Negative Equity - Possible way out?

PasturesNew

Yellabowley wrote: »

Unfortunately I haven't yet received an offer of £157000 so I haven't been able to test this

Post a RM link, somebody here might want it.

Yellabowley

Thanks very much Papermoney. At least we know I'm not talking complete rubbish. It might not be quite what I initially thought but that's why I welcomed comments to clarify what I was saying.

Thanks again.

Yellabowley

PasturesNew wrote: »

Post a RM link, somebody here might want it.

Is there a section for that? Or were you joking?

mbga9pgf

Yellabowley wrote: »

What they're saying is that the interest I have paid so far is not what it cost to borrow the money. What you're saying is that them lending me £167000 cost them £25000. What I'm saying is that if I were to pay it off at £157000, then in total I will have given them £182000 pay back from an initial loan of £169500.

In other words they've lent £169500 over two years and get back £182000 which equates to (unless I'm wrong) 3.5% a year. It might be that this would work purely because I've been stuck on a high interest deal for two years and the mortgage companies would have no room for manoeuvre for people on good rates.

Just another point, the reason I asked family was because the mortgage lender said that if I received an offer lower than the mortgage value to ring them and they may be able to accept it. It could well be that they offer to convert it to a loan. I just want to make sure there aren't people out there who might be declining offers to buy before consulting their lender thinking the offer is too low.

Some news for your rather simple attitude to bank lending.

Read this then come back when you understand it

http://www.swap-rates.com/UKSwap.html

Lending money costs the banks money. Idiots that want to worm out of debt cost the rest of us money.

I waited 5 years to save a 30% deposit before buying my home. I was convinced prices would crash, and they did.

I now work every hour God sends in a world where overtime is non-existent. Did you enjoy Christmas with your family? I was working Christmas day. I hope you have a good night tonight. I start a 10 hour shift in 4 hours. I apologise if I don't fit your criteria for a decent hard-working mortgage payer.

I left my family at 3 PM on christmas day, missed christmas dinner to work boxing day thank you very much.

Quite frankly I am sick of hearing "excuses" why people cant pay the mortgage, when actually they can. Job loss and illness are excusable and understandable. Choosing not to pay the mortgage because "you dont want to" is in my mind, completely unacceptable and the main reason why the UK is in so much trouble.

JQ.

Yellabowley wrote: »

What they're saying is that the interest I have paid so far is not what it cost to borrow the money. What you're saying is that them lending me £167000 cost them £25000. What I'm saying is that if I were to pay it off at £157000, then in total I will have given them £182000 pay back from an initial loan of £169500.

In other words they've lent £169500 over two years and get back £182000 which equates to (unless I'm wrong) 3.5% a year. It might be that this would work purely because I've been stuck on a high interest deal for two years and the mortgage companies would have no room for manoeuvre for people on good rates.

Just another point, the reason I asked family was because the mortgage lender said that if I received an offer lower than the mortgage value to ring them and they may be able to accept it. It could well be that they offer to convert it to a loan. I just want to make sure there aren't people out there who might be declining offers to buy before consulting their lender thinking the offer is too low.

Well I'm afraid they're wrong. What kind of Chartered Surveyor is your sister? I'm a Chartered Surveyor specialising in advising Banks and investors on Commercial Property Loans and Investments. Admittedly, I don't do residential property but the principles are the same.

I'm guessing that you have borrowed £169,500 at an interest rate of 6.5% - you can't just change what rate the bank receives because it suits your circumstances. The cost of borrowing £169,500 over 2 years is £22,000 - that is cost not profit. What you have paid to date is the interest cost as I stated earlier.

You have signed a legally binding agreement that the bank will hold you to. What you've suggested is just wishfull thinking on your part and is not realistic.

If you really want to test the water, why not tell your bank you've had an offer of £155,000 and see what they say - the offer could always be retracted at some later date. I can assure you it won't be "don't worry we're happy to take a loss on your behalf".

Yellabowley

mbga9pgf wrote: »

Some news for your rather simple attitude to bank lending.

Read this then come back when you understand it

http://www.swap-rates.com/UKSwap.html

Lending money costs the banks money. Idiots that want to worm out of debt cost the rest of us money.

I waited 5 years to save a 30% deposit before buying my home. I was convinced prices would crash, and they did.

I left my family at 3 PM on christmas day, missed christmas dinner to work boxing day thank you very much.

Quite frankly I am sick of hearing "excuses" why people cant pay the mortgage, when actually they can. Job loss and illness are excusable and understandable. Choosing not to pay the mortgage because "you dont want to" is in my mind, completely unacceptable and the main reason why the UK is in so much trouble.

I am aware that it costs the banks to lend but in my situation it certainly hasn't cost them anywhere near what it cost me as I got stuck on a high interest rate.

In any case my message was simple. Just because an offer is below the mortgage value don't dismiss it. It turned out to be correct but the relief coming in the form of a loan.

Good for you if you managed to save up a deposit. You speculated on a crash and got it right. Some of us had houses long before the crash was forecast and the cost of not owning a property rising in value was greater than any deposit that could be saved over the same timescale.

As for "excuses", if you come onto a site like this with the intention of belittling people who made different choices to you then you'll find excuses being thrown at you as people will find it necessary to justify themselves.

I despise those who use loopholes and exploit the system just as much as everyone else, but for you to presume that everyone who is in difficulty is one of those people is wrong.

Hard working, honest people can fall on hard times. I hope that doesn't happen to you or anyone else on here, but I'm certain every member could think of a single event that could financially ruin them despite all best laid plans. Don't judge before you know the facts and then this forum will be a more pleasant place to be.

mbga9pgf

it certainly hasn't cost them anywhere near what it cost me as I got stuck on a high interest rate.

risk comes at a price. As you are demonstrating, they cannot assume 100% repayment, some will default. The cost of lending has to be added to this "risk". On top of this, banks are a business. They have to make money. Especially seeing as homeowners were greedy and expected their home to work as a cash cow indefinately. They may have assisted in this process, but Banks are not charities. If you have the ability to pay off your debt, you should. Otherwise, others will have to, namely the UK taxpayer. The money needs to be repaid somehow.

PasturesNew

Yellabowley wrote: »

Is there a section for that? Or were you joking?

People post their RM links in here for all sorts of reasons, usually because their house isn't selling and they want our opinions on everything from it's price/location, through to whether they have enough sticks standing alongside the fireplace.

Yellabowley

JQ. wrote: »

Well I'm afraid they're wrong. What kind of Chartered Surveyor is your sister? I'm a Chartered Surveyor specialising in advising Banks and investors on Commercial Property Loans and Investments. Admittedly, I don't do residential property but the principles are the same.

I'm guessing that you have borrowed £169,500 at an interest rate of 6.5% - you can't just change what rate the bank receives because it suits your circumstances. The cost of borrowing £169,500 over 2 years is £22,000 - that is cost not profit. What you have paid to date is the interest cost as I stated earlier.

You have signed a legally binding agreement that the bank will hold you to. What you've suggested is just wishfull thinking on your part and is not realistic.

If you really want to test the water, why not tell your bank you've had an offer of £155,000 and see what they say - the offer could always be retracted at some later date. I can assure you it won't be "don't worry we're happy to take a loss on your behalf".

It looks like the loan method is the more likely way out. However I refuse to accept that banks don't make any money on mortgages.

This is irrelevant anyway. As I said at the start my post involved some speculation as to how the banks could do it, and to those whose alternative is bankruptcy then I still believe that the bank could take the loss on. If they have a house to sell that's been repossesed it'll cost them x. If it can be sold earlier for more than x and it'll cost them less, they'd have to be mad not to do it.

mbga9pgf

Bit of Wikipedia for you:

http://en.wikipedia.org/wiki/Moral_hazard

Something lost under Labour in the past 13 years.

Economist Paul Krugman described moral hazard as: "...any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly."[9] Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of potential losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the highest return.I][URL="http://en.wikipedia.org/wiki/Wikipedia:Citation_needed"][COLOR=#0645ad]citation needed[/COLOR][/URL][/I So-called "too big to fail" lending institutions can make risky loans that will pay handsomely if the investment turns out well, while being bailed out by the taxpayer if the investment turns out badly.

Sound Familiar?