Negative equity question

WTF?_2

Numenor wrote: »

It's not necessarily a bigger risk, just a bigger potential loss. The 'risk' (i.e. the probability of default) is surely not affected greatly...? If you lose your job you lose your job, and the price of your house does not have an impact on that scenario.

If the bank could somehow magically know that you were going to lose your job, you wouldn't get the mortgage though.

If they decide to loan you the money, they take the risk and assume that you won't lose your job and default - but price the possibility of default into the loan as insurance.

That's if they are doing their job properly of course. Most of the problem we are now in stems from the fact that lenders often didn't do due diligence and as a result made too many risky loans which are now turning toxic.

Really2

The_White_Horse wrote: »

but that is the same in the first property. they would lose out on 30k if you default. the end.

I can't help you I am not sure anyone can.

The_White_Horse

hoggums wrote: »

So let me understand this -

You want a bigger house without paying anyone any money for it at the time?

what? not sure what you mean.

you sell the smaller house. and pay back what you can of loan (less the ne) and then you are loaned a bigger amount to pay for the house.

WTF?_2

Really2 wrote: »

Well given they have a mortgage they already have worked out the repayment risk. The point is why would a bank want to give you more money than somthing is worth?

The risk of a 110% mortgage is stupid to a Bank (espesialy in the current cliamte how do you think this all kicked off? look at what happened in America).
If you can't see that this is a pointless argument and perhaps I was wrong about some owners .

Bear in mind that more than a few people don't seem to understand why a deposit is required or why lending should be restricted to multiples of income.

Generali

The_White_Horse wrote: »

but that is the same in the first property. they would lose out on 30k if you default. the end.

Have you been turned down for a similar deal? Are you sure the bank won't go for this or is it hypothetical?

Is it Penry, the mild mannered janitor?

Could be!

kennyboy66_2

You also ignore that by moving in such circumstances you will be looking at costs (stamp duty, solicitors, estate agent, moving) of at least £10k, increasing the amount you are in negative equity by.

You are currently paying about £3-3.5k a year off you existing mortgage (assuming repayment), you seem to be able to afford another £700 a month (to increase your mortgage to £300k).
If I was in charge of the bank I would say come back in 3 years when you have saved £25k and paid £10k off your existing mortgage.

I would rather in the current environment have 2 people with £150k mortgages on properties worth £150k than 1 person with £300k mortgage on £300k property.

WTF?_2

The_White_Horse wrote: »

what? not sure what you mean.

you sell the smaller house. and pay back what you can of loan (less the ne) and then you are loaned a bigger amount to pay for the house.

Have no fear - Gordon feels your pain and is in the process of taking control of the banks and printing up new money for them to give away, no questions asked, to people like your fine self.

The_White_Horse

Really2 wrote: »

Well given they have a mortgage they already have worked out the repayment risk. The point is why would a bank want to give you more money than somthing is worth?

The risk of a 110% mortgage is stupid to a Bank (espesialy in the current cliamte how do you think this all kicked off? look at what happened in America).
If you can't see that this is a pointless argument and perhaps I was wrong about some owners .

but you seem to be forgetting that in this example, you already have a 110% mortgage.

All you are asking is for the bank to give you the same deal on another property.

You are not asking the bank to go from having a positive to a negative. they already lose out if you default. If you default, they lose 30k.

In the new house, if you default, they lose 30k.

true, the new house could lose more value, but then so would the original house.

The_White_Horse

Generali wrote: »

Have you been turned down for a similar deal? Are you sure the bank won't go for this or is it hypothetical?

Is it Penry, the mild mannered janitor?

Could be!

its hypothetical at the moment.

Generali

The_White_Horse wrote: »

its hypothetical at the moment.

Try asking the bank then. You'll get a definitive answer rather than a bunch of people sounding off (sorry all but that's what a lot of this thread is!).