MSE News: Guest Comment: Why is it difficult to get a mortgage?

mavric501

Hi, first post on the site so sorry if not in the correct place. I need some opinions on the next move for my mortgage, maybe someone could suggest something, my situation:
100% Interest only mortgage with Northern Rock, just come off a 5 years fixed rate deal and cannot change from their standard variable rate, my house has not gone up in value so if i sell it should just cover the mortgage. No other lender will touch us as we dont have any deposit and im afraid if the interest rates go up the payments will go up more than i can afford and we will end up losing the house.Do i sell now or wait another year? any advise welcome.
:mad:

daaave

mavric501 wrote: »

Hi, first post on the site so sorry if not in the correct place. I need some opinions on the next move for my mortgage, maybe someone could suggest something, my situation:
100% Interest only mortgage with Northern Rock, just come off a 5 years fixed rate deal and cannot change from their standard variable rate, my house has not gone up in value so if i sell it should just cover the mortgage. No other lender will touch us as we dont have any deposit and im afraid if the interest rates go up the payments will go up more than i can afford and we will end up losing the house.Do i sell now or wait another year? any advise welcome.
:mad:

If you're struggling to repay an interest-only mortgage, I would strongly suggest you sell now while you can.

On topic - it really is quite simple - The banks are insolvent. The value of their assets (if they were forced to mark-to-market) are substantially less than their liabilities. They are frantically trying to refill their vaults by overcharging on loans/mortgages and underpaying savers before someone notices and the pack of cards collapses.

opinions4u

daaave wrote: »

If you're struggling to repay an interest-only mortgage, I would strongly suggest you sell now while you can.

Or build up a savings pot or overpay the debt to reduce the balance.

On topic - it really is quite simple - The banks are insolvent. The value of their assets (if they were forced to mark-to-market) are substantially less than their liabilities.

It's simple, but it's the other way round. Their assets (loan books) are substantially bigger than their liabilities (savings accounts, current accounts, wholsale funding portfolios).

They are frantically trying to refill their vaults by overcharging on loans/mortgages and underpaying savers before someone notices and the pack of cards collapses.

No. Their books are balanced by the Special Liquidity Scheme from HM Government. The banks are repaying this at a fairly rapid rate. Savers have actually got access to interest rates that are at a higher margin above base rate than history has ever seen. The "net interest margin" of the banks is hovering between 1.5% and 2.5% - it's historical norm.

grumbler

opinions4u wrote: »

On topic - it really is quite simple - The banks are insolvent. The value of their assets (if they were forced to mark-to-market) are substantially less than their liabilities.

It's simple, but it's the other way round. Their assets (loan books) are substantially bigger than their liabilities...

I am no expert, but I think there are two different values here:

• the book value,
• the real value - what they can actually get for their assets if they have to sell them.

Ste.._2

illgetthere wrote: »

it has put people like myself in a horrible position

I bought my first home in 2002

and then bought a 2nd property in 2007

I now want to buy a 3rd

Our hearts bleed for you :rotfl:

illgetthere

Ste.. wrote: »

Our hearts bleed for you :rotfl:

I must say that i am getting a bit bored with this site now. Everyone moaning and narrow minded with no real input just crappy comments.

not everyone is the same and has the same scenarios as each other, my comments were meant to show the difference in how easy it was to obtain a mortgage back in 2007, yet the inability to do so with the same criteria and with me being in relatively a similar situation hence the 'trapped' feeling of not being able to purchase another property, which would have been a career choice.

This site has nothing but people moaning about absolutely nothing. If you don't want to discuss how low the interest rates are, or when houses will crash or fall, there is actually nothing of any use to read.

I'll pop back next year and read the same old stuff..

barney1234_2

Echoing an early comment in this thread, we bought our first house in 1992. An edwardian 3 bed semi in Nottingham requiring modernisation. I'm fairly sure the criteria was as follows:

Purchase price - approx £58000

Our joint income - approx £21,500 (both recent uni graduates)

Income multiplier was 2.5 x joint = £53,750 max mortgage

We had saved up a 5% deposit = approx £3,000

Therefore the 'gap' was 58000 less 53750 less 3000 = £1,250

We persuaded the lender to lend the extra £1,250 but this was conditional upon my wife's (then g/friend) father acting as guarantor.

The mortgage lender (might have been The Woolwich..can't quite remember) was very very strict. It was 2.5 x joint and max 95% loan. All pretty healthy to be honest. We didn't have aspirations for a larger house and the loan was affordable.

Of course, the housing booms since then have probably stuffed this equation for good. I might see if I can work out the current house 'value' versus comparable graduate wage. Probably painful reading.

Ste.._2

illgetthere wrote: »

I must say that i am getting a bit bored with this site now. Everyone moaning and narrow minded with no real input just crappy comments.

not everyone is the same and has the same scenarios as each other, my comments were meant to show the difference in how easy it was to obtain a mortgage back in 2007, yet the inability to do so with the same criteria and with me being in relatively a similar situation hence the 'trapped' feeling of not being able to purchase another property, which would have been a career choice.

This site has nothing but people moaning about absolutely nothing. If you don't want to discuss how low the interest rates are, or when houses will crash or fall, there is actually nothing of any use to read.

I'll pop back next year and read the same old stuff..

:rotfl:
.

spikyone

illgetthere wrote: »

not everyone is the same and has the same scenarios as each other, my comments were meant to show the difference in how easy it was to obtain a mortgage back in 2007, yet the inability to do so with the same criteria and with me being in relatively a similar situation hence the 'trapped' feeling of not being able to purchase another property, which would have been a career choice.

One man's career choice is another man's home. Sorry but it's nothing like a "horrible position" - that would be someone who's just left university at 21-22, with £20k+ of debt (under the current system) and no savings, who won't be able to afford to buy a house until they're 35.
The house price bubble occurred precisely because people like mavric501 have borrowed more than they can afford (and using equity from one house as a deposit for another is doing exactly that, so I have no sympathy for you either), and because people have seen houses as an investment or source of income and not a place to live, and blindly refuse to make any financial loss on them, whatever the market conditions.

@mavric501, I suggest you sell your house and rent somewhere, since you clearly can't afford to buy. Live within your means! To expand on what I said in my previous post, anyone who said "yippee, mortgage rates are low, I can afford to buy now", or bought a more expensive house, without realising that rates were abnormally low and could only ever go up, probably shouldn't be allowed out unsupervised anyway...