Abbey - 5 times joint salary?

mystic_trev

pawpurrs wrote:

How come you have no council tax, cupid-stunt?

Perhaps he's working in Iraq !!!

BobProperty

pawpurrs wrote:

How come you have no council tax, cupid-stunt?

There are several exemptions, (anyone remember Drop the Dead Donkey when council tax first came out?) the most likely being some sort of tied job related arrangement, e.g. Crown servant, or minister of religion.

AndrewSmith

The simple solution is simply don't ask for so much money.

It's not as if they are knocking everyones door and forcing 5x income into their hands is it?

Just because it is offered doesn't mean you have to take it.

Just because your car will do 115mph doesn't mean that you drive it that quickly everywhere does it? Yet no-one calls car manufacturers irresponsible for making cars that go over 70mph.

About time the individual borrowers in this country began to take responsibility for the amount of money they are asking for.

Let's give a hypothetical scenario here:

Client comes to see me, want's to borrow 5x their income. We do an expenditure analysis and budget planner after which it transpires that 5x income is not prudent in their case. I tell them this and suggest that they should limit their borrowing to around, say, 3.5-4x.

What do you think that client does? DO you think they will take my advice and take a lesser mortgage? Highly unlikely. They will most likely say 'he is crap and can't get us as much as we want. Let's find someone who can.'

If you can't afford it, don't buy it. We can all moan about property prices till we are blue in the face but it still won't change anything.

If it is out of your reach then leave it.

At the end of the day it is the client ultimately who decides how much they borrow. It doesn't take a rocket scientist to work out whether a monthly payment of x amount is affordable or not.

trickster

Just can't figure this out. Me and Mrs Trickster have a mortgage of 3.15 x my salary. She works part time after having our boys. I earn above average salary.

We find things tight enough on that!

How on earth would a couple earning £25k each afford the repayments if the mother gave up work to have children or one of the couple lost their job?

Would scare me silly being a slave to that scenario.

BobProperty

AndrewSmith wrote:

.....At the end of the day it is the client ultimately who decides how much they borrow. It doesn't take a rocket scientist to work out whether a monthly payment of x amount is affordable or not.

Problem is in a number of cases it does. Look at the single woman in Warrington in the Trevor McDonald program. Buys a SO(? can't remember) then realises that after all the other bills she is left with £25 a month to live on.
People get it into their head that they must get on the property bandwagon and nothing will stop them. It's no different than them wanting the latest mobile phone with MP3,bluetooth,camera etc. only in this case it will cost them £x00,000. They must have it so they find a way of having it. It will all end in tears, but every cloud has a silver lining, cos that's when I'll be buying again.

AndrewSmith

BobProperty wrote:

Problem is in a number of cases it does. Look at the single woman in Warrington in the Trevor McDonald program. Buys a SO(? can't remember) then realises that after all the other bills she is left with £25 a month to live on.
People get it into their head that they must get on the property bandwagon and nothing will stop them. It's no different than them wanting the latest mobile phone with MP3,bluetooth,camera etc. only in this case it will cost them £x00,000. They must have it so they find a way of having it. It will all end in tears, but every cloud has a silver lining, cos that's when I'll be buying again.

Exactly my point Bob, but why is this the fault of a lender?

Is it the fault of the mobile phone company that they sell a £450 unit that offers MP4, bluetooth, GPS etc etc, or is it the fault of the individual that buys it that he then realises he can't afford to buy food for the month?

People in this country are all too quick to blame others when in the majority of cases the blame lies a little too close to home for their liking.

cupid_s

pawpurrs wrote:

How come you have no council tax, cupid-stunt?

we are both full time students. Hubby was working when we bought the house so that's how we got the mortgage but then decided he'd get as much money doing a postgrad degree which is what we both do now

roswell

From http://news.bbc.co.uk/1/hi/business/6104522.stm

The bank is making the offer available to individuals or couples with a 25% deposit for their house and an annual income of £50,000 or more.

Mutton_Geoff

If you're in a career that has an escalating salary system or has good opportunities for future promotion and want to take the risk, then I think the Abbey product would be ideally suited for people that are prepared to bear some financial pain to get into the property they want now rather than have to waste money on agents fees, stamp duty etc by moving up as and when they could afford to service the loan under the old 3.5 earnings calculations.

I don't think anyone applying for an Abbey mortgage will miss the words "your home may be at risk ..."

Their criteria also excludes low earners and those who'd be scratching to find a deposit, so I think it's entirely reasonable for them to offer a 5x deal to someone whose salary may well double in 5 years.

BobProperty

AndrewSmith wrote:

Exactly my point Bob, but why is this the fault of a lender?

Is it the fault of the mobile phone company that they sell a £450 unit that offers MP4, bluetooth, GPS etc etc, or is it the fault of the individual that buys it that he then realises he can't afford to buy food for the month?

People in this country are all too quick to blame others when in the majority of cases the blame lies a little too close to home for their liking.

I didn't say it was, I was just agreeing with you on the point that you can do the calculation but if the client/borrower/victim is too thick to understand the implications and/or still wants to borrow the money anyway then how is the lender meant to know they will have difficulty meeting the commitment? Sure, they all do calculations but no-one can tell me everyone puts everything down 100% accurately on a mortgage application, especially if it may affect them getting the loan. (ask Mandy :rotfl: ) Equally, people could take out a mortgage and then start using the £xx,000 credit limit on their cards and get themselves into trouble, is that the mortgage lender's fault? I don't think so.
There is no economic education in this country (probably anywhere actually) so when all you have had is low inflation, low interest rates and rapidly rising house prices, it's difficult to believe in anything else. (Rant over, needs lie down)