Mumblings of Negative Equity Mortgages ...!!

PasturesNew

Towards the end of the crash of the late 80s/early 90s, some lenders were looking at negative equity mortgages, allowing people to port their NE to a new property.

They're sniffing round that pot again: http://www.irishtimes.com/newspaper/pricewatch/2010/0628/1224273456053.html

Are negtive equity mortgages a way out for people trapped in properties that no longer suit their needs or just another minefield waiting to blow up?

COULD A SOLUTION to the negative equity nightmare currently facing hundreds of thousands of people finally be in sight? No, it’s not a rebounding property market, but rather a number of proposals aimed at lightening the load of those who bought during the boom, are now struggling to meet their monthly repayments and are stuck with properties they cannot sell.


...
Now however, our banks are considering introducing negative equity mortgages – albeit on a limited basis and subject to strict regulatory oversight – thereby enabling borrowers to sell their properties and move on.

Damn that's a long article! So I didn't copy/paste it all.

Cannon_Fodder

Makes sense. Better than all these accidental/unauthorised/illegitimate/amateur landlords just because they cannot sell at 2007 prices.

A bit disconcerted by the "mortgage £280k on £400k property, so make it £300k on a £200k property" idea...

Think it will be closer to a "like-for-like" exchange being permitted, so the Lender retains a similar exposure.

maninthestreet

The article refers to Eire, not the UK.

jockosjungle

I'm sure this has been talked about in the UK as well, I think it was more for people who had to move rather than wanted to (for work, etc.) and wasn't so people could upgrade to a better house.

To be honest though, the problem seems to come from people who bought at the height of the market and a couple of years later want to move.

Surely this shouldn't be many people?

maninthestreet

So what if you are in negative equity, you can just afford to pay it off, but don't have enough money for a deposit on a new property as well - will you be able to get a 100% mortgage???

DVardysShadow

It makes sense in certain cases to let people port -ve equity mortgages.

Suppose someone is made redundant, but they get a job offer with a relocation, then the lender's choice is

• to let them have a mortgage greater than 100% in a place where they can earn money
• or force them to keep a greater than 100% mortgage in a place where they earn no money and face a dilemma whether to rent a property where they can earn money and prevent them from renting the property out too

It is a no brainer.

sonastin

DVardysShadow wrote: »

It is a no brainer.

Says it all. I think there have been no brains involved in mortgage lending for some time. :rotfl:

First we had the give-any-amount-to-anyone chaos of the boom years followed by the kneejerk unless-you-already-have-it-we're-not-lending-it-to-you over-reaction.

Until there is evidence of underwriters using their brains to think about individual cases, us mere mortals will be stuck trying to second-guess what we're gonna be able to do.

twirlypinky

I think what's really needed is for the mortgage lenders to properly look at each application indiviually, rather than have set %age rules.

I'm in a negative equity situation at the moment, and really want to buy a bigger place with my boyfriend. The mortgage is in his name and based only on his salary. Now I'm living with him, we could add my income into the mix, i earn rather a lot more than him. You would think that the mortgage company would be delighted with this and would help us look at options. But no, they're not interested because we're in negative equity by £5k, so we've got to stay in the teeny tiny house and overpay in the hope the house doesn't lose more value.

Every branch should have proper mortgage advisors there to help, rather than the sales people that are there at the moment. The last time we had an appointment to talk to them the guy didn't even bother to show up, we had to sit in an empty office and have a conference call with him from another branch. Really feel like a valued customer.

Whoops, rant over, not sure where that came from!