Negative equity question

Wickedkitten

SandC wrote: »

I would have thought that portable mortgages have clauses about LTV.

Ours certainly does, they value it again if you are porting and you need at least 90% LTV.

We would also need to fill out a new mortgage application and would incur a higher lending charge as well as a different rate on the top up.

Really2

The_White_Horse wrote: »

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.

HELP.

looK the mortgage was agreed at 100% it is now 110% due to the market does that not tell you the difference is now 10% more than agreed!You want to borrow more!

Lets put it this way Icould have angreed overdraft of £1000 it currently sits at £1100 do you think it is unfair of the bank expect me to pay this back and not letting me increase it to £2000.

Where is the wall icon.

The_White_Horse

i am not saying the bank should give customers 110% mortgages from the off. I am saying that, if a good customer, has been sensible, and finds themselves in NE. Why should the bank not assist with another "110%" mortgage, if the customer already has, in effect, a 110% mortgage?

This would not be suitable for sub-prime, or even some prime, just the highest of the high in respect og good credit history ie no defaults EVER.

beecher

It is a new deal so banks will always look at their present lending policy, rather than the one which you signed up to in your existing deal. Why would a bank lend you more when they are more risk averse than they were when you got the orginal deal? It is like asking why there are no 125% deals out there or why no-one's lending at 6 times salary.

JayScottGreenspan

The_White_Horse wrote: »

as I say, this makes no difference to the banks - they are just being awkward really.

That's the way I see it too.

There are many reasons why they would want to be awkward, of course.

First, they'd probably quite like to get your mortgage off their books - they've put the prices up on most new ones, so they'd probably rather do a new product instead (for you or anyone else). They would probably like another application fee too. So they'll be sticklers when it comes to the 'home-moving' T+Cs on your current mortgage.

Second, to help you out someone in an office somewhere will have to sign a document authorising a loan at 110% LTV, or something - not gonna happen.

Really2

Generali wrote: »

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!).

Sorry not sounding of just trying to save the guy/girl from an embaressing situation.
There is no 100-110% products and the market is falling it a waste of their own time.
But still I supose If he wants to know for certain he/she might as well do it.

Wickedkitten

The_White_Horse wrote: »

i am not saying the bank should give customers 110% mortgages from the off. I am saying that, if a good customer, has been sensible, and finds themselves in NE. Why should the bank not assist with another "110%" mortgage, if the customer already has, in effect, a 110% mortgage?

This would not be suitable for sub-prime, or even some prime, just the highest of the high in respect og good credit history ie no defaults EVER.

They wouldn't assist because they have already "lost" money on you.

Put it this way, you loan someone 1000, they come back 2 months later and give you 800. Would you loan them another 1000 knowing they still owe you 200?

The_White_Horse

Really2 wrote: »

HELP.

looK the mortgage was agreed at 100% it is now 110% due to the market does that not tell you the difference is now 10% more than agreed!You want to borrow more!

Lets put it this way Icould have angreed overdraft of £1000 it currently sits at £1100 do you think it is unfair of the bank expect me to pay this back and not letting me increase it to £2000.

Where is the wall icon.

nonsense. If you have an oversdraft of 1000 and you go over it, that is nothing like this example.


the bank agreed to lend you 225k. they lent you 225k. the fact the value of the house has decreased does not increase the amount you have borrowed, only the LTV which, in this example is irrlevant. Banks know that values go up and down. they agreed the mortgage at 90%. Its their tough luck it now happens to be 110%.

In your world, if house prices go up are the banks "obliged" to keep lending you more so the LTV always remains at 90%????

The_White_Horse

Wickedkitten wrote: »

They wouldn't assist because they have already "lost" money on you.

Put it this way, you loan someone 1000, they come back 2 months later and give you 800. Would you loan them another 1000 knowing they still owe you 200?

i might, depending on the reason.

if the 1000 loan was secured on something worth 1000 that is now worth 800 and therefore the loanee is 200 short, I may extend them more credit to say, 2000 provided they can give me security up to 1800, as I am still owed the 200.

If they repay me, I will make more money.

therefore, it depends on how risky I see the person.

King_Of_Fools

The_White_Horse wrote: »

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.

But the new mortgage would be issued based on the future for the housing market (which is why most banks will only lend 80% at the moment - they are expecting houses to fall 20%). so the original £195k house with a £225k mortgage currently has £30k negative equity but the house could drop to £156k so the negative equity would increase from £30k to £69k. Compared to a £300k house with a £330k mortgage falling to £240k where the negative equity would increase from £30k to £90k.