k for said crappy flat, perhaps.

kriss_boy

So what exactly happened to those fixed rate people? how did it work? only paying somethng like 3% interest for the first couple of years then 10% there after?

Is that really enough to tip them over board financially?

I was advised to go variable, mine is some sorta tracker thingy i think.

We hope to extend our house next year then upsize.

gallygirl

You seem to have planned sensibly, so good luck. TBH, a lot of the repossessions you hear about are people who purchased at a low price then continually remortgaged until they could barely meet repayments even before rates rose. There is a lot of naivety out there, and banks & BSocs have fed on it. Unfortunately we are all paying the price now (and I do mean all - even renters are affected by a downturn in economy).

A house I've liked for a year has been cut from 300k to 260k. 14% fall. If I thought I could get it for 225k (unlikely!) I'd be tempted. & keep my own home & rent it out. So I'm not against your original plan in principle, as long as you are aware that it COULD happen to you, and plan accordingly.

Do you still feel the same as 2 months ago or are you more wary? I for one am more wary than I was.

SquatNow

kriss_boy wrote: »

But whats the worst that can happen? We sell it in a couple of years for what we paid? Or heaven forbid at a loss of a couple of grand? Big deal.

It gets Repos and sold at auction for £20,000.

You get left with £70,000 in negative equity and charges.

You spend the rest of your life living in abject poverty, working 80 hours a week, desperately trying to pay off the outstanding £70,000 so you can start afresh and maybe have a family.

Yeah I think that about sum it up.