We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Debate House Prices


In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

House Price Crash Discussion Thread

1275276278280281317

Comments

  • I have seen some great advice doled out on this topic so I was wondering if anyone could give me some thoughts. I am struggling to meet the £1000 pcm mortgage repayments on my flat (a 2 bed in a not so nice area of London). I fixed back in June in the tiny period it looked like interest rates were going to shoot up. I am paying 5.69% with Abbey, fixed for 3 years and it is interest only (owing 212k). I am sick with jealousy of friends on variable rates, particularly as they are not struggling with work like I am!

    Anyway, I am self-employed so was probably lucky to get that mortgage as I didn't have to prove my income. I realise I got myself into this position so no admonishing necessary, I have already done that myself! However I am unsure of what to do now. I am one month in arrears and having to borrow from my boyfriend for this months mortgage. In addition all my bills have bounced.

    Here are my options as I see them:

    1) sell up - I might get around £250k for it (I paid £260k) and I will still have about 30k in equity once I paid the 6.2k redemption fee. With 17k worth of debts I would be left with around £13k but no mortgage and little chance of being given one in the near future - being self employed and pretty skint. But I would need somewhere to live! Which brings me on to:

    2) sell up and buy something else at around £230k. I can port mortgage so no redemption fees and pay off all debts. Okay I will still have to find a grand a month mortgage but the outgoings will be seriously reduced (by about £400 a month) due to no debts to pay back (and this takes into account fees and stamp duty).

    3) rent out my place and rent somewhere else. The only problem is Abbey want to charge me for this £690 up front. And then I would have to find 4-6 weeks deposit and rent up front to rent another place. I don't have the cash.

    4) do nothing and keep working my bum off to try to earn more. Not that I aren't already trying to earn as much as possible!

    5) anything else?!

    Any thoughts or advice really appreciated!
  • I have just recently put my bungalow up for sale £120,000 agreed price with estate agents with the intention of buying a bigger house as we want to start a family. I have no mortgage and we have seen a few bigger houses that we would like in the region of £160,000, I have had offers between £100,000 and £105,000 for mine and don't mind losing a bit of money on the price, but I have offered £145,000 on a two house's that is up for 160,000 which i think is fair considering I have dropped £15,000 but have been told the offer is too low, we have got our Heart set on one but seems to me people are reluctant to accept any offers. I know there is no crystal ball, the problem is do I just accept the offer for mine or hold out, and with house prices coming down it would be in everyone interest to drop a bit on there house or face being stuck in your property.:confused:
  • harryhound
    harryhound Posts: 2,662 Forumite
    SE_Girl wrote: »
    I have seen some great advice doled out on this topic so I was wondering if anyone could give me some thoughts. I am struggling to meet the £1000 pcm mortgage repayments on my flat (a 2 bed in a not so nice area of London). I fixed back in June in the tiny period it looked like interest rates were going to shoot up. I am paying 5.69% with Abbey, fixed for 3 years and it is interest only (owing 212k). I am sick with jealousy of friends on variable rates, particularly as they are not struggling with work like I am!

    Anyway, I am self-employed so was probably lucky to get that mortgage as I didn't have to prove my income. I realise I got myself into this position so no admonishing necessary, I have already done that myself! However I am unsure of what to do now. I am one month in arrears and having to borrow from my boyfriend for this months mortgage. In addition all my bills have bounced.

    Here are my options as I see them:

    1) sell up - I might get around £250k for it (I paid £260k) and I will still have about 30k in equity once I paid the 6.2k redemption fee. With 17k worth of debts I would be left with around £13k but no mortgage and little chance of being given one in the near future - being self employed and pretty skint. But I would need somewhere to live! Which brings me on to:

    2) sell up and buy something else at around £230k. I can port mortgage so no redemption fees and pay off all debts. Okay I will still have to find a grand a month mortgage but the outgoings will be seriously reduced (by about £400 a month) due to no debts to pay back (and this takes into account fees and stamp duty).

    3) rent out my place and rent somewhere else. The only problem is Abbey want to charge me for this £690 up front. And then I would have to find 4-6 weeks deposit and rent up front to rent another place. I don't have the cash.

    4) do nothing and keep working my bum off to try to earn more. Not that I aren't already trying to earn as much as possible!

    5) anything else?!

    Any thoughts or advice really appreciated!

    This part of the forum tends to deal with house prices and macro economic ideas (like guess the price of gold against fiat currency XYZ in 18 months time now that the USA has "eased" another 800 billion).

    Your problem is not really a house price problem, it sounds like the start of a debt spiral problem.

    You are likely to find really sympathetic knowledgeable people if you repost with full details on the debt part of the forum. One of the first things they will suggest is a statement of affairs.

    Good luck

    Harry
  • .... in estimating the value of my property to be similar to the value that a virtually identical property sold for in 2005.

    But the valuation (for remortgaging) has come back significantly lower than I thought, citing nothing but "the current market" by way of explanation, based on sales of almost identical properties, today's valuation reflects the following changes...

    Q2 2000 plus 18%
    Q1 2003 About equal
    Q3 2005 minus 15%

    This is saying that anyone who bought in 2003 or later (thats six years ago) is looking at having lost money and realistically, anyone buying since 2004 (even with a 10% deposit) is already in negative equity. Anyone who bought in the last 2 years must be in dire straits. I haven't read widely on the subject but I thought prices were back at about 2005/6 levels, not those of 2003! I know it will depend on the area, property type etc, but even so I'm by no means in the worst category and as I said, the surveyor gave no specific reason for the downgrade.

    Is this really typical of other recent valuations? If so, how is the mortgage board so busy with remortgagers? With 75% LTVs now commonplace, these figures will be ruling out a remortgage for anyone who struggled onto the ladder in the last 6/7 years unless they had a large deposit to begin with, something that I don't believe is truly the case, yet.
  • Recession leads to fall in prices of everything.
    No Unapproved or Personal links in signatures please - FT3
  • harryhound
    harryhound Posts: 2,662 Forumite
    ............except prices set by the government.
  • Walter_J
    Walter_J Posts: 206 Forumite
    SE_Girl wrote: »
    I have seen some great advice doled out on this topic so I was wondering if anyone could give me some thoughts. I am struggling to meet the £1000 pcm mortgage repayments on my flat (a 2 bed in a not so nice area of London). I fixed back in June in the tiny period it looked like interest rates were going to shoot up. I am paying 5.69% with Abbey, fixed for 3 years and it is interest only (owing 212k). I am sick with jealousy of friends on variable rates, particularly as they are not struggling with work like I am!

    Anyway, I am self-employed so was probably lucky to get that mortgage as I didn't have to prove my income. I realise I got myself into this position so no admonishing necessary, I have already done that myself! However I am unsure of what to do now. I am one month in arrears and having to borrow from my boyfriend for this months mortgage. In addition all my bills have bounced.

    Here are my options as I see them:

    1) sell up - I might get around £250k for it (I paid £260k) and I will still have about 30k in equity once I paid the 6.2k redemption fee. With 17k worth of debts I would be left with around £13k but no mortgage and little chance of being given one in the near future - being self employed and pretty skint. But I would need somewhere to live! Which brings me on to:

    2) sell up and buy something else at around £230k. I can port mortgage so no redemption fees and pay off all debts. Okay I will still have to find a grand a month mortgage but the outgoings will be seriously reduced (by about £400 a month) due to no debts to pay back (and this takes into account fees and stamp duty).

    3) rent out my place and rent somewhere else. The only problem is Abbey want to charge me for this £690 up front. And then I would have to find 4-6 weeks deposit and rent up front to rent another place. I don't have the cash.

    4) do nothing and keep working my bum off to try to earn more. Not that I aren't already trying to earn as much as possible!

    5) anything else?!

    Any thoughts or advice really appreciated!

    Sorry, but you've been conned.

    Conned into taking out a mortgage you cannot afford simply so that the spiv who sold it to you could earn a couple of grand of your money in commission.

    Conned, like millions of others, into believing the monstrous lie that property prices only ever go up and that taking out a huge mortgage on a crappy little flat is an 'investment'.

    Conned into thinking that funding your lifestyle on credit card debt was a sustainable and viable option. It isn't. It never was.

    None of the options you suggest will work. You way out of this mess is as follows;

    1. Stop paying your mortgage and other debts immediately.
    2. Open a Cashminder account with the Co-op Bank.
    3. Find somewhere else to live and sign the tenancy agreement. Use the mortgage money to pay the deposit.
    4. Move in.
    5. Go bankrupt.

    It sounds drastic, but your quality of life will improve ten-fold overnight. All your debts will vanish and you will be able to continue running your business as a sole trader, although not as a limited company.

    Forget the flat. It has bankrupted you and is undoubtedly worth a lot less than the mortgage already. You are unlikely to be out of negative equity within 10 years. Walking away will without doubt be your best move.

    Check out the bankruptcy forum for excellent advice.
  • I'm struggling to work out if Walter J is being serious here, I can't imagine he can be.

    Your situation is that you are currently solvent. Instead of going bankrupt why not try and sell the place, if you need a quick sell drop the price to a level that saves you. It can't make things worse and if you then went bankrupt having failed to sell the flat then at least you have tried.

    In your situation surely considering an IVA would help and if you tell the bank that you're struggling I'd have thought there may be some other options.

    Couldn't you get a new mortgage and use that to pay off the redemption fee, this avoids the costs of moving house which could cost all of the difference in prices anyway - just a thought.

    Bankruptcy is a bit drastic for debts of £17k when you have earnings available. To me it doesn't seem half as bad as Walter J suggests.
  • Walter_J
    Walter_J Posts: 206 Forumite
    subarusty wrote: »
    I'm struggling to work out if Walter J is being serious here, I can't imagine he can be.

    I'm being deadly serious.
    subarusty wrote: »
    Your situation is that you are currently solvent. Instead of going bankrupt why not try and sell the place, if you need a quick sell drop the price to a level that saves you. It can't make things worse and if you then went bankrupt having failed to sell the flat then at least you have tried.

    Fair enough in normal circumstances, but she can't sell the flat. Despite her protestations to the contrary she is in negative equity, and will remain so for years to come if she stays put. Selling is simply not an option.

    Oh, and she is far from solvent. Every day she is getting even less solvent as the value of her flat falls.
    subarusty wrote: »
    In your situation surely considering an IVA would help and if you tell the bank that you're struggling I'd have thought there may be some other options.

    Her main problem is the mortgage. An IVA is of no use in this situation. If she got repossessed and any shortfall on the mortgage following the sale of the property was crystalised as an unsecured debt then an IVA might be appropriate. If she's been repossessed however, her credit rating is shot to pieces anyway so she might as well go bankrupt and save herself many thousands of pounds over five years.
    subarusty wrote: »
    Couldn't you get a new mortgage and use that to pay off the redemption fee, this avoids the costs of moving house which could cost all of the difference in prices anyway - just a thought.

    Now you're just being silly!
    subarusty wrote: »
    Bankruptcy is a bit drastic for debts of £17k when you have earnings available. To me it doesn't seem half as bad as Walter J suggests.

    But the debts aren't £17k. She has an ever increasing chunk of negative equity in her flat that needs to be added to that. If she could afford to make her mortgage payments and live without racking up further credit card debt then it might not be a problem. But she can't. That's why she wrote her post.

    Its as bad as I suggest right now. Every day she does nothing it gets worse. She now knows what the solution is.
  • Walter J

    I also believe house prices are dropping but from what I read the flat has not been placed on the market, how can you tell she can't sell the flat? She estimated its value as £250k at the moment and I see no reason to doubt her - some places in London have dropped more than others.

    The IVA idea was figuring you can get IVA's based on monthly payments with lump sum payments at time of sale of the flat. If the current debts are stopping her being able to make the meet the mortgage repayments it may help. Her current repayments are £400 per month reducing these may help.

    Speaking to the mortgage provider may be able to help.

    Getting a new mortgage may be silly but I was throwing an idea into the air. It seemed to me to be a solution and having looked online I understand its not generally a good solution but yahoo says that is it possible to someone in a similar position:
    Can I buy out of a fixed rate mortgage?

    Stuck with a 5.5% mortgage, 2 years in to a 5 year fixed rate deal, my friend [not me], wonders if it's possible, and/or worthwhile, to buy out - pay a penalty or whatever - of the deal and to take up a new mortgage at the new LOW rate.


    "Yes, subject to an early repayment charge (ERC). This amount will be a percentage of the amount you owe, this figure will vary from mortgage to mortgage but will generally be somewhere between 1% and 5%, often reducing as you get closer to the end of the deal. As you are only 2 years into a 5 year deal, I would imagine you would be looking at paying an ERC of somewhere near 4%. Check your original mortgage offer as this will have the exact figure.

    As for it being worth while, I very much doubt it. There may be circumstances where it is worthwhile, if for example you are really struggling with your current payments, have been offered a MUCH lower rate, and are in desperate need of reducing the payments to get you through a temporary cash flow shortage.

    However, I very much doubt this would be worthwhile due to the high ERC and the fact that current deals aren't that much more competitive that what you are paying now. If you are in a desperate situation, speak to a mortgage broker as there will be several avenues to go down before making a decision like that."


    I go back to saying bankruptcy for £17k in her situation seems drastic. Bankruptcy for a case of possible negative equity.

    In this case as advice goes recommending someone goes bankrupt is ridiculous, if the flat could be sold for her estimate your advice would end up costing her £13k plus a terrible credit rating!

    The best option is to speak to some people, CAB may be able to suggest something, her mortgage provider may be able to provide some relief or an estate agent may be able to sell her flat. Bankruptcy is definitely not the only solution I do agree though that doing nothing will not help matters.

    Bankruptcy is suitable for some people but it shouldn't be the first thought that comes to people's heads and I think advising it based on the limited information we have is dangerous.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352.1K Banking & Borrowing
  • 253.5K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245.1K Work, Benefits & Business
  • 600.7K Mortgages, Homes & Bills
  • 177.5K Life & Family
  • 258.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.