Nationwide to Offer 125% Mortgages

Heyman_2

Graham_Devon wrote: »

They are not neccesarily taking on more debt. They will be taking their debt with them.

Just because you move house, it doesnt mean the next one has to be more expensive. You could want to move for job prospects, the be close to loved ones etc.

You can sell your house for 160k, with a 180k mortgage on it, and buy another house for £160k.

You still have 20k debt in either house. You have just moved to be able to get on with your life instead of being held prisoner in the house elsewhere.

But the rate on the deal is about 7-8% which is very much at the upper-end of current Mortgage rates. So it's likely that the person in question would be paying a lot more each month even if they didn't take any more debt.

Not surprised that they don't expect a lot of take-up on this deal.

Graham_Devon

Heyman wrote: »

But the rate on the deal is about 7-8% which is very much at the upper-end of current Mortgage rates. So it's likely that the person in question would be paying a lot more each month even if they didn't take any more debt.

Not surprised that they don't expect a lot of take-up on this deal.

No, 7% is very much the norm actually and in regards to the rates around at the moment, for the type of deal your getting here, I don't think that's excessive anyway.

And I don't think we need to pretend that most of the country says "oh no, I actually won't move to cater for my lifestyle, because it's 1% more expensive that way".

For the deal your getting, it's a very good rate.

Harry_Powell

Graham_Devon wrote: »

They are not neccesarily taking on more debt. They will be taking their debt with them.

Just because you move house, it doesnt mean the next one has to be more expensive. You could want to move for job prospects, the be close to loved ones etc.

You can sell your house for 160k, with a 180k mortgage on it, and buy another house for £160k.

You still have 20k debt in either house. You have just moved to be able to get on with your life instead of being held prisoner in the house elsewhere.

If you moved house from a £180k house to a £160k house, you'd incur the following expenses:

HIPS Pack: £300 (selling)
Stamp Duty: £1600 (buying)
Solicitors costs: £700 (Selling & Buying)
Estate Agent Cost: £1800 (Selling)
Surveyor Cost: £300 (Buying)
Removal Costs: £900 (Dependant on amount of furniture)
Mortgage Redemption Fees: £1500 (may not affect everyone)
Mortgage Arragement Fees: £500 (I couldn't find info on Nationwide)
Valuation Fee: £335 (buying)

So it would cost about £7935 just to move house, and I have only included costs that I could think of from the top of my head over a 2 min period. I checked out a couple of website (channel 4) to get the amounts and used very conservative figures. I could easily see it costing upto £10k to sell a £180k house and buy a £160k house. Allowing the person to pay off just £10k of debt.

I'd also say it was highly unlikely that people would downsize for such a small "gain". I'd imagine most people using this mortgage will be buying larger properties due to marriage and/or birth of children.

Sorry, I'm, with Heyman. This is another scheme to encourage the foolhardy into more debt.

p.s. as Heyman has also said - the mortgage rate is hardly generous, so the £10k that your test case saved by downsizing may soon be eaten up by mortgage payments.

Heyman_2

Graham_Devon wrote: »

No, 7% is very much the norm actually and in regards to the rates around at the moment, for the type of deal your getting here, I don't think that's excessive anyway.

For the deal your getting, it's a very good rate.

I was talking about general mortgage rates but I would agree that 7-8% is the norm for the deal we're talking about here. The point is, for a lot of people this is aimed at, they will be victims of NE and will be used to or already paying a lower rate.

Graham_Devon wrote: »

And I don't think we need to pretend that most of the country says "oh no, I actually won't move to cater for my lifestyle, because it's 1% more expensive that way".

Probably more than 1% more expensive than what they'd currently be paying and in any case I think most people are now fully aware of the current economic climate and wouldn't be adopting the mentality you are suggesting which was more prevalent prior to the recession.

Heyman_2

Graham_Devon defending an 125% Mortgage - never thought I'd see the day LOL

Graham_Devon

I'd agree with some of the stuff people are saying.

But I also think people need to be able to move around if their lifestyle needs dictate that. bringing in the moving costs is neither here nor there, ramping them up to over 7k, is just silly, I'm talking about the product.

This just seems like a decent product to me in order to enable life to go on for the people caught up in this mess. I don't see it as a 125% product at all. I see it as a negative equity product.

System

Nice idea by Nationwide, well done them I say.

Graham_Devon

Heyman wrote: »

Graham_Devon defending an 125% Mortgage - never thought I'd see the day LOL

So why you arguing the toss with me?!

If I say it's a good idea, people argue its bad.

If the typical bull says it's a good idea, they get thanks from the people arguing at me that its bad!

adrian_bond

hi everyone,

Forgive me if this is wrong, as I was just turning about 9 when the last crash / recession hit...but didn’t mortgage lenders do this last time around the end of the recession so that people could move etc and the market to stabilize?

I may be totally wrong on this, but even tho it will mean massively more debt for some, it would allow homes to change hands once more, and stimulation of a failing system could only be a good thing? could this move signal the smallest glimpse of a green root, instead of shoots?

Please correct im if im wrong. Cheers.

Harry_Powell

Graham_Devon wrote: »

I'd agree with some of the stuff people are saying.

But I also think people need to be able to move around if their lifestyle needs dictate that. bringing in the moving costs is neither here nor there, ramping them up to over 7k, is just silly, I'm talking about the product.

This just seems like a decent product to me in order to enable life to go on for the people caught up in this mess. I don't see it as a 125% product at all. I see it as a negative equity product.

I agree with you that it's a good product and invaluable for people who are in negative equity and trapped in property that is no longer adequate for them (either due to increasing family size or due to job relocation), but you were arguing that it won't necessarily increase debt, and gave an example (which I missread as downsizing, but you were actually proposing a sideways move) but neglected to make it a real-world example by including moving costs.

If you really believe I 'ramped' the costs of the house move then please provide more realistic figures. As someone who is currently looking at buying a house I am appalled by the costs involved in just buying, let alone those incurred if you also have to sell a house as well.

If you're going to provide financial examples, then please include all costs, otherwise the example is invalid. This is especially the case when the costs are so high.