125% mortgages // just when we thought it was safe

richardlionheart

http://newsvote.bbc.co.uk/1/hi/business/8141584.stm

i suppose good news if you are having difficulty moving house.

Cleaver

richardlionheart wrote: »

http://newsvote.bbc.co.uk/1/hi/business/8141584.stm

i suppose good news if you are having difficulty moving house.

Or you want to buy a 4x4 as well as a house.

Gorgeous_George

It is only reasonable that someone with negative equity should be given a means to move house and take their negative equity with them.

This is not the same as Northern Rock offering 125% mortgages to just anyone.

It is a perfectly reasonable thing to do.

GG

wharty

I think i read somewhere that a "negative equity mortgage" did exist with Lloyds or something during the 90's recession, could be wrong though.

shakerbaby

richardlionheart wrote: »

http://newsvote.bbc.co.uk/1/hi/business/8141584.stm

i suppose good news if you are having difficulty moving house.

Yes God forbid that people in NE who want to move house actually downsize and buy a cheaper house. :rolleyes:

GDB2222

wharty wrote: »

I think i read somewhere that a "negative equity mortgage" did exist with Lloyds or something during the 90's recession, could be wrong though.

My strong recollection is that a lot of lenders offered this in the mid-90's. By then, there had been people stuck in their homes with negative equity for 5 years plus and making their payments on time. Essentially, the existing mortgage was transferred to a new property of the same value. If handled correctly, it doesn't diminish the lender's security. Is the Nationwide deal different?

Thrugelmir

Old news.

http://forums.moneysavingexpert.com/showthread.html?t=1804411

Gorgeous_George

shakerbaby wrote: »

Yes God forbid that people in NE who want to move house actually downsize and buy a cheaper house. :rolleyes:

Maybe they will. They still need to take their negative equity with them.

GG

richardlionheart

how about just sitting tight when NE is around ?

Californication

richardlionheart wrote: »

how about just sitting tight when NE is around ?

This causes problems with labor force mobility; ie, if someone looses his job he can't move to a new one in a different area.

It's why the 3 year capital gains tax exemption exists for a home that was previously your primary residence, but you rented out because it was hard to sell in the last crash.

The result during the boom was that BTLs and MPs could pay less capital gains tax than would otherwise have been the case.

--C

LydiaJ

shakerbaby wrote: »

Yes God forbid that people in NE who want to move house actually downsize and buy a cheaper house. :rolleyes:

Downsizing doesn't get rid of the NE, I'm afraid.

Suppose you have a mortgage of £200k on a house that's only worth £180k.
You sell the house for £180k and downsize to a house that only costs £130k.
This downsizing cuts £50k off your mortgage.
So you now owe £150k and your house is worth £130k - STILL £20k of negative equity.

The good news is that your smaller debt is easier to pay off, so you have more of a hope of getting out of the NE by overpaying. Allowing people in NE to port their mortgages not only helps with labour mobility as Californication says; it also helps people who are trying to be responsible about their debts to do the things they need to do to sort things out.