Banks will only lend to well-off homeowners. That’s bad news for first-time buyers

abinanthanb

FallenAngel9898 wrote: »

Why ?, I don't think 20% deposit is a big deal if you want to be a homeowner, I really don't.

Oops, I forgot to mention that my reply was for 50% limit on FTBs. It is nearly impossible for a FTB to wait until he/she gets 50% of the value of the property.

I completely agree with your view on current homeowner; Infact I would recommend 25% limit for them.

Dan:_4

FallenAngel9898 wrote: »

I'd dare say there aren't many people like you, paying off lump sums, most of them are down the mall I bet, buying 'the latest thing', certainly when we see how personal debt has ballooned over the past decade.

Yep, I think your right.

abinanthanb

Lending money to buy house is a way of earning for the banks. Ideally they should calculate the risk involved and based on the risk evaluation they should decide to whom and how much they should lend.

While thinking about that I came with an idea. All the FTBs should open a specialised account. They should deposit a fixed amount (chosen by themselves) for 12 months and the amount should be what they can afford as the mortgage premium.

* This way they can prove the lender that they can afford that much money for a considerable period.
* They can actually save a decent amount towards the deposit.
* This will probably avoid people from taking another credit to fund their deposit for the mortgage.
* Most of all, this will make the people to be financially organised before committing to a bigger credit.

The banks can encourage better interest for this deposit account to encourage people to bank with them.

Mips

Seeing as lenders take into account credit card payments and personal loan payments, I should imagine it is counter productive when applying for a mortgage (for some)... you would get a higher mortgage with less outgoings..