Are you a "Recession virgin"?

WTF?_2

IveSeenTheLight wrote: »

EdInvestor made some valid points, which you obviously are sticking your fingers in your ears and singing "lalalalalala"

If you are finding your mortgage payments a struggle, it would be best to contact the lendor to discuss.
You could increase your amortization period (some people only have 20 years eft and they can revert back to 25 again), this would reduce the monthly outlay.
You could go interest only, again this reduces the monthly rate but it will neve actually pay off the capital. You effectively would be renting your home from the mortgage lender
you never know, they may even allow you to pay a reduced rate for an agreed time

Even if times are hard, its not all doom and gloom.
There are many decisions that can be made, albeit some of those decisions may be hard to make.

At the end of the day, paying as much capital off as you can is always beneficial.

Edinvestor's post:

Negative equity is basically only a problem if you have a 100%+ mortgage with Northern Rock.

The SVR at other lenders is not "punitive" - and those people coming off deals this year will be expecting a rise anyway.

Those who are on repayment mortgages could also switch to interest only for a while to reduce outgoings, or extend the mortgage term if necessary.

Anyone with an endowment could also consider cashing it in and using the money to reduce the mortgage and the monthly payment (this may be a good move anyway).

Don't be fooled by doomster nonsense from speculators with a vested interest in a house price crash.

Summary: Don't worry about buying now. Negative Equity is nothing to worry about: Even if you can't meet the repayments you can always extend your mortgage or switch to interest only.

That's about the most stupid message you can give to anyone contemplating buying a house at this stage of the game. It's bordering on being malicious really as anyone encouraged to buy by this 'advice' is likely to find themselves in a heap of trouble if they just blithely assume they can remortgage their way out of trouble.

Changing your mortgage is likely to cost you an arm and a leg - and that's if you can get a new deal that's any way competitive. Not great if you are having problems making ends meet, is it?

And assuming you can refinance to something that you can afford to repay, it still leaves you in negative equity unable to sell and unable to move and completely exposed to poor economic conditions.

My advice to FTBs: Anyone contemplating buying now should make damn sure that they can comfortably afford the monthly repayments, are in a good position to weather possible negative equity and can afford to 'hang on' if the worst comes to the worst (change in personal circumstances).
If you can't say that the above criteria are met then don't buy in the current market.

I get the impression that Edinvestor and a lot of the 'bulls' in this thread are doing nothing more than trolling for a good slanging match and thus putting forward completely harebrained 'advice' to elicit a response. That's a lot of fun for you I'm sure, but not so much fun for people looking to find advice on the board.

IveSeenTheLight

!!!!!!? wrote: »

Summary: Don't worry about buying now.

Where did EdInvestor say buy now?

I read that if you already have a property and you go into negative equity AND you are struggling with payments there are options you can take.
Very good advice I think

Sheesh, some people can't read posts correctly

WTF?_2

IveSeenTheLight wrote: »

Where did EdInvestor say buy now?

I read that if you already have a property and you go into negative equity AND you are struggling with payments there are options you can take.
Very good advice I think

It doesn't matter that he didn't say "Buy now" in this thread, though he has in other threads.

It matters that he's telling people that Negative Equity isn't anything to worry about.
Quote: Negative equity is basically only a problem if you have a 100%+ mortgage with Northern Rock.

Wrong: It is something that people should worry about. It's a very big deal indeed and anyone who believes otherwise and actually buys because they think a simple refinance once they're in a crisis will save them is going to be placing themselves in a very sticky situation indeed.

The best advice for anyone who thinks they are going to be in negative equity and anticipates problems repaying their mortgage is to sell while they still have equity in their property and rent until their financial situation is better. Believing that they can just re-mortgage their solvency troubles away when they are in the hole is downright pie in the sky thinking.

kristianwilliams

Its the people who think "Im safe, its everyone else's problem" that will be hurt the most.

I always look on the bright side of life, but am not naive enough to think that bad things wont happen to me.

Anyone who thinks "bah, im ok, im safe, i've had good times in the last 5-10 years, and things will only get better" are the same people who though "my house has gone up in value for the last 5-10 years, and things will only get better"

Im a virgin here, I have never lived through one. I do remember my parents having problems during the last time. But I was young.


People who dont see the fall coming to them, are the ones that fall the hardest. I hope that I've atleast got my hands out to catch myself when I fall.

SingleSue

Certainly not a recession virgin...we got caught up with it last time around and even though we were acting holier than thou (secure jobs, good wages etc) and saying it won't possibly hurt us it only took one thing to change and the whole blooming lot came tumbling down.

We lost our house, our sanity and became in debt (combined mortgage shortfall and other debts) to the tune of nigh on 40K.

MissMoneypenny

How heavily are you in it with your BTL/s, IveSeenTheLight?

IveSeenTheLight wrote: »

I collect my rent through standing order directly into my bank.
No need to go round once a week / month to collect.

morg_monster

I'm a recession virgin but saw my parents buy a house in 1987 and sell it for the same price in 1993. I am in the public sector, work for a research council - probably on the more safe side of things but wouldn't go as far as saying recession proof; having said that I'm about to start a funded PhD and studentships are basically guaranteed whatever happens I think. OH works in the cabinet office. We're renting atm and saving hard, were hoping to buy a 2bed flat or house in greater london/surrey this summer with a 5-10% deposit but its all on hold now while we see what happens. My personal hope is that we will wait a year or two and then have a 15-20% deposit and be able to get a bigger house for the same money, somewhere we can stay for 10 years maybe.
I'm really curious to see what happens over the next 6m-1year.

Butterfliesarepretty

Been there done that in 1994. Bought a house in 1991 for £59,950 three bed dorma semi detached with double garage in Wigan. Sold it for £52,000 in 1994 but gained because the house we bought was only £67,000 and it was a four bed dorma detached with garage, with large garden at front and 100 foot garden at the back. After my divorce my ex sold it for £118,000 in 2001 and the other year the buyer extended it back and sideways into garage and sold it for £300,000. :rolleyes:

I bought my terraced for £35,000 in 2001, so it does not really affect me yet, got some replastering of walls and re-wire soon, so it will be in saleable condition throughout whatever I decide to do in the future.:T

Dan:_4

!!!!!!? wrote: »

The best advice for anyone who thinks they are going to be in negative equity and anticipates problems repaying their mortgage is to sell while they still have equity in their property and rent until their financial situation is better. Believing that they can just re-mortgage their solvency troubles away when they are in the hole is downright pie in the sky thinking.

Advice should depend on circumstances !!!!!!. It may be impractical for an entire family to uproot and find a place to rent just because they may be heading for negative equity, not to mention the stress of selling, finding a rented home, selling costs, renting deposit, new schools, re-adjusting etc the list goes on.

Maybe sometimes its better to just it out rather then get shot of the family home.

There is not one piece of generic advice that should be given out, advice will need to be tailored to each individual case and set of circumstances.

happywarmgun

I bought my first flat in 1996. Paid 38k for it. I couldn't believe it when I got all the paperwork to see that the couple I bought it off had paid 55k for it in 1989. So over 7 years it fell in value 30%. Stuck with me ever since that. Of course as someone who jumped on the housing ladder in the mid 90s I've been one of the big 'winners' of the bull run on housing. Knowing the way the cycle goes (and due to an expanding family) I moved out of my latest city centre aprtment last year and have been renting a family house where the rent is half what the mortgage interest only payments would have been on the same property. Whilst I would love to be smug about the genious of my timing the reality is that the city centre apartement has not sold in the year. A flat I paid 165k for in 2002, of which identical apartments in the same block sold for over 200k in 2005 I cannot now shift for 145k!

Now I have virtually paid off the mortgage on that flat so it is nearly all equity and I can afford to take the hit on the basis that the next house I buy is falling far more in real pounds than the flat I can't sell is.

But what of my old neighbours? The 20 somethings who bought at 100% interest only on a two year fixed at circa 5% for 200k in 2005. When their rate is up it will be amazing if they can find anyone who will touch them on for any less than 7%. That 2% rise is actually a 40% rise in their mortgage payments.

Add to that the chap works in IT, and just imagine what will happen if get's to work one day soon to find his company is moving non core activity (such as IT) to India. Shafted.

Now times that set of circumstances by tens if not hundreds of thousands of people in the UK and you get a glimpse of the human misery a recession will inflict.

I'm lucky - I have the resources to pay my rent (and mortgage on the flat I can't sell) for a couple of years. But I am still worried stupid about the inevitability of the coming recession because of the effect I know it is going to have on so many people I know and care for.