100% mortgages?

brit1234

azazle so when you property falls in value, you will most likely be put into negative equity despite your over payments. This brings increased risks.

At the moment you are being bailed out by extremely low interest rates which are crippling pensioners, savers and ftb trying to get a deposit. I only hope rates go up soon.

I would brag about Australian banks as they are creating a huge property bubble like the chinesse which is likely to explode shortly. Guess which tax payers will have to bail out the UK customers when they go boom, yes us yet again.

azazle

What exactly am i at risk of? the value of the house could drop 100K and i would still be happy with where i live and what i paid. Fundamentally this is all about perceptions of value. I made the choice to be tied to the monthly payments i make and made suitable contingency re overpayments to sensibly pay my mortgage off in as short a time as possible. If my house lost 50k overnight it doesn't change the bricks and mortar of the house, only its perceived value. I bought this house with a view of never having to move again, I don’t plan on selling it and i don’t intend to make money on it. I do however plan on having it paid for in less than 15 years.

So what am i at risk of? Unemployment or critical health problems? neither of these are mutually exclusive to 100% mortgages? I’m hardly on a particularly low interest rate at 6.99% and as stated in my previous post am capable of paying above and beyond my current rate so Why/how exactly am i being bailed out?

As for Australian banks, the lending criteria for both Yorkshire and Clydesdale bank (both NAB owned) on anything above 90% is very very strict for us "UK customers" as stated in my previous post. I accept the housing market in Australia is overpriced but how is that related to UK tax payers. Neither Yorkshire bank nor clydesdale lend irresponsibly to uk taxpayers with whom the liability would fall to. They only lend high ltv mortgages to people who can genuinely afford the repayments .

If more banks adopted the approach that clydesdale/yorkshire have we would not be in this mess. Those that would struggle with such mortgages should be encouraged to save for deposits etc but why should i be penalised for being able to afford such a mortgage? wasting dead money on rent to finance somebody else’s investment vehicle is a complete waste of my time and money.

milliebear00001

azazle wrote: »

What exactly am i at risk of? the value of the house could drop 100K and i would still be happy with where i live and what i paid. Fundamentally this is all about perceptions of value. I made the choice to be tied to the monthly payments i make and made suitable contingency re overpayments to sensibly pay my mortgage off in as short a time as possible. If my house lost 50k overnight it doesn't change the bricks and mortar of the house, only its perceived value. I bought this house with a view of never having to move again, I don’t plan on selling it and i don’t intend to make money on it. I do however plan on having it paid for in less than 15 years.

So what am i at risk of? Unemployment or critical health problems? neither of these are mutually exclusive to 100% mortgages? I’m hardly on a particularly low interest rate at 6.99% and as stated in my previous post am capable of paying above and beyond my current rate so Why/how exactly am i being bailed out?

As for Australian banks, the lending criteria for both Yorkshire and Clydesdale bank (both NAB owned) on anything above 90% is very very strict for us "UK customers" as stated in my previous post. I accept the housing market in Australia is overpriced but how is that related to UK tax payers. Neither Yorkshire bank nor clydesdale lend irresponsibly to uk taxpayers with whom the liability would fall to. They only lend high ltv mortgages to people who can genuinely afford the repayments .

If more banks adopted the approach that clydesdale/yorkshire have we would not be in this mess. Those that would struggle with such mortgages should be encouraged to save for deposits etc but why should i be penalised for being able to afford such a mortgage? wasting dead money on rent to finance somebody else’s investment vehicle is a complete waste of my time and money.

I think this is very valid. Clearly, 100%, and even more so, 95% mortgages can be a perfectly sensible choice. I took out a 95% mortgage several years ago - £100000k house, £5000 deposit, £50000 joint income - where's the risk? The additional problem is that in many areas, savings have been outstripped by house price increases - in parts of London they still are - it's soul-destroying to save £500 every month for a deposit, only to see that deposit eroded every month by a house price increase of the same value or greater.

brit1234

azazle wrote: »

If more banks adopted the approach that clydesdale/yorkshire have we would not be in this mess. Those that would struggle with such mortgages should be encouraged to save for deposits etc but why should i be penalised for being able to afford such a mortgage? wasting dead money on rent to finance somebody else’s investment vehicle is a complete waste of my time and money.

Its this sort of thing that caused the mess in the first place and house prices to rise so fast. Without it we would have cheaper hoses and far less public debt.

At the moment it ids savers like my self being penalised for risky borrowers of the past. I am lossing thousands in iterest from my deposit and yet I still can't to afford to buy. If you are such a safe bet then how can you not afford a deposit.

azazle

its not a case of afford or not afford a deposit. I graduated last july from university with just enough money saved to cover the cost of the mortgage fees, surveys etc etc which is not bad for a university student. I then had a choice to make. Either save up for a deposit and rent somewhere or get a 100% mortgage straight away and off set the higher lending rate by the amount i saved in not paying rent. i really don't understand why you cant accept that for some people a 100% mortgage should be a perfectly viable and dare i say it a "sensible" choice to make. I am now in a position where i own my own home, can decorate it how i see fit and am already reducing the capital on a monthly basis. Granted this scheme is not for everyone and the criteria should be strict but equally i think there is a legitimate market for such products as long as the potential borrower has the financial capacity to cope with the repayments. The most important aspect of the clydesdale/yorkshire banks scheme is that it is worked out on affordability criteria and not multiples of incomes which tend to often disregard existing debt levels. They really scrutinised my incomings and outgoings but ultimately found that i would be able to meet the repayments, which i am.

brit1234

So you have no savings at all for a rainny day. You are also on a lower wage than you would be in a few years as you have just graduated.

Now two things are certain:

1, interest rates will go up.

2, House prices are set to fall

What happens when you have to remortgage?

Its truely scary stuff, sounds pretty high risk to me especially with unemployment set to increase as well, also the threat of a double dip recession.

:eek:

madeupname1

brit1234 wrote: »

Now two things are certain:

1, interest rates will go up.

2, House prices are set to fall

Actually, it is not certain that house prices are set to fall - its just your opinion.

brit1234

madeupname1 wrote: »

Actually, it is not certain that house prices are set to fall - its just your opinion.

Study a bit of economics and you will think differently. Blind hoping prices will rise won't really affect the fundamentals or have you not seen the transaction levels.

Its all being held up by 0.5% interest rates, foriegn buyers and tax payer funded schemes. Also there is only so long the government can by mortgage debt off the lenders for. When that stops the secutisation market is dead and banks will have to be dependant on depleted savers accounts. To keep it simple they won't have the money to lend to people at these overinflated values. No fiance then prices fall.

robin_banks

madeupname1 wrote: »

Actually, it is not certain that house prices are set to fall - its just your opinion.

What is certain is uncertainty, but interest rates at some point will have to rise because they cannot go any lower, there is only one way intertest rates can go and that can only increase the cost of borrowing.

If people want a 100% mortgage good for them, but it demonstrates an ability to save for a deposit.

robin_banks

azazle wrote: »

Yorkshire bank are owned by National Australia Bank and, as far as i am aware, have received no help from the UK government / Tax payers money.My understanding is that National Australia Bank is relatively cash rich. Yorkshire bank/ Clydesdale bank do offer 95% and 100% mortgages at the moment but only on selected developments. They are very strict and i mean very strict on who they will lend this LTV to and operate on an affordability criteria. They will lend a high LTV if you basically have very little outstanding credit and have very high incomings to low outgoings ratio. How do i know this? because I am one of the 12 people last year who successfully took out a 100% mortgage late last year. Google: 100% mortgage clydesdale telegraph and read the article.

People constantly go on about how irresponsible this kind of mortgage is but the only irresponsible thing about these mortgages is if they are lent to people who cannot afford them. I currently overpay £400 per month on my mortgage and have been doing so for the last 6 months which is already having a significant impact on my LTV when it comes to the end of my fixed term period. Granted the apr is 6.99 over 3 years but at least i know that should rate rises reach this level i will be able to afford to pay at this level of interest rate and more.

Its not the 100% mortgage that are the problem here, Its banks that lent out vast sums of money to people who had no real ability to pay should interest rates rise and no ability to over pay to reduce the LTV . If somebody earned a million pounds a year and wanted to purchase a house at £200k with 100% LTV why on earth should a bank not let this happen. What is the risk? its a unlikely scenario i accept but my point is plain to see.

I took this mortgage because saving money for a deposit meant wasting dead money on rent. For what? to pay somebody else's mortgage? how is that sensible.
I accept that I am not everybody and that nobody has the same circumstance as me but i get really frustrated at the amount of people who bash people for wanting a high LTV mortgage. For some people they just make sense.

Which selected devlopments exactly ?

Not a dig, just curious.