Why do FTBs get all the help?

homehunter

catpea33 wrote: »

95% mortgages? Where abouts are they? I'm a FTB but call the 'help' laughable. Do I really want a 90% mortgage at extortionate rates? No. Instead I'm been saving for a deposit for the last two years (and paying £12k off my landlord's mortgage) so that I can actually get a rate that's affordable. If it sounds like I'm complaining, I'm not. I'd rather be in a good financial position then hurry things along by getting the banks 'help' and potentially screwing myself in the future when rate rises make the already high FTB rate higher. So sorry for your situation but I think it's market-wide and FTB are in no better position thanks to the 'help' then you are.

...What catpea said!! :T Totally agree - first off, what 95% mortgages? Have you seen the rates on anything more than a 75% LTV these days? We've been wanting to buy for a long time now, and we've been saving hard, but each time we reach a point where we think 'right,we've got the deposit for the sort of house we want', the lenders move the goalposts!!I'm not getting a mortgage while the repayments are still extortionate, the base rate is 0.5% for goodness' sake.

For me, the final insult was that 'lend a hand' mortgage, offered by Lloyds - I moved out at 18 to go to uni, went back to the parents' place sporadically over the next 4 years, then rented a flat with BF and worked for 3 years, went travelling for a bit, came back and got a new job, rented another flat which got repossessed (another example of where we are at the mercy of landlords), and now we're renting a terrace, which needs work and we can't do much to spruce the place up and make it homely because it isn't 'ours'. But it's ok, because now Lloyds have stepped in, and we can go back to mum and dad and ask them to put up their savings at collateral, to buy our first house!! Perfect!!! :mad: (Might be fine for some, but I feel my parents have done quite enough thanks...)

catpea33

Homehunter, I totally agree! That 'lend a hand' scheme just annoys me. Surely if people can't even be bothered to try to save for a decent deposit then they don't deserve their own home? To me, owning a property demands the leg work beforehand. Might sound a bit harsh but whatever. Reminds me of a friend at work (edit: I don't know why I wrote friend - I can barely stand her) who is buying 'her own house' right now with a deposit given to her by her parents (and she's going for the shared ownership scheme). It must be so nice for her to take her parent's hard-earned cash so that she can be an independent woman.

But seriously, good luck with saving the deposit. I know what you mean about moving the goalposts - it's quite frustrating when you reach your target and realise that it's no longer enough.

Phill_555

catpea33 wrote: »

Homehunter, I totally agree! That 'lend a hand' scheme just annoys me. Surely if people can't even be bothered to try to save for a decent deposit then they don't deserve their own home? To me, owning a property demands the leg work beforehand. Might sound a bit harsh but whatever. Reminds me of a friend at work (edit: I don't know why I wrote friend - I can barely stand her) who is buying 'her own house' right now with a deposit given to her by her parents (and she's going for the shared ownership scheme). It must be so nice for her to take her parent's hard-earned cash so that she can be an independent woman.

It's not that people ''can't be bothered'' to save for the deposit, its the fact that this would take years, and in that time the value of the house would have gone up (probably by more than the interest earned on savings) and the person would have had to pay their landlords rent, or suffer living with the parents.

In my case, I will be able to be able to pay less per month for this helping hand mortgage, than I would be paying to rent a smaller place!

All my parents will be missing out on is 0.6% worth of interest (compared to the current 3-year fixed-term best-buy bond), and the 'risk' that I will default while in negative equity. However, I will be paying at least £200 less a month than the equivalent current best-buy 90% FTB mortgage.

You may say people are swiping their parents' savings, but it's all coming down the family line at some point anway, and this is a temporary loan, not a gift. I do realise how lucky I am that I have supportive parents who would help me in this way.

seven-day-weekend

catpea33 wrote: »

Homehunter, I totally agree! That 'lend a hand' scheme just annoys me. Surely if people can't even be bothered to try to save for a decent deposit then they don't deserve their own home? To me, owning a property demands the leg work beforehand. Might sound a bit harsh but whatever. Reminds me of a friend at work (edit: I don't know why I wrote friend - I can barely stand her) who is buying 'her own house' right now with a deposit given to her by her parents (and she's going for the shared ownership scheme). It must be so nice for her to take her parent's hard-earned cash so that she can be an independent woman.

But seriously, good luck with saving the deposit. I know what you mean about moving the goalposts - it's quite frustrating when you reach your target and realise that it's no longer enough.

Sometimes parents WANT to help out, you know. We would gladly help our son if we were in a position to.

catpea33

Sorry, that post didn't come across quite as I had intended. I'm aware that there are a lot of people who are unable to save a significant amount of money and that a deposit would take years to build in their case and if parents are willing to help then that's all fine. I guess I was just painting a lot of people with the same brush based on the girl at work. She had already decided her parents were giving her the money (and started viewing properties) before she had even asked them if that was OK and it would only take her two years at most to save a deposit - we're both in the oil industry and she's not exactly being paid a pittance (and she's paying a great deal less in rent (with bills included) than I am (with no bills included)).

But yes, on re-reading my post I realise how it came across so apologies.

SelbyJay_2

Well, that put me in my place! : )

Actually, i do realise it's very difficult atm, not just for us, but for everybody. Hence the moan! Maybe i have been a little blinkered and that's the good thing about forums like this. You can easily see that you're not on your own.

I dont work in the financial industry and i'm not aware of all of the propucts that are out there. But the Lloyds "lend a hand", Yorkshire, Bank of NI, Penrith & Ipswich BS & Nationwide are supposadly offering 95% mortgages to FTBs. Or they certainly give the impression they are. There are various restrictions attached to them and yes, the rates are all shocking.

Once i've paid off my credit cards, i'll be saving a huge amount and that will be going towards the deposit for the new house, but it is unrealistic to expect people to save £20k, £30k, £40k for a deposit for a house, when the cost of living is so high anyway.

I still stand by the idea that 90% & 95% LTVs are essential to the housing market and will be until property values return to 3/4x average salaries (will they ever?). As long as you can afford the monthly payments of a mortgage, it's almost irrelevant how much of the property's value you borrow. Property values will always fluctuate, that's just the nature of the beast and negative equity is only a problem for those that must must must move or sell.

Conrad

[QUOTE=SelbyJay;23738597

As long as you can afford the monthly payments of a mortgage, it's almost irrelevant how much of the property's value you borrow. [/QUOTE]


How is it irrelevant?

Property value at start £100,000
Mortgage £90,000 + £1995 fees

Repossession = bitter occupants who wreck the place and strip it bare

Repo sale price £85,000

Court and balifs fees £4000
Locksmiths and boarding up £1000
Lost interest and arrears £10000
General admin £500
Estate agents selling costs £2000 inc vat
Legal fees for selling £500

Total cost to lender including £92000 mortgage = £110,000

LOSS TO SHAREHOLDERS (our pension pots) = £25,000.

AND........... clients then take lender to court for thier own losses having leant 'irresponsibly' they argue!!

SelbyJay_2

What reason would you get reposseed for unless you cant afford to make the repayments?? It's about affordabilty. If you can afford to make the repayments, your house wont be taken off you and all mess would be avoided.

Framps

I agree with fact that as long as you have no reason to sell or remortgage and can afford the repayments then the nominal value of your house is neither here nor there...

For lenders, however, it is very important - high LTV is a risky game for them, whether you are an FTB or not. Thus they can price aggressively and be very fussy - the fact that you have unsecured loans in addition to your mortgage is now seen very negatively, whereas a couple of years ago it would have been a tiny blemish.

Conrad - in your example, any debts still outstanding after the house has been sold would still be those of the original owner (including costs arising from reclaiming and disposing of the property). Of course, if the owner has no discernible assets then bankruptcy would be likely and then the loss would be crystallized on the bank's balance sheet. If that was the case though, they wouldn't have any cash to proceed with a civil action against the lender's monolithic legal department... I'm taking it too seriously, I know!!

winnie101

Hi!
I am in agreement with selbyjay. I moved house two years ago. I bought a new house for £320k and had a deposit of £100k (68.7% LTV). This to me was a good deposit. I have been in the housing market for 6 years and I have never missed a payment. Abbey have now told me my house is worth £230K (94% LTV) and I can't get a decent mortgage rate. Why am I being punished for irresponsible people who got mortgages in the past but couldn't afford them! Banks need to take more notice of people's credit history!