New Build Disaster - help needed!

Matt123

He is not paying 130,000 and making a loss each month, the loss each month is the entire cost of purchasing the house. Assuming the shortfall was as much as 250 a month this would only be 75,000 in total over a 25 year mortgage.

eek

Matt123 wrote: »

He is not paying 130,000 and making a loss each month, the loss each month is the entire cost of purchasing the house. Assuming the shortfall was as much as 250 a month this would only be 75,000 in total over a 25 year mortgage.

No because they are merely subsidising the interest payment on the property based on that £250 a month. If they wanted to own the property after 25 years they need to subsidise the payment by not just the interest only side of £250 a month but also the difference between that interest only payment and a full repayment mortgage (another £340 a month, grand total £590 a month).

Personally, I would be more concerned over the idea that you will get a 6% rate next year. If you can't remortgage you are going to be stuck on Halifax's SVR which is not 6% but currently a rather scary 2% above base rates (7.75%). If base rates increase that may well be 8% or 8.25%

Pobby

Just a thought.I do`nt know which part of Essex you are going to but parts of Essex are much cheaper than greater London.Me,I think i would take the hit now.

jimmyay

Dead_Eye_Jones wrote: »

Quick check of the OP's earlier posts and this thread actually seems for real. Sorry for my cynicism but there are plenty of people wishing for a collapse in the housing market and this is just the sort of thread that they would conjour up! So yes there are a few people in this predicament but sadly some are just winding us up! Kind of sick really.

If I were you, Id cut my losses and move. tbh Id never buy a flat because the risk of getting stuck there is too great and no one wants to live in a flat for the rest of their lives. Its a shame because there are still towns in London where you can buy a whole house for the price of that 1 bed flat - thats what you are competing with!

yes lots of people from houseprice crash website come on and spam these boards all the time - they're a real pain.

Doom_Lord

Sometimes you need to know when to cut your losses. This is looking like one of those situations.

Doom_Lord

jimmyay wrote: »

yes lots of people from houseprice crash website come on and spam these boards all the time - they're a real pain.

It may seem like a pain but what would you call the situation when someones flat is worth less then they paid for it?

This property is not worth what they paid for it, property doesn't always go up in value. You are in denial.

The question they have to ask is whether it's going to get better or worse? Personnally I think it's getting worse, but if they insisted on keeping the flat to rent out then I would get a long 5 - 10 year fixed deal and let it out without the banks consent. Yes you might have to subsidise it and yes you would be commiting mortgage fraud (seems to be the norm these days anyway) but at least you'll have fixed costs over the next few years. Make sure you have two months mortgage payments saved to cover voids. If you can get a BTL Mortgage then you could always consider handing it over to the council who will pay all the costs and voids for the entire time they have a contract for it.

Also if your "Mortgage fraud" is found out but you have tennants in your flat, it is still in negative equity and your making all the mortgage payments the bank may be more inclinded to give you "consent to let" instead of repossesion.

Regardless of the fraud make sure you sort out you Tax situation because Tax office will not be so forgiving.

If you choose this root then you will be in this for the long term otherwise you stand to loose even more money than you stand to loose now.

Doom_Lord

Double Post

Doom_Lord

Double Post

horace_2

alternative views http://www.housepricecrash.co.uk/forum/index.php?showtopic=50939

Bubble_Pricker

haymans74 wrote: »

We bought a home because we were sick of lining the pockets of landlords

And I am sick of this silly argument for buying.

Instead of lining the landlord's pockets, you have lined the pockets of the building company and you are still lining the pockets of the Halifax. What is the difference between renting a flat and paying rent and renting the money and paying interest?

My advice would be to sell now and take the hit. Keeping the property to let out will cost you money on an ongoing basis, as other posters have pointed out. You seem to somehow assume that if you just wait long enough, you will eventually break even. Despite having seen the errors of your way in buying an overpriced newbuilt flat, you are still making another error: to assume that the value of your flat will continue to go up. Property is a depreciating asset, so its real value will naturally decline, not increase. This natural picture has been distorted by nominal house price inflation of the past decade.