Abbey - 5 times joint salary?

dfarry

meanmachine wrote:

Not that Abbey cares. They have your 25% equity cushion.

I promise I haven't been looking at HousePriceCrash

But if history repeats, I don't think the 25% cushion will be sufficient.....it also cost banks and building societies a fair bit of cash to repocess a place I'd imagine and though they might chase the borrowers for the money... if it can't be paid it won't be paid and everyone ends up very miserable.

MascaraMinx

Dfarry - you are right that there are several risks and "what ifs" attached to what we are doing, and we have been over and over them all between ourselves. I wouldn't expect anyone to be patting me on the back and congratulating us at our decision, but at the same time, we have done as much research as we possibly can so we are aware of all the risks. We know that at the end of the day, we may be forced to sell if prices crash, but then we probably would anyway even if we took a smaller mortgage.

We both have jobs in public sector where redundancy is practically unheard of, and the property is in an area that, even if prices do wobble, will probably be one of the last to drop (good links to london, nice location, good schools etc). We figure that any purchase right now is a risk, but we want to start setting up for the future.

The reason I posted on here was just to give the other side of the argument and to try and rationalise why people are doing this, rather than just the caricature of greedy irresponsible naive people going mad because the banks will let them.

roswell

on a single 50 000 salary thsi is leaving only £600 a month for all other bills ... or my calculations are very wrong

Angela_D_3

meanmachine wrote:

A couple earning 50K must have some idea of what things cost?

Well, presumably a key criterion from the Abbey is sterilization of both partners.

I'm too dumb to work the stats, but what if one of them falls pregnant (I'm guessing the woman) and their salary halves to 25k?

They've borrowed the max of 250K, which magically becomes TEN TIMES salary.

Oh, and factor in a rise in IRs to 6%. WHat's the % of take home on that?

Not that Abbey cares. They have your 25% equity cushion.

Your assuming she or he stops working just because they have a baby ?

Don't be silly, the tax credits bribe will ensure they do the right thing and hand the child over to a nursery to be "educated" from 6 weeks til 18 then off to Uni for further brain washing. Genius isn't it.

MascaraMinx

meanmachine wrote:

Well, presumably a key criterion from the Abbey is sterilization of both partners.

I'm too dumb to work the stats, but what if one of them falls pregnant (I'm guessing the woman) and their salary halves to 25k?

You would like to think that any woman in this precarious financial position should have the good sense to not "fall pregnant" and bat those storks away from her rooftop

dfarry

MascaraMinx wrote:

Dfarry - you are right that there are several risks and "what ifs" attached to what we are doing, and we have been over and over them all between ourselves. I wouldn't expect anyone to be patting me on the back and congratulating us at our decision, but at the same time, we have done as much research as we possibly can so we are aware of all the risks. We know that at the end of the day, we may be forced to sell if prices crash, but then we probably would anyway even if we took a smaller mortgage.
QUOTE]

Good for you for doing your homework!! - many people don't even bother with that.

The decision you have made is what you judge to be right so that is all that matters really.... just make sure, whatever happens that you always hit those payments.

Incidentally and slightly off topic... I worked in the NHS for many years... but it is so cash strapped at the moment with many trusts running deficits that redundancies are a reality.... central government takes no prisoners when it slashes the number of public servants out there.

dfarry

MascaraMinx wrote:

You would like to think that any woman in this precarious financial position should have the good sense to not "fall pregnant" and bat those storks away from her rooftop

But then you fall into the "We can't afford to have a baby".... then it gets left until their mid 30's or later... then (if they are really unlucky) they have fertility problems.

In this situation I feel sorry for the guy.... once that female biological clock starts ticking he'll be expected to fulfill his obligations day and night!! hehe

Alan_M_2

AndrewSmith wrote:

I agree regarding unscrupulous companies however we are talking about Abbey, a mainstream lender offering a product to couples earning in excess of £50,000 per year. Without any dis-respect, a couple earning in excess of £50,000 should have a basic grasp on what they can afford each month.

There has to also be an acceptance of responsibility on the point of the borrower. After all a lender will go on what is requested by the customer.



Which proves that the 'filters' in this case were working.



A very strange experiment to try I must say bearing in mind that you will now have a record on your credit file of the application. You are comparing two completely different types of underwriting and, whilst I make no defence of their decision, would still suggest that any borrower in this position MUST take responsibility for their own actions. After all it was you who initiated the application and asked for the finance.



They are a commercial enterprise who tried to fulfill the request of a customer. If the payments for something are not affordable no one is breaking your arm insisting that you must take it.

My point being, they stated I couldn't afford £1,000 a month mortgage (through being able to prove with accounts), but I could afford £2,000 a month for a car. That was the purpose of the experiment and that was what I failed to get a satisfactiry answer to.

This is the bank which holds all my bank accounts so it was clear to them what my trading history had been.

Alan_M_2

MascaraMinx wrote:

Dfarry - you are right that there are several risks and "what ifs" attached to what we are doing, and we have been over and over them all between ourselves. I wouldn't expect anyone to be patting me on the back and congratulating us at our decision, but at the same time, we have done as much research as we possibly can so we are aware of all the risks. We know that at the end of the day, we may be forced to sell if prices crash, but then we probably would anyway even if we took a smaller mortgage.

We both have jobs in public sector where redundancy is practically unheard of, and the property is in an area that, even if prices do wobble, will probably be one of the last to drop (good links to london, nice location, good schools etc). We figure that any purchase right now is a risk, but we want to start setting up for the future.

The reason I posted on here was just to give the other side of the argument and to try and rationalise why people are doing this, rather than just the caricature of greedy irresponsible naive people going mad because the banks will let them.

Actually my comments may have been misconstrued, I wasn't suggesting or generalising in fact that people are irresponsible or greedy for that matter (some BTLers aside), I was suggesting that the lenders have a moral responsibility to protect people from themselves.

Over the years I've had cause to deal with a reasonable cross section of society by running a business and an astonishingly large proportion of them fall into the naive category (being polite).

Lets be honest, people who go to the time and trouble of reading and posting on a forum of this type are far less likely to be falling into this category and probably have their heads screwed on reasonably well to start with.

martyn4764

mustrum_ridcully wrote:

Well I've heard a 25% deposit is required - I guess we should be thankful for small mercies in that it's not 100%.

Update: that was an error apparently... it's a 3% deposit!

http://today.reuters.co.uk/news/articlenews.aspx?type=topNews&storyID=2006-11-01T120315Z_01_L01480559_RTRUKOC_0_UK-FINANCIAL-BRITAIN-ABBEY.xml