There will not be a crash

mr.broderick

geoffky wrote: »

mr broderick if you read i have told you where to look..

Yeah geoff and ive replied to your proprty snake post. loser.

Paul_N_4

The_Dangerman wrote: »

I'll let you into a secret on how it works.

You have 20k, in a top rate savings account paying 6.5%. In 5 years you make £5769 after tax.

I put £20k as a deposit, into a house worth £100k with the rent covering the £80k mortgage. Even at 2.7%, the I will make £14,248 Over the longer term, 4% is easily achievable making it more like £21,665 over 5 years, compared to £5769 in a savings account. And then, before the 5 years is up, the rent is turning a profit, so add that into the mix, too.

I think I will stick to the house, thanks.

Obviously that is VERY simplistic, but gives you an idea.

Yes very simplistic. You conveniently appear to have left off everything from void periods to maintenance costs, to solicitor fees, mortgage fees, etc. You also seem to have plucked 4% HPI out of the air instead of the 2.7% you quoted from the Nationwide in your last post. And are you seriously telling me you have to wait 5 years before turning a profit on the rent nowadays? Wow things have got bad. I also assume you pay your taxes when you do finally make a profit on the BTLs, cause with the increased power HMRC have, I assume they'll start looking at those landlords that have extremely high maintenance costs, if you know what I mean.

Now if you use Nationwide statistics again, can you do the same sums but for a BTL property I bought in November 2007? Nationwide say the average house has dropped by around 2% in that time? So that's -2.0% instead of 2.7%, or your imaginary 4%.

And lastly, just one thing, you haven't made a penny of the HPI until you sell and apply CGT. Until then, your figures are purely imaginative.

SquatNow

mr.broderick wrote: »

Would the property be surveyed to ascertain value squatty?

Yes and no. It's "valued" by a "surveyor" but it's unlikely they will bother going to see it unless it's particularly unusual, normally they'de just look at the sale values of similar houses in the surrounding area.

BTL is a commercial loan not a residential mortgage.

As such completely different rules apply.

LTV ratios must be maintained and the loan, including the value of the asset it is secured on, is reviewed annually. If the bank calculates that the asset value has dropped, and thus the LTV value increased, they will ask the debtor to pay off a chunk of the loan.

This is done to try to avoid negative equity. It's a remenant from ye olde days... from the "commercial" nature of BTL loans. When only real businesses (not BTL fraggles) used them, if the company went bust the lender would have no come back agaist the companies management, so they'de want to make sure that the value of the asset at auction is always enough to repay the loan.

Of course, these days with BTL fraggles using commercial loans to buy property, it the loan goes bad the BTL fraggle looses everything through bankrupcy.

For residential mortgages, they will normally offer to modify payments, within reason, and will only reposess when you fall 2.5 months behind.

For BTL mortgages (well, they arn't technically mortgages they are commercial loans as stated) the bank can call in the loan and reposess the property the day after the first missed payment.

The difference between BTL loans and residential mortgages should be added to this forum as a sticky.

mr.broderick

SquatNow wrote: »

Yes and no. It's "valued" by a "surveyor" but it's unlikely they will bother going to see it unless it's particularly unusual, normally they'de just look at the sale values of similar houses in the surrounding area.

BTL is a commercial loan not a residential mortgage.

As such completely different rules apply.

LTV ratios must be maintained and the loan, including the value of the asset it is secured on, is reviewed annually. If the bank calculates that the asset value has dropped, and thus the LTV value increased, they will ask the debtor to pay off a chunk of the loan.

This is done to try to avoid negative equity. It's a remenant from ye olde days... from the "commercial" nature of BTL loans. When only real businesses (not BTL fraggles) used them, if the company went bust the lender would have no come back agaist the companies management, so they'de want to make sure that the value of the asset at auction is always enough to repay the loan.

Of course, these days with BTL fraggles using commercial loans to buy property, it the loan goes bad the BTL fraggle looses everything through bankrupcy.

For residential mortgages, they will normally offer to modify payments, within reason, and will only reposess when you fall 2.5 months behind.

For BTL mortgages (well, they arn't technically mortgages they are commercial loans as stated) the bank can call in the loan and reposess the property the day after the first missed payment.

The difference between BTL loans and residential mortgages should be added to this forum as a sticky.

Yes i am aware of this squattie, so anybody here ever had to throw money in to the mortgage because ltv changed?

baileysbattlebus

SquatNow wrote: »

You haven't accounted for the fact that the property you bought for £100k is now only worth £40k.

Nor have you accounted for the fact that as soon as the value of the property drops, your bank will ask you maintain the LTV. You're on 80%LTV so if the proprety drops £10k in value the bank will send you a demand for £8000, payable within 30 days, or they'll reposess the proprety.

I hope no one reading this post believes it, banks and building societies don't reposses houses unless you default on the mortgage, they don't care about the house value, only the repayments. You only have a problem with negative equity if you HAVE to sell and can't make up the difference between selling price and amount owed:
1 You can afford the mortgage and you want to sell - you find the difference between value and loan or stay where you are
2 You can't afford to pay the mortgage and you want to sell - you find the difference between between value and loan or house will eventually be repossessed.

It's a good job they don't apply the same logic as poster to cars.

geoffky

mr.broderick wrote: »

Yeah geoff and ive replied to your proprty snake post. loser.

ha ha loser car salesman and three kids i retired at 35 and you call me a loser, 3 kids is for poor people.

SquatNow

mr.broderick wrote: »

Yes i am aware of this squattie, so anybody here ever had to throw money in to the mortgage because ltv changed?

Hasn't happened since the early 90s, when it was common.

It won't happen this time until places start going HPI yoy negative... so anytime from now until august.

Then it takes a little while to build up before people start to make a fuss about it, as loans are reviewed annually on their anniversary.

The first place it will be visible is in BTL new build flats becuase they are dropping like a brick. You're already starting to see significant negative equity in that area, and when the annual reviews happen, the letter will get sent.

The_Dangerman

meanmachine wrote: »

Do people still drive porsches?

To be honest, the only people I've seen in them are men in their 60s.

Hardly a cool car.

I'd think much more of you if you went around in a Nissan Micra and scruffy clothes, but were still worth a fortune.

why? cos that would show *confidence*

You just give off the air of flash desperation.

Sorry.

Hey, don't be sorry, it's your opinion and you are entitled to have it.

I have one because I think it's amazing to drive, looks stunning, and the girls seem to like it, "OMG is that your car?!!" is what I seem to hear.

But each to their own. I don't like Nissan Micras particularly. If I was going to buy a small car I would have gone for a Clio.

Only bad thing about the Porsche is normally lets you out of a junction, haha, but I'm in no rush!

(EDIT was "drive" to "have".... whoops)

mayjay

lol everyone knows house prices only ever go up.

The_Dangerman

Paul_N wrote: »

Yes very simplistic. You conveniently appear to have left off everything from void periods to maintenance costs, to solicitor fees, mortgage fees, etc. You also seem to have plucked 4% HPI out of the air instead of the 2.7% you quoted from the Nationwide in your last post. And are you seriously telling me you have to wait 5 years before turning a profit on the rent nowadays? Wow things have got bad. I also assume you pay your taxes when you do finally make a profit on the BTLs, cause with the increased power HMRC have, I assume they'll start looking at those landlords that have extremely high maintenance costs, if you know what I mean.

Now if you use Nationwide statistics again, can you do the same sums but for a BTL property I bought in November 2007? Nationwide say the average house has dropped by around 2% in that time? So that's -2.0% instead of 2.7%, or your imaginary 4%.

And lastly, just one thing, you haven't made a penny of the HPI until you sell and apply CGT. Until then, your figures are purely imaginative.

The first one I bought turned a healthy profit straight away, and longest void period was two days:D . It can often take a year or two to be making a decent profit, 5 years was just to tie in with my example. That's the beauty about it though, rent will go up with inflation but my mortgage won't on a fixed term. Sure, interest rates may well go up, but if and when they do the rent will have gone up enough by then. Take my parents home. Last mortgage payment was £90. Current rental would be around £600. Interest rates would have to go up a hell of a lot before a loss would be made.

But I should add as the standard disclaimer - property at the moment is at the very least a medium term investment. Anyone hoping to make a quick buck has a high chance of getting their fingers burnt.