Sorry - very naive question...

neas

I'm not wishing pain on others...but I am not naive to think that if house prices continue dropping people won't feel the pinch.

They go hand in hand as with everything in capitalism..

HC_2

Perhaps part of the property problem is the 'win' and 'lose' mentality.

When I was a gel, people bought a house to live in - not with the sole intention of making profit.

WillowCat

lauraandclive wrote: »

Ok. Bear with me... Say your house was mortgaged for £100K in 1991. Then in 2007 you had it valued for £200K. This meant you could re-mortgage your house for £200K - the mortgage company would give you up to £100K against the value of your house (but your mortgage was then £200k).
Say you didn't do that, but if in 2009 your house then became worth £80K, could you re-mortgage your house and pay less? Sorry, I'm trying hard to explain myself... It's just if it worked one way, can't it work the other?
If it helps, it's only a hypothetical question, I'm in Shared Ownership, but it's something I've been wondering about.

Of course you can do that - it does work both ways.

Let's assume 100% mortgages for simplicity. In your example you have £100K mortgage in 1991, and valued at £200K in 2007. You remortgage for £200K and the bank transfers £100K cash into your hands.

If you don't do this, and in 2009 the valuation is £80K, you can remortgage for £80K, only this time you transfer £20K cash from your hands to the bank.

You can do this any time you like if you've saved up the money....you don't need to wait for a HPC!

silvercar

Its ordinary people who bought their homes in the last few years who I feel sorry for. Saved a deposit of say 10% then hit by falling values, with mortgages not available above 90% LTV they are stuck on a SVR.

These are the real people that are hurt by falling prices.

In the same way that we can blame BTLers for pushing prices above FTBers means, we can blame sell-to-renters (STRs) for pulling money out of the housing market and encouraging this fall in house prices (ironically renting from the same BTLers that were pushing the FTBers out).

HC_2

silvercar wrote: »

Its ordinary people who bought their homes in the last few years who I feel sorry for. Saved a deposit of say 10% then hit by falling values, with mortgages not available above 90% LTV they are stuck on a SVR.

These are the real people that are hurt by falling prices.

In the same way that we can blame BTLers for pushing prices above FTBers means, we can blame sell-to-renters (STRs) for pulling money out of the housing market and encouraging this fall in house prices (ironically renting from the same BTLers that were pushing the FTBers out).

Well put.

The average house price in my area is £200k. How on earth will my teenage children eventually manage to buy?

So much has changed since 1984, when my boyfriend (now husband) and I bought our first house. Then, it was easy if you had a decent job.

What the hell has gone wrong?

KiKi

lauraandclive wrote: »

That's kind of my point LillyJ. It works one way, just not the other. Am I correct in saying that?

Hiya Laura (and Clive?!)

I totally understand what you're saying - it's just the sort of thing I would wonder about! And yes, in the sense you mean it (because I understand what you're getting at), it does work one way and not the other.

Your mortgage doesn't equal what the house is worth, so if your house decreases in value to £80K, you can't suddenly decide to only pay £80K back instead of £100K!

Just as equally, though: if your house value increases to £200K, you don't automatically owe the bank £200K.

If you *choose* to take out an extra £100K because your house is worth £200K, you can increase your mortgage and get the extra cash. Just as equally, as someone else pointed out, if you choose to take out only £80K, then you have to pay back £20K first.

So it's not to do with what your house is worth, but how you choose to control your mortgage within the boundaries of what your house is worth.

HTH!

KiKi

SquatNow

It's worth adding that mortgages in many US states are non-recourse, meaning if you get in negative equity you can hand the keys back and they can't chase you for the difference.

dean_ham

LillyJ wrote: »

neas I am a similar age as you but I don't wish pain on others.

Im more than likley in the same age range as you two (in my early 20's) and neither do i wish pain on others.
But i have no simpathy for people remortgaging in a rising market for a new car/holidays/hobbies when they have no foresight that the market can turn the other way!
Neither do i have sympathy for people borrowing 100-125% LTV @ 6+ times their annual salary.....

END OF

HC_2

KiKi wrote: »

Hiya Laura (and Clive?!)

I totally understand what you're saying - it's just the sort of thing I would wonder about! And yes, in the sense you mean it (because I understand what you're getting at), it does work one way and not the other.

Your mortgage doesn't equal what the house is worth, so if your house decreases in value to £80K, you can't suddenly decide to only pay £80K back instead of £100K!

Just as equally, though: if your house value increases to £200K, you don't automatically owe the bank £200K.

If you *choose* to take out an extra £100K because your house is worth £200K, you can increase your mortgage and get the extra cash. Just as equally, as someone else pointed out, if you choose to take out only £80K, then you have to pay back £20K first.

So it's not to do with what your house is worth, but how you choose to control your mortgage within the boundaries of what your house is worth.

HTH!

KiKi

That is a long way of saying what I already posted. It doesn't make any difference what your house is worth - you owe what you borrow.

Of course, you can borrow up to what your house is worth at the time. But you still end up in the same situation.

neas

how about :

Bring on the tough times...

then?

If i am going to pay a 'reasonable' price for my first home people are going to have to get burnt... this is life swings and roundabouts... your responsible for your own decisions...

Theres nothing saying that my decision will be correct but I can hope that it is a good decision for me and my future family... afteralll I dont want to have sleepless nights owning a !!!! tip of a house ... I want to enjoy my life and saving money will help me get a good nights sleep.

Moneys not everything, it doesn't mean happiness but lack of money certainly has a high risk of leading to sadness... anyone been on the debt wannabee forums lately?