Home Equity increases by 2.7% in 2011

DervProf

RenovationMan wrote: »

Lets have an theoretical example, we love these on this board:

2 twins, Bill and Ted.

How apt.

Please refer to the bogus theory that you started this thread with.

blisk3

RenovationMan wrote: »

Glad to see that you read and, more importantly, understood my description of mortgage valuations for 5 year olds.

Just to recap, the mortgage valuation in my signature never changes because I don't get the mortgage lender to value my property every month. The actual value is immaterial, it's the value the lender sets it at when you get your mortgage.

When I get a new mortgage deal, I'll have a new valuation to work with and a new mortgage challenge to keep me motivated. Simples.

Glad you now understand, hopefully we'll have no more of those silly digs you feel compelled to have against the valuation figure in my signature?

Valuation is an active term.

Picking the valuation from years ago is not a current valuation.

You have conned yourself, as have many, into thinking the value of your house can't possibly go down. As long as you stubbornly stick to value in your head, that must be it. :rotfl:

That's why you don't have any new valuations, you don't want to believe it, don't want anything to get in way of this idea that has been planted in your head.
.

shortchanged_2

That's the point blisk3. RenoMan would probably rather go to his current lenders high SVR than admit to a devaluation from a new lender for a remortgage, and therefore a drop in equity of his precious asset. Stubborness and denial will set out his stall from now on.

That's how property equity works. It's often an unrealistic figure in peoples heads and it's only when it's time to remortgage or sell does reality set in.

RenovationMan

Thrugelmir wrote: »

Past performance is no guarantee of future performance.

Doesn't help the 14.7% of total mortgage borrowers who at the start of 2007 had mortgage advances in excess of 90% LTV.

To have winners, you also need losers.

Someone buying in 1985 probably felt the same as someone buying in 2007. The market works in cycles but it always goes up. As long as you're in it for the long haul, everything is fine. In relation to the length of a mortgage, negative equity is a short term problem.

shortchanged wrote: »

HPI is no guarantee, particularly if you buy at the wrong time. i.e at the peak of the market.

But you make it sound all so simple RenoMan. Funny now though why banks are starting to take quite a dim view of IO mortgages these days.

See answer above. Generally speaking, most people have a mortgage for at least 25 years, often 30 or 35 years especially if they move house a few times. Time enough to view today's peak as tomorrow's trough. I'm sure someone buying today would love to be paying 1985 peak prices.

It is all very simple, providing you follow the golden rule, do not MEW. Banks are taking a dim view of IO because they are under political pressure to do so. The reality of the situation is that very few banks will lose any money because of IO mortgages, unless they allow their borrowers to break the Golden Rule. Its highly unlikely that an IO mortgage reaching the end of a 25 year term will be in negative equity, so the risk of not having the mortgage paid off at the end of the term lies soley at the door of the borrower.

Graham_Devon

RenovationMan wrote: »

Banks are taking a dim view of IO because they are under political pressure to do so. The reality of the situation is that very few banks will lose any money because of IO mortgages, unless they allow their borrowers to break the Golden Rule. Its highly unlikely that an IO mortgage reaching the end of a 25 year term will be in negative equity, so the risk of not having the mortgage paid off at the end of the term lies soley at the door of the borrower.

What political pressure is this?

Do you have evidence?

Pimperne1

Renoman. Too much good stuff on this thread. Please register with CreditCrunch so that you can enlighten them too.

RenovationMan

Emy1501 wrote: »

Isn't the above idea part of the potential problem? I know few people who bought as late as 2008 who could only afford the payments at interest only. Their thoughts were their house will be worth 4-5x in 25 years and as some of these don't really have a pension they are also relying the house providing a pension. Of course now we are being told on other threads that down sizing isn't really an option for a lot of the elderly at time when people's houses are worth up to 10 times what they paid so how's it going to work when people may not get even twice as much as they paid.

Also IO mortgages are normally taken out over a term ie 25 years and at the end of this the bank can demand their money back. I someone who was given 4 weeks to pay off the mortgage at the end of their term

Affordability is down to the lender, if they decide that they are happy to lend a sum of money to an individual (say 3x salary) then whether the mortgage is IO or repayment, if the borrower can barely afford the repayments, then that is the fault of the mortgage providers lending criteria, not the fault of the mortgage type.

The whole point I made is that at the end of the 25 years the home owner who hasn't made any capital repayments and doesn't have a repayment vehicle will have to sell the house. However, he will walk away with a tax free HPI lump sum and will have had 25 years of security of tenure after effectively renting from the bank. Contrast this with someone who rents from a landlord - what does he gain after 25 years?

RenovationMan

blisk3 wrote: »

Valuation is an active term.

Picking the valuation from years is not a current valuation.

You have conned yourself, as have many, into thinking the value of your house can't possibly go down. As long as you stubbornly stick to value in your head, that must be it. :rotfl:

That's why you don't have any new valuations, you don't want to believe it, don't want anything to get in way of this idea that has been planted in your head.

The value of my house can go down, but over a 25 year period it will always go up. I haven't been conned at all, I bought my first house in 1995 for £40k and sold it for £140k in 2002. I then bought a house for £180k and sold it in 2010 for £250k. I bought my current house for £450k and will sell it around 2032 when I'm looking to retire. Do you really believe that it will be worth less than £450k by then? Seriously?

I don't have new valuations (I'm assuming you mean my sig) because I'm not going to pay my mortgage provider to revalue my mortgage every year. I'm basing my equity challenge against the purchase price, which is also the valuation price the mortgage provider gave. WHen I remortgage at the end of my challenge, I'll know whether I have hit my 50% LTV target. Simples.

RenovationMan

shortchanged wrote: »

That's the point blisk3. RenoMan would probably rather go to his current lenders high SVR than admit to a devaluation from a new lender for a remortgage, and therefore a drop in equity of his precious asset. Stubborness and denial will set out his stall from now on.

That's how property equity works. It's often an unrealistic figure in peoples heads and it's only when it's time to remortgage or sell does reality set in.

What on earth are you talking about shortchanged? You're better than this. Come on mate, pull your socks up.

I've already given you my 'Valuations for 5 year olds' text, you seemed to understand it but it seems that you're once again struggling. Shame really.

When I bought my house I arranged a 3 year discounted BoE tracker. Hence the reason I have a 3 year equity challenge. WHen the three years are up I'll arrange a new mortgage and I'll know my new valuation price, my new mortgage term and I'll set up my next challenge and signature accordingly.

DervProf

"Equity challenge". :rotfl:

Why not just shut up about your mortgage, and get on with paying it off ?