how long before the first 100% mortgage to return

geneer

HAMISH_MCTAVISH wrote: »

Link?

Source?

Evidence?

Because thats a crock of !!!!

I wonder if this quote will ever come back to haunt
our favourite unsubstantiated assertion maker.

AndyGuil

HAMISH_MCTAVISH wrote: »

Untrue. There is no law saying that deposit monies have to be saved, not borrowed.

You just can't lie about it to the lender....

So for example, if I were to loan 50K to my brother for a deposit, and the lender asks about the source of funds, then he can't lie. The lender will take repayment of those funds into account for affordability calculations. But it's not illegal.

If I say to my brother that he doesn't need to repay the funds until the house is sold in the future, then there is no affordability problem either.

In that cause no fraud committed, but they won't give you mortgage because of lending restrictions. Using an unsecured loan means ultimately you can't afford to save a deposit and therefore can't afford the repayments on a mortgage. The deposit demonstrates you can save and it reduces risk to the lender.

A gift is different to a loan. The bank will be looking out for these types of "gifts" to make sure they are not a loan. They want evidence the gift is not required to be repaid ever. Repayment of a gift after a house sale will only be accepted if the gift is not required to be repaid in any other circumstance such as repossession, negative equity etc.

Generali

chucky wrote: »

banks will get around the Basle III requirements somehow.

for example - giving a customer a 75% mortgage + 25% home loan can be done, just not in this economic climate though.

I don't think unsecured debt counts as an asset under Basle III for the purposes so that doesn't get you round the problem that you have to charge punitive rates for 100% mortgages. It doesn't matter how you package them.

Basle III as agreed doesn't prevent banks making 100% or even 100%+ mortgages. What it does do is make them very expensive, at least what I've read makes me think it will and I have had a go at reading the original document (although I confess I sped through to the bit that deals with mortgages).

HAMISH_MCTAVISH

AndyGuil wrote: »

In that cause no fraud committed, but they won't give you mortgage because of lending restrictions. It means ultimately you can't afford to save a deposit and therefore can't afford the repayments on a mortgage. The deposit demonstrates you can save and it reduces risk to the lender.

Again, this is absolutely false.

There are many parts of the UK where rent is MORE expensive than mortgage payments.

The ability to save is no proof of the ability to make repayments on a mortgage.

A gift is different to a loan. The bank will be looking out for these types of "gifts" to make sure they are not a loan. They want evidence the gift is not required to be repaid ever. Repayment of a gift after a house sale will only be accepted if the gift is not required to be repaid in any other circumstance such as repossession, negative equity etc.

And again, you're demonstrating your ignorance.

So we've gone from "it's illegal and fraud" to "in my opinion the banks shouldn't allow it".

So again, I ask for evidence, proof or a source that shows where it's illegal or fraud to use borrowed money for a deposit, provided you haven't lied about it on the application.

AndyGuil

HAMISH_MCTAVISH wrote: »

Again, this is absolutely false.

There are many parts of the UK where rent is MORE expensive than mortgage payments.

The ability to save is no proof of the ability to make repayments on a mortgage.

The reason they can't get a mortgage is because they can't save a deposit. Why do you think there is a massive decrease in mortgage applications since 100% mortgages are non existent? Interest rates are low, so it's nothing to do with rates. Why doesn't everyone go out an get a loan for the deposit? because they won't get accepted for a mortgage.

HAMISH_MCTAVISH wrote: »

And again, you're demonstrating your ignorance.

So we've gone from "it's illegal and fraud" to "in my opinion the banks shouldn't allow it".

So again, I ask for evidence, proof or a source that shows where it's illegal or fraud to use borrowed money for a deposit, provided you haven't lied about it on the application.

An unsecured loan taken with the intention of using it for a mortgage when the loan was not stated for this purpose on the mortgage form is fraud.
A loan gifted from another person used for a mortgage where the loan was stated to be a gift is fraud.
A gift from another person that does not need to be repaid in anyway is allowed.
An unsecured loan taken for a mortgage deposit will stop the lender giving you the mortgage as they do not think you can save the deposit.
The banks do no want you in a situation where you can not pay the mortgage, they don't like you owing money to other people/lenders or an LTV higher than they allow.

HAMISH_MCTAVISH

AndyGuil wrote: »

An unsecured loan taken with the intention of using it for a mortgage when the loan was stated for this purpose on the mortgage form is fraud.

No it isn't. If the loan was stated for the purpose, no fraud was committed.

A loan gifted from another person used for a mortgage where the loan was stated to be a gift is fraud.

True.

A gift from another person that does not need to be repaid in anyway is allowed.

True

An unsecured loan taken for a mortgage deposit will stop the lender giving you the mortgage as they do not think you can save the deposit.

False.

The bank will look at the affordability criteria and determine whether you can pay both the mortgage and the loan. Simple as that.

The banks do no want you in a situation where you can not pay the mortgage, they don't like you owing money to other people/lenders or an LTV higher than they allow.

False.

The only reason the banks don't like high LTV lending is because new rules on capital reserves distort the cost they have to pay to lend at those ratios.

If it's someone else's money, whether loaned or gifted, they don't care.

AndyGuil

Hamish, typo on the first one.

Again,
The reason they can't get a mortgage is because they can't save a deposit. Why do you think there is a massive decrease in mortgage applications since 100% mortgages are non existent? Interest rates are low, so it's nothing to do with rates. Why doesn't everyone go out an get a loan for the deposit? because they won't get accepted for a mortgage.

HAMISH_MCTAVISH

AndyGuil wrote: »

Interest rates are low, so it's nothing to do with rates.

False.

Interest rates for high LTV lending are higher now than they were in 2007, at the peak of the last interest rate cycle.

Why doesn't everyone go out an get a loan for the deposit? because they won't get accepted for a mortgage.

Because getting an unsecured loan for 30K is just as hard as getting a mortgage, and massively more expensive as well.

The banks are rationing lending, because they simply don't have access to enough funds to lend.

AndyGuil

HAMISH_MCTAVISH wrote: »

False.

Interest rates for high LTV lending are higher now than they were in 2007, at the peak of the last interest rate cycle.



Because getting an unsecured loan for 30K is just as hard as getting a mortgage.

The banks are rationing lending, because they simply don't have access to enough funds to lend.

You only need a 10-20k deposit for most properties and you can get a 90% LTV. Most people can get those, so why don't they get them and use it for a mortgage? Why have lowest value properties such as flats/terrace been hit the hardest with price falls?

HAMISH_MCTAVISH

AndyGuil wrote: »

You only need a 10-20k deposit for most properties and you can get a 90% LTV. Most people can get those so why don't they get them and use it for a mortgage?

Because lending on unsecured loans for 20K is difficult to get. Most people can't get them, as the banks are rationing the limited pool of funds they have to lend.

And the interest rates payable these days for unsecured borrowing is often 15% or more..... Which is one of the ways banks ration the funds.

You're talking credit card rates nowadays for most people.... Which is a stupid way to borrow money that you'll take years to pay back.

Why have lowest value properties such as flats been hit the hardest with price falls?

Because they were hit hardest by LTV restrictions.

Although they've also recovered fastest lately as lending has eased slightly.