A generation are being priced in order to keep the value up of their parents assets.

wotsthat

shortchanged wrote: »

Or you could look at it this way. If you put £5 million of your own money into the same venture you would now be £2.45million worse off if the values dropped 50%.

Yes I know wotsthat. Falls like that never happen do they.

Again, we're talking about two properties that at the point of repossession have £9k of equity and £500k of equity. Why doesn't the bank just sell them - the equity's there. That's way they don't have exposure to future price falls.

But yes if the value of a house falls by 50% it...errr...falls in value by 50% - thanks for that.

shortchanged_2

wotsthat wrote: »

Again, we're talking about two properties that at the point of repossession have £9k of equity and £500k of equity. Why doesn't the bank just sell them - the equity's there. That's way they don't have exposure to future price falls.

But yes if the value of a house falls by 50% it...errr...falls in value by 50% - thanks for that.

You were also taking about risk and making out that the bigger loan is a no brainer. I was just pointing out that it's not really that simple, is it.

wotsthat

shortchanged wrote: »

You were also taking about risk and making out that the bigger loan is a no brainer. I was just pointing out that it's not really that simple, is it.

I was just pointing out that loan size is but one consideration when calculating risk - Percy seemed to think that 'that percentage' (i.e. LTV) wasn't an indicator of how stretched someone was and, of course, your head turned purple and spun around in circles when the affordability word was mentioned.

No it's never simple.

Percy1983

Eellogofusciouhipoppokunu wrote: »

Affordabilty has practically no relationship to income multiples/percentages.

Your mortgage payments could be 21% of your income but you could have car finance, credit cards and other long-term financial commitments that negatively impact your ability to service the debt. Conversely your mortgage payments could be 42% of your income, but if you have zero debts and no other financial commitments you might easily be able to afford to service the mortgage debt.

As I said in an earlier post, salary multiples are irrelevent while affordability is everything.

I agree completely, but I do remember my mortgage provider asking if I owed elsewhere etc.

Goes back to risks again, they could see the 21% and there was nothing else taking a bite so was I a big risk borrowing 90% of £93k.

As I said its down to not over stretching and keeping good credit files, if I had asked for 90% of £180k I may not have got it, if we hads loads of debts we may not have got it, if I had loads of missed payments I may not have got it.

My point is its clear to see why I got a mortgage at 90% and I did nothing impossible, I am sure there is just as clear reasons why those who got rejected got rejected, there will be some point which they control which has made it a rejection.