Abbey - 5 times joint salary?

Alan_M_2

martyn4764 wrote:

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

Oh dear, that puts a whole different slant on it.

So with a joint income of £60,000 and a deposit of £10,000 you can have a £300,000 mortgage.

Really is it just me or does this seem wrong?

abaxas

martyn4764 wrote:

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

Ouch! Why not just give them a copy of the keys... would make live easier in the long run.

scorpio_princess

It will all end in tears, but every cloud has a silver lining, cos that's when I'll be buying again. [/QUOTE]

Me too!! It's not like i'm rubbing my hands with glee at the thought of the property market crashing (after all, my parents, sister and a lot of friends will lose out big time) but I just wish they'd come down to a sensible, affordable level where people didn't have to sell their soul just to buy a grotty studio flat (!!!!!!-ed up term for bedsit) for 100k when 3 years previously they wouldn't even walk through the door, let a lone buy it!

I do think it's unfair of people to label some FTBers as 'I want it all now' types (I suspect the people saying this are smugly sitting in their semis that are worth 5 times what they paid for them) - why should some people own property just because they happen to be older and got in at the right time, whilst others have no hope in hell of buying a cupboard in the current market? (particularly us poor singles - i'm obviously gonna have to buy a house with the next bloke that shows an interest - you laugh but I bet it's happening) What would be the point of them 'doing the right thing' and saving, only to be told that their savings fall way short of even a 5% deposit? We're not all earning mega bucks you know!! I don't know about any other areas, but here in the east there aren't a lot of jobs about, let alone well-paid ones. So while i'm lining my landlord's pockets by paying an extortionate rent, and paying council tax, utilities etc (oh, and how come if you live alone you only get a 25% reduction on council tax -why not 50%? Does anyone know?) I have absolutely nothing to save!!

Ahem, rant over :mad:

meanmachine_2

martyn4764 wrote:

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

Oh dear God.

Yes, a clear SELL sign if you have Abbey shares.

That really is more desperate than ever could have been imagined.

And the really annoying thing is that the BoE won't soon be able to raise interest rates, even if they wanted, without crippling 1000s of families.

This is why banks used to be regulated. If you let them run rampant they'll run everything into the ground. At this rate a recession will be inevitable.

abaxas

meanmachine wrote:

Oh dear God.

Yes, a clear SELL sign if you have Abbey shares.

That really is more desperate than ever could have been imagined.

And the really annoying thing is that the BoE won't soon be able to raise interest rates, even if they wanted, without crippling 1000s of families.

This is why banks used to be regulated. If you let them run rampant they'll run everything into the ground. At this rate a recession will be inevitable.

Some beleive it's been here for the last 3-4 years, just staved off due to remortaging (MEW) etc.

Cant remember where I saw it, but didnt somewhere say that 6% of GDP was MEW? Could we be saving a recession by borrowing more and buying crap?

Alan_M_2

Having just read your post I realised that I was paying full council although I've been living alone since my divorce earlier this year, I've just called the local council who are sending me a form to apply for the 25% reduction backdated to the day I became the sole occupant.

So it pays to read the money saving forum evenn though it may be a rant over something completely unassociated.

Thanks scorpio princess.

payless

Its a matrix, of 30 different situations - that takes into account

Credit score rating ( which will also consider deposit size)
Income Levels
Sole or Joint

range is from 3.1 to 5 X , + does not take into account all income types, deduction needed for other commitments , PLUS a final affordability check

dfarry

Alan_M wrote:

Having just read your post I realised that I was paying full council although I've been living alone since my divorce earlier this year, I've just called the local council who are sending me a form to apply for the 25% reduction backdated to the day I became the sole occupant.

So it pays to read the money saving forum evenn though it may be a rant over something completely unassociated.

Thanks scorpio princess.

HAHA.... every cloud has a silver lining.... eh?

AndrewSmith

Alan_M wrote:

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.

£1000 per month 25 year mortgage as opposed to a 3 year £2000 finance deal on a used car.

They are two completely different things and cannot be compared against each other as there is a vast difference in the underwriting for each.

The lender does not have to give you a reason for declining a mortgage application, nor does it have to explain why it is prepared to offer the loan amount you ask for.

They have no obligation to lend anybody anything at all and, as such, do not have to give you an explanation.

You asked for their help, they offered it. Simple.

It's not as if they would have forced £80,000 on you if you didn't ask for it now is it?

whambamboo

meanmachine wrote:

Oh dear God.

Yes, a clear SELL sign if you have Abbey shares.

Abbey has much less risk than you think.

Yes, they will lend a couple with a £35k joint income £161,000 (4.6*), and 97% LTV (implying a property worth £166,000. However, they'd pay a higher lending charge of 8% on the amount above 75% LTV, which is £36,500 = £2,920 charge.

They will use this to insure on the derivatives market against a 22% fall in house prices (i.e. down to 75%, which is seen as the bottom in the event of repossession).

So Abbey really doesn't have that much to worry about on the 97%, thanks to the wonders of the markets - it's the mortgagees paying for Abbey's security that should be worried.

Actually their biggest risk is on 90% LTV: a couple earning £30k each is lent £300k on a house worth £333,333. They pay *no* higher lending charge. One of them gets pregnant/ill/loses their job, it's literally impossible to pay a £300,000 mortgage on a £30k salary - the take-home is only about £1,650/month, and even interest-only at the rate of 5.5% (which by the time they were in trouble they wouldn't be paying), would be £1375/month, leaving £275/month for food/council tax etc. More realistically they could be on a repayment mortgage at a standard variable rate (unable to remortgage due to circumstances), and a standard variable rate of 7.5% (which is 0.75% above the current rate, not high at all) - £2271/month, with one £1,650 salary. Hmm.

Anyway, in the event of repossession, rising interest rates, etc. 90% LTV doesn't cover you that well.