2.5 million people facing negative equity

mower5

chucky wrote: »

here you go Mower - Owner Occupied vs Social Housing vs BTL it goes out to 2005.
http://news.bbc.co.uk/2/shared/spl/hi/guides/456900/456991/html/default.stm
You'll notice that there isn't a significant increase of BTL vs Social Housing

Cannon Fodder provided some figures the other day that helped us work out that if we did it take it to peak 2007 it could have been up to 8% or 9% of BTL I think it was.

And by the way it was the lenders that increased the deposit requirements not someone buying a property as an investment.

Yes I do own a few BTLs - do you own a property or are you one of those people that missed their opportunity to buy and is now blaming everyone and their brother for not being on the housing ladder?

There are lots of winners and losers with hpi over 9 years, potential 300% gains! Those who sold up at peak of the bubble are the winners, those who bought in the last few years will have to hang in there somehow. Btl isn't a moral issue to me but rather another aspect of the bubble that's just gone POP. I am interested in how smart people were suckered into paying over the odds for these assets.

I was priced out many years ago because i live in commuter belt SE england. The crazy HPI has forced me to work very hard and build a good business to raise a deposit and earn enough to cover a mortgage, i am now sat waiting for the market to calm down when i will buy a home for myself. I am not bitter, just interested in the bubble and peoples responses to it, bit of an education.

chucky

mower5 wrote: »

There are lots of winners and losers with hpi over 9 years, potential 300% gains! Those who sold up at peak of the bubble are the winners, those who bought in the last few years will have to hang in there somehow. Btl isn't a moral issue to me but rather another aspect of the bubble that's just gone POP. I am interested in how smart people were suckered into paying over the odds for these assets.

I was priced out many years ago because i live in commuter belt SE england. The crazy HPI has forced me to work very hard and build a good business to raise a deposit and earn enough to cover a mortgage, i am now sat waiting for the market to calm down when i will buy a home for myself. I am not bitter, just interested in the bubble and peoples responses to it, bit of an education.

i see - i do see BTL as a factor in contributing to HPI also.

good plan to let the market pan out - even now their are some bargains; you seem to know where you are with you want. good luck with the house purchase.

sarah_elton

Dithering_Dad wrote: »

Out of interest, how did you calculate the £22k difference between renting and buying? It seems an awful lot of money just over the term of three years - were you renting a 1 bed studio flat at £100 pm and then bought a 4 bed family home with a £1000pm mortgage??

Nope - more impressively, I bought a flat exactly the same as the one I was renting beforehand (a two bed in the same development)! Bought for £115k with a 100% mortgage, so the mortgage repayments were higher than the rent I'd been paying. Yeah - that should have been a clue for me...

OK so it breaks down roughly as follows (and yes, I wish I hadn't worked it out lol)

Excess of mortgage plus service charge, over monthly rent, x36 = £5,700

Money spent on property (DIY etc) = £5,000

Negative equity at sale point (assuming current buyer completes) = £5,500

Buying and selling costs = £5,000

No deposit put down on property so that hasn't been lost with the drop in value - it's just the negative equity.

My mistake - £21k roughly. :rolleyes:

whathavewedone

Ouch. Never mind, you live and learn.

Dithering_Dad

sarah_elton wrote: »

Nope - more impressively, I bought a flat exactly the same as the one I was renting beforehand (a two bed in the same development)! Bought for £115k with a 100% mortgage, so the mortgage repayments were higher than the rent I'd been paying. Yeah - that should have been a clue for me...

OK so it breaks down roughly as follows (and yes, I wish I hadn't worked it out lol)

Excess of mortgage plus service charge, over monthly rent, x36 = £5,700

Money spent on property (DIY etc) = £5,000

Negative equity at sale point (assuming current buyer completes) = £5,500

Buying and selling costs = £5,000

No deposit put down on property so that hasn't been lost with the drop in value - it's just the negative equity.

My mistake - £21k roughly. :rolleyes:

Ouch indeed. This is the trap that many BTLers fall into. They look at the mortgage, look at the rental income and say "Oh look, my mortgage is £100 pm less than the rental income, £100pm free money".

What they forget to factor in is the purchase cost, the maintenance cost and the periodic mortgage arrangement fees. Once these have all been factored in they're actually losing money! Try telling em that though

It's not usually a problem with home purchasers though because their home isn't really an investment, it's a place to live. However, if you buy and sell in a short period in a falling market, then you will get stung.

How come you sold so soon after buying?

setmefree2

adrian_bond wrote: »

i agree. unfortunaltey tho, im one of those people who bought in april 2007, a 1 bed flat (bought for £103, worth £105k at the time (norwich)), and would like to move in about two years or so. gonna start paying approx £200 - £300 a month overpayment into the mortgage starting april (should have about £3000 emergency money saved then). unfortunalty, we are certianly in negative equity, as although we improved the decor, and made the place nicer to live in, we only had approx six months growth before the peak. now i recon weve lost 12 - 15% realistically since that point. sniff.

were gonna really try and dig ourselves out of it but without killing ourselves or damaging our lifestyle too much. we love the place at the mo, but lots of people we know have had kids (generally a bit older than us (she is 23, im 27) so broody isnt the word!) which we would love to do, but really cant afford it yet, plus a 1 bed flat isnt the place for three, so will have to wait till we can afford a bigger place!

i remeber the hype about owning not renting at the time. "buy now cos if you try and save for a deposit, the houses you want will be £20k more than you can afford right now!". we still saved about £7k straight from uni which helped, plus got us a pretty good mortgage at the time (5.53% fixed for 5 years (at the time someone offered us £210000!) but who could have known that the adjustment would be so quick? i certainly didnt, but cant change that now!

any ideas that would help would be very much appreciated so please reply and dont be shy. cheers everyone

adrian - pop over to the mortgage free wannabe board. We are a really friendly bunch and will give you a great big and you'll pick up lots of good ideas & tips. A word of warning - paying of your mortgage is addictive!

baileysbattlebus

vivatifosi wrote: »

Is it one in five home owners or one in five mortgage holders potentially entering NE? If it is the first, that's terrible, but the number of home owners sound a little low so hopefully it is the latter. I can't remember what percentage of home owners have finished paying their mortgage, but I seem to remember it being pretty high (lucky sods)...

The total housing stock is 21.17 million homes

18% are social renters (3.75million)
12% are private renters (2.69million)
70% are owner occupiers (14.73million)

of the 14.73 million owner occupiers

44% are mortgage free (6.5 million)
56% have a mortgage (8.2 million)

We aren't in the mortgage free section - but the mortgage is probabley between 10 to 20% of the value of the house - and growing........

wymondham

MrFonzerelli wrote: »

So long as you're not (a) looking to downsize or (b) re mortgage most people won't be adversely impacted..

....until you lose your job..