HPC rogue post: Why dont you just buy...

caronoel

I really love this one:
http://www.housepricecrash.co.uk/forum/index.php?/topic/205195-why-dont-you-just-buy/

They are going apoplectic with rage over there at someone who could have the temerity to challenge the group think.

The mods have moved it from the main forum to "Anecdotals", but still the vitriole rages.

Very amusing. Well worth a read!

:D:D

cells

one of my earliest posts on there when 100% mortgages were available was something along the lines of...

why not buy with a 95-100% mortgage, if prices go south by much you can hand the keys back if they don't and instead go up you could be saving yourselves from making a foolish decision

needless to say it didn't get a lot of support even though it was i think logically a good idea and a sane move.


The same advice would probably be true today too. If you are so afraid of of a HPC then buy with a 95% mortgage and let the bank take the risk of a 50% HPC that isnt going to happen

mwpt

cells wrote: »

one of my earliest posts on there when 100% mortgages were available was something along the lines of...

why not buy with a 95-100% mortgage, if prices go south by much you can hand the keys back if they don't and instead go up you could be saving yourselves from making a foolish decision

needless to say it didn't get a lot of support even though it was i think logically a good idea and a sane move.


The same advice would probably be true today too. If you are so afraid of of a HPC then buy with a 95% mortgage and let the bank take the risk of a 50% HPC that isnt going to happen

You're still liable for the debt, you can't just hand back the keys. In other words, any other equity you have is at risk.

(as far as I'm aware)

danothy

cells wrote: »

logically a good idea and a sane move ... buy with a 95% mortgage and let the bank take the risk of a 50% HPC

The bank don't take that risk. If you "hand the keys back" to your lender and it sells for less than you owe then you still owe anything that is still outstanding.

mwpt

caronoel wrote: »

I really love this one:
http://www.housepricecrash.co.uk/forum/index.php?/topic/205195-why-dont-you-just-buy/

They are going apoplectic with rage over there at someone who could have the temerity to challenge the group think.

Actually, the group think is that you can't lose in housing. Most people don't really think much more deeply than "what is the max monthly repayment I can afford" and buy at that price.

Also, if you've benefited from huge house price inflation, someone has lost out. The way I was brought up was to actually have empathy for fellow human beings rather than laugh in the face of their issues.

cells

danothy wrote: »

The bank don't take that risk. If you "hand the keys back" to your lender and it sells for less than you owe then you still owe anything that is still outstanding.

yes I understand that, this is assuming you only have enough money to buy with a 95-100% mortgage. Or of course you could gift any other money you have to your mother before buying said property

and of course this is only a problem if prices did indeed fall a substantial amount. and it was a solution for the "dont buy prices MIGHT fall" group. ie transferring a HPC risk from yourself to the bank IF a hpc happens

at the time i posted about London, and prices are double what they were back then.


I think a factor for a lot of HPCers is that they are extremely risk averse and/or a type of person who finds it extremely difficult to make a decision (different to continuing on as they are)

danothy

cells wrote: »

it was a solution for the "dont buy prices MIGHT fall" group. ie transferring a HPC risk from yourself to the bank IF a hpc happens

No, it was never a solution, as you cannot transfer the risk of the value of a mortgaged house falling in value to the lender. If your house value crashes, and you let the lender sell it (or sell it yourself) to pay off the mortgage and it goes for less than you owe then you still have to pay the lender the remainder of what you owe above the sale price, only you now have nowhere to live.

Landofwood

How is this a 'rogue' post? I also don't see any vitriol.

Did you link to the wrong thread?

cells

danothy wrote: »

No, it was never a solution, as you cannot transfer the risk of the value of a mortgaged house falling in value to the lender. If your house value crashes, and you let the lender sell it (or sell it yourself) to pay off the mortgage and it goes for less than you owe then you still have to pay the lender the remainder of what you owe above the sale price, only you now have nowhere to live.

bankrupt and back to renting.

the risk was transferred to them fully if you bought with a 0% down mortgage

in fact the banks accept this risk its why they charge higher fees and rates for lower deposit mortgages

danothy

cells wrote: »

bankrupt and back to renting.

Bankruptcy is not without its consequences.

Mistermeaner

Thread didn't seem bad, I don't agree with some views but same on here. What's the issue?