will these type of neg equity mortgages come back?

rover25

Iwas reading that in the last housing crash in the early 90's that some lenders offered a 'negative equity mortgage' where I believe the negative equity amount could be transferred onto another property. Will these ever come back and what were the advantages and disadvantages of them?

PasturesNew

They will come back, for the truly credit worthy.

The advantage was people could move. You just transfer the negative equity to the new house, job done.

Cazza

In a difficult market innovative lenders will come up with products which enable people to borrow money and move house or remortgage.

The thing we have to wait for is the banks wanting to lend.....

minimike2

The Dow Jones is up 11%. That is a good sign that USA has hit rock bottom and is bouncing back. Hopefully this will filter through over here and by new year we might see money flowing a bit more freely!

rover25

Were individuals able to do this if wanting to move to a self build project?

dunstonh

In the short term, I dont think there is the appetite for negative equity mortgages. In 4 or 5 years time maybe there will be. That would match the timescale of the last property price crash as its only likely once the bottom has been hit and recovery has started.

At the moment, any lender offering 125% mortgages would be crucified in the press.

opinions4u

Unusually, I will disagree with dunstonh.

I think a number of lenders probably still have these products on the shelf - they just haven't been used since the mid-90s.

While it's not in a lender's interests to increase the £s or % of negative equity, it is in their interests to keep the housing market moving.

A scheme that allows an existing mortgage customer who owes, say, £180k on a £160k house to move to another £180k mortgage with £160k house doesn't increase the lender's exposure. Higher lending charges and additional legal costs were a feature of the previous schemes. Don't expect a tracker rate at 0.5% below base rate either! I'd guess at SVR only.

I doubt any lender would want to take on another lender's negative equity customers though.

Furthermore, Northern Rock style 125% loans for first time buyers etc are an absolute no no.

maninthestreet

When negative equity mortgages were offered back in the mid 90s, they were only offered to a lender's existing customers - as opinions4u has stated, no lender wanted take on another lender's negative equity customer. I secured one of these negative equity mortgages from my then lender, Halifax Building Society (as they were then called) - I actually got offered a deal that was better than their SVR, a 3 year fixed rate, if I remember correctly.

koexelek

rover25 wrote: »

Were individuals able to do this if wanting to move to a self build project?

in a word.... no.

rover25

Does this apply even if the site is already owned and the build costs would be the only amt to be borrowed. If the buyer/builder was ablet to pay the 10% on the build costs only mortgage as a deposit would this still have been a no?

rover25

Also I wonder was there a maximum amount that these individuals were able to transfer into a new negative equity mortgage