Likely effect of the stamp duty elimination on house prices

Emy1501

ukcarper wrote: »

I'm surprised that the vast majority of FTB are being bank rolled by the bank of mum and dad because I don’t know any mind you I don’t move in the circles where the parent could afford to give their children £20k. But then how many real FTB are there in the market. Does Rich exceed Bank of mum and dad.

The average FTB deposit is 25% therefore at even 150K you are talking over 40K. Few FTB are capable of saving 10k on their own let alone 40K so its either they are very rich or bank of Mum and dad.

Take a look through the sellers thread on the housing forum. Many selling over on there to FTB are selling to people being funded by mum and dad.

If you take 200k then you looking at 50K on average. I highly doubt anyone who can find 50K deposit is worrying over the odd 2K.

Graham_Devon

ukcarper wrote: »

Why can't he borrow more please explain

Because they will only ever lend a maximum amount based on the salary.

Having a bit of money in the bank, and then having a bit more, does NOT increase your loan eligibility. It increases the price of the house you can buy, as you put more down.

But they do NOT lend further multiples because you have saved a grand in stamp duty.

Surely it's pretty simple to see this? Hence why such large salaries are being used to make the point on a lower priced house. It's being twisted this way into being able to take more in terms of a loan....but it is simply not true.

3x 30k will always get you 90k. Whether you have 1k in the bank or 300k.

The percentage you will need as a loan will change, which is what hamish is relying on to try and tell us a 2k stamp duty saving equals 20k MORE lending.

ukcarper

Emy1501 wrote: »

The average FTB deposit is 25% therefore at even 150K you are talking over 40K. Few FTB are capable of saving 10k on their own let alone 40K so its either they are very rich or bank of Mum and dad.

Take a look through the sellers thread on the housing forum. Many selling over on there to FTB are selling to people being funded by mum and dad.

I don’t disbelive you but you could rephrase that to say Rich or Children of the Rich.

ukcarper

Graham_Devon wrote: »

Because they will only ever lend a maximum amount based on the salary.

Having a bit of money in the bank, and then having a bit more, does NOT increase your loan eligibility. It increases the price of the house you can buy, as you put more down.

But they do NOT lend further multiples because you have saved a grand in stamp duty.

Surely it's pretty simple to see this? Hence why such large salaries are being used to make the point on a lower priced house.

There are two things limiting what you can borrow one is your salary and one is the deposit you have you don’t seem to understand that. If you earn 100k a year you still wouldn’t be able to borrow anything if you didn’t have a deposit conversely if you had £100k saved up but only earn £5k a year you still would only be able to borrow say £20k.

Graham_Devon

ukcarper wrote: »

There are two things limiting what you can borrow one is your salary and one is the deposit you have you don’t seem to understand that. If you earn 100k a year you still wouldn’t be able to borrow anything if you didn’t have a deposit conversely if you had £100k saved up but only earn £5k a year you still would only be able to borrow say £20k.

I understand it fine.

But you are having to use extreme examples of 100k and no deposit and 100k deposit but only 5k wages....yet again to make your point stand.

I'm still in the real world....and looking at this from the perspective of the normal buyer.

LydiaJ

Graham_Devon wrote: »

Because they will only ever lend a maximum amount based on the salary.

Having a bit of money in the bank, and then having a bit more, does NOT increase your loan eligibility. It increases the price of the house you can buy, as you put more down.

But they do NOT lend further multiples because you have saved a grand in stamp duty.

Surely it's pretty simple to see this? Hence why such large salaries are being used to make the point on a lower priced house. It's being twisted this way into being able to take more in terms of a loan....but it is simply not true.

3x 30k will always get you 90k. Whether you have 1k in the bank or 300k.

The percentage you will need as a loan will change, which is what hamish is relying on to try and tell us a 2k stamp duty saving equals 20k MORE lending.

Graham, if the salary multiple is 3x, then it's true that having a bigger deposit won't persuade them to lend you a bigger multiple. However, if you haven't got a decent deposit, then you can't borrow the 3 x salary.

I know this is true, because I was dealing with just this issue in my own life recently. Before late-nearly-ex died, he was pushing me for more of my capital as part of the divorce settlement, because he wouldn't be able to borrow more than 90% of the purchase price of a house, and wouldn't get a favourable interest rate unless he had 15%. Each extra £1k of settlement cash for him meant £10k extra on the purchase price. This was only a few months ago. I think there are some higher LTV mortgage products out there, but they have much higher IRs than mortgages for people with good deposits.

Eeek - I am supporting Hamish in an argument with Graham. How did that happen?

HAMISH_MCTAVISH

Graham_Devon wrote: »

I understand it fine.

Obviously you don't.

I'm still in the real world....and looking at this from the perspective of the normal buyer.

In the real world, most people are limited by the deposit, not the theoretical maximum loan to income ratio.

The deposit to loan ratio is the limiting factor at the moment for most people. So an increase in deposit size = an increase in borrowing power.

ukcarper

Graham_Devon wrote: »

I understand it fine.

But you are having to use extreme examples of 100k and no deposit and 100k deposit but only 5k wages....yet again to make your point stand.

I'm still in the real world....and looking at this from the perspective of the normal buyer.

Well to be honest I expect it cuts both ways there are people who are restricted by the amount of deposit they have and there are people who are restricted by what they earn. But a lot of bears say that people can’t buy because they can’t saver the deposit. I used the silly figure to make sure you understood what I was getting at.

ukcarper

LydiaJ wrote: »

Graham, if the salary multiple is 3x, then it's true that having a bigger deposit won't persuade them to lend you a bigger multiple. However, if you haven't got a decent deposit, then you can't borrow the 3 x salary.

I know this is true, because I was dealing with just this issue in my own life recently. Before late-nearly-ex died, he was pushing me for more of my capital as part of the divorce settlement, because he wouldn't be able to borrow more than 90% of the purchase price of a house, and wouldn't get a favourable interest rate unless he had 15%. Each extra £1k of settlement cash for him meant £10k extra on the purchase price. This was only a few months ago. I think there are some higher LTV mortgage products out there, but they have much higher IRs than mortgages for people with good deposits.

Eeek - I am supporting Hamish in an argument with Graham. How did that happen?

I don't think one will ever convince the other

nollag2006

nearlynew wrote: »

F*cking muppets the lot of you.

Interesting that this abusive post stays on - while others are removed.