125% mortgage, 2.5 years to go, should I be worried?

speedbird1973

ad9898 wrote: »

This post is ridiculous, let me get this straight, you think that 6x,7x,8x lending will be back in vogue in 2 years time, do you listen to news, read papers or anything. As someone as already said the biggest housing bubble in history has burst, the financial fallout in the US and the UK, will be not only be felt for years but possibly decades.

Property will return to 2007 levels one day, however I wouldn't hold my breath, conservative estimates put this at least a decade away if not more.

2007 levels were perpetuated on these premises'

1. buy to let (which is all but dead, falling prices, low yields, try and get a BTL mortgage with anything less than 20% deposit, you won't)
2. liar loans ( no income given when taking out a mortgage and none asked for by the banks)
3. 6x,7x,8x lending levels by banks thinking the party would never end.
4. cheap credit ( don't worry buy it and stick it on the credit card )
5. low unemployment ( unfortunately this era is about to end )

I could go on, most sellers are still in denial, this phase will play out over the next year I suspect, fear and anger to follow.

My call would be that the bottom of the market is at least 2 years away with a very long period of stagnation. There are around £400billion worth of unsecured debt washing around at the moment, a hell of a lot of this is going to have to be paid back before there is any glimmer of house prices rising. Banks will not want to get into the mess that they have found themselves again.

This isn't a "credit crunch", this is a return to "credit normality", painful now but in the long term much better for everyone, especially our children

So my post is ridiculous and you agree with the only contentious point I've made!! House prices will recover.. we both agree, ergo it's a good investment! Not a quick profit.. a good long term investement. Stop being a keyboard warrior and come play in the real world!

I was at BBG on Friday, they've signed a contract to buy more products and services from us. The world isn't imploding depsite what you read in the press! Business continues as usual, when there is liquidity banks will start lending funny money again. I'm not saying it's correct.. but you honestly think the banks will learn from their current condition?? they've made their share holders a huge profit in the last 10 years. It's worth the bust the have the boom times.

Kez100

I don't think they will be allowed to return to what caused this bust. Taxpayers are going to pay heavily for this and, if nothing else, regulation on lending will be tightened.

ad9898_3

speedbird1973 wrote: »

So my post is ridiculous and you agree with the only contentious point I've made!! House prices will recover.. we both agree, ergo it's a good investment! Not a quick profit.. a good long term investement. Stop being a keyboard warrior and come play in the real world!

I was at BBG on Friday, they've signed a contract to buy more products and services from us. The world isn't imploding depsite what you read in the press! Business continues as usual, when there is liquidity banks will start lending funny money again. I'm not saying it's correct.. but you honestly think the banks will learn from their current condition?? they've made their share holders a huge profit in the last 10 years. It's worth the bust the have the boom times.

Ok, well let the argument rest, the future will show which one of us is right, one thing though, if I were a shareholder in HBOS, B&B, Northern Crock, the list goes on, I don't think I would be to chuffed at how my portfolio would be looking at the moment, worth the bust ??, a lot of people have been "busted" this time and are out for the count.

TDS_2

speedbird1973 wrote: »

So my post is ridiculous and you agree with the only contentious point I've made!! House prices will recover.. we both agree, ergo it's a good investment! Not a quick profit.. a good long term investement. Stop being a keyboard warrior and come play in the real world!

I was at BBG on Friday, they've signed a contract to buy more products and services from us. The world isn't imploding depsite what you read in the press! Business continues as usual, when there is liquidity banks will start lending funny money again. I'm not saying it's correct.. but you honestly think the banks will learn from their current condition?? they've made their share holders a huge profit in the last 10 years. It's worth the bust the have the boom times.

Another day, another dreamer.

As one of the other posters put it. If you really think it's worth 140k, I'd sell it now and rent for a year or two. You will be significantly better off. Don't believe anyone that tells you that renting must be 'dead money'. I'm renting currently, and house prices are falling by more than I pay in rent each month (which will continue for a good year). Why is renting from a bank (whilst liable for any loss in value) better than renting from a LL?

Good luck.

JimmyTheWig

MarkyMarkD wrote: »

I think with hindsight that you should have revised your view of "wasting" £6k a year on rent.

With hindsight I would have chosen the correct numbers on Friday and now be millions of pounds better off.
House prices have been too high for years. Those that bought in when they were too high (2003, say) have still seen gains. It is very, very difficult to predict when prices will come down while they are still going up.
I don't think the OP should beat themselves up for their decission.

DocHants wrote: »

Nothing will ever convince me that paying £600 per month for someone elses mortgage, is not a wast of money...

Though this worries me.
DocHants, I presume from what you have said that you have put a lot of work into this house. And, I presume, that you have either put a lot of money into the house (some of the unsecured loan, maybe?) and/or time when you could have been doing paid work. Lets say, for arguments sake, that you've put in £20k. So, in effect, your house is now worth what you have paid for it.
You could have rented for £600 a month and bought a house like yours is now for £140k.
Or you could have (as you have done) bought a house for £140k and paid £940 a month mortgage.
The first option _would_ have been cheaper. There is no denying that.
MarkyMarkD is right - with hindsight you could have done better financially. I just don't think that you necessarily could have done without hindsight.

Incidentally, I think MarkyMarkD's second post (post #5) is spot on.

beingjdc

So by my maths you were "throwing away" £500 a month on rent, and you're now "throwing away" £850 a month on interest. And you don't want us to criticise that decision?

If it's really still worth what you think it's worth, sell up and get back to renting, and save that £4000 a year towards paying down your debts until you can afford to buy.

Gorgeous_George

3 x £6K = £18K

At the end of three years you will owe £141,234. Your house will probably be worth less than that so you will revert to Northern Rock's SVR (currently 7.49%) and repayments will jump to £1,092.99. That is if the unsecured element remains on the SVR.

If your house falls in value by a modest 20% it will be worth £96,000. You will need to have saved over £45,000 to reduce your LTV to 100% or over £54,000 to qualify for a 90% LTV deal.

That is the basic facts. I would forget Christmas this year. Rather than increase debt by buying tat for all and sundry get a seasonal extra job.

It's all well and good being fluffy and exchanging :grouphug: and :kisses: but now is the time to start planning to resolve the mess that you have gotten yourself into.

I wish you well. You may be better off selling now and renting even after paying the early redemption fees.

Seek professional advice.

Rent a room.

Seek promotion at work.

Look after your OH. You cannot afford a divorce/split.

Edit to add. The good news is that you will not have sqandered £18,000 paying somebody else's mortgage. The bad news is that you will have spent £34,102 excluding moving in costs and will need a 146% mortgage. Yet still people complain about BTL LLs.


GG

benbenandme

Pop over to the mortgage-free board or the debt-free board, we're a friendly bunch who are all trying to save a bit here / pay a bit off there. Like you, on paper my situation doesn't look ideal; I'm a single mother who works part-time, my total monthly income is less than 1500.00 but I am managing to overpay my mortgage, is amazing what a bit of determination can do for you So, don't listen to the negatives, check out a few other boards on here for ideas, mystery shopping, matched betting etc, it all can be chucked towards overpayments Good luck with it, well done for planning in advance and trying to do something about it now, and welcome to the boards

speedbird1973

TDS wrote: »

Another day, another dreamer.

As one of the other posters put it. If you really think it's worth 140k, I'd sell it now and rent for a year or two. You will be significantly better off. Don't believe anyone that tells you that renting must be 'dead money'. I'm renting currently, and house prices are falling by more than I pay in rent each month (which will continue for a good year). Why is renting from a bank (whilst liable for any loss in value) better than renting from a LL?

Good luck.

Why am I a dreamer? I started with a 95% mortgage - my mortgage is now 40% LTV.. at worst it may go back to 60%. Over time house prices go up. Simple as that.. look at house prices 10,20,30,40 years ago, they go UP and UP and UP. Think of the long game TDS. Property is a good investment.. end of... if you have time and security you won't lose money on it.

Renting is dead money if you're settled. My 10k is worth 100k now. The increase in equity is more than the interest on the mortgage I have. Job's a good'un. On top of that I have a home and security.

As a renter, you have a roof over your head, and two months to get lost if your landlord decides.. I have nothing against it, there's nothing wrong with renting. If you think having a mortgage is wrong however.. you need a blue sticker in your car mate!

beecher

Regardless to the 'debate' over renting versus having a mortgage, the OP should read Gorgeous George's post carefully as that is the reality of the situation and you should indeed be very worried. Now is the time to start sorting it out though - I'd dump Sky/your car/holidays/Xmas and try to get out of this situation.