UK Landlord Forum / Life

Source: http://money.guardian.co.uk/businessnews/story/0,,-2202031,00.html

QuoteThousands of first-time buyers could find themselves in negative equity following a big increase in the number of 100% mortgages available, according to new research issued yesterday.


An estimated 33,000 first-time buyers borrowed the full value of their property, or in some cases more than it was worth, between January 2006 and August 2007, said the mortgage website mform.co.uk. Such deals are allowing people to get on to the housing ladder without having to raise a deposit.


Homebuyers who have recently taken out 100%-plus loans are particularly vulnerable to price falls, as they have no equity to cushion them if there is a drop in the value of their home. In some cases, even a small fall in house prices would leave them owing more on their mortgage than their home is worth.

You have got to be insane to get a 100% mortgage! The amount we pay on interest for even a 85% mortgage is extortionate, so the amount you'll pay on 100% over a 25yr period must be ridiculous.

But also, I guess it depends on what your intentions are. Getting a 100% mortgage is probably more suited for a family man/woman, that wants to build stability for his/her family, as opposed for investment purposes. But if you get a 100% mortgage for investment purposes...you must be pretty ballsy!!

You're fond of calling people insane or foolish aren't you?


V

I haven't really noticed lol
I might just say those words a lot, without really meaning it.


So what do you think, son?

Well, I have a 100% mortgage.

The risk of a 100% mortgage is that if the market goes down you lose. The risk of not having a 100% mortgage (if a deposit is not available to you) is that if the market goes up a stake in it drifts further from your grasp.

Its a calculated risk. As long as you consider it realistically alongside your personal situation and circumstances I don't think its particularly insane.



V

haha *removes foot from mouth*

SORRY, V! How is it working out, out of curiosity?

Well, I think if you get a 100% mortgage in the current state of the market, it would be pretty risky!

Has your property increased in value? Have you got equity in your property?

I bought this place in July of last year. A flat in a pretty identical block has just gone for £1,000 more than I paid.

While I don't know the condition of that one to compare, I do know that there's only 1 beds and studios in these blocks on either first or ground floor. Mine is 1 bed first floor, so ignoring the unknowns you'd expect mine to be at least in line with the highest sale prices in the blocks.

Mortgage is also still in interest only fixed rate period, but I've paid off just over £500 anyway with overpayments. I'd have saved some to put down as equity but am focusing on my VISA debt atm, which has reduced £2,000 in the last four months.

Its not ideal, but it could be worse, and it wasn't a decision I took lightly. Market conditions were quite different this time last year, and I'd already been watching the market skyrocket for about four or five years while the doomsayers insisted a crash was just one month away throughout that time. My folks lost a potential £20K off the value of their house in the early nineties so I am aware of how crashes work, but you only lose money if you have to move and at some point you have to make a call. I also knew when I bought this flat that I had at least £70K share in my grandmother's house, so even though that's equally tied up in property it does give me a little more confidence that if everything was liquidated it wouldn't be a total disaster. Had that not been the case I'm not sure I'd have made the same decision.

The key point here is that its never black and white, that the choices are not straightforward, and that while some people's choices may well be truly insane I would still dispute your initial analysis purely because of the oversimplification. I can understand why someone might come to the conclusions you did, but its worth remembering that if something doesn't seem to make sense there might be more to it than the information you currently have.


V

I must be pretty ballsy , as you so kindly put it .

well for me , its not even a calculated risk really.

I bought my house for £83,000 ............ I have umm about 10k to do it up with

and even then £93,000 in the area it is , is quite cheap , even in bad condition .

But I got a BARGAIN 

So yes

KERCHINGA ha

But id never max myself when im older .... that why im doing this whole thing so I dont need a pissing mortgage!

anyways i agree with something you said ! but i cant remember what now ... oh its to late

Quote from: vwilson on November 03, 2007, 07:23:25 PM

The key point here is that its never black and white, that the choices are not straightforward, and that while some people's choices may well be truly insane I would still dispute your initial analysis purely because of the oversimplification. I can understand why someone might come to the conclusions you did, but its worth remembering that if something doesn't seem to make sense there might be more to it than the information you currently have.


V

Point taken and I agree

Quote from: Fionalouisa on November 04, 2007, 01:44:10 AM
I must be pretty ballsy , as you so kindly put it .

well for me , its not even a calculated risk really.

I bought my house for £83,000 ............ I have umm about 10k to do it up with

and even then £93,000 in the area it is , is quite cheap , even in bad condition .

But I got a BARGAIN 

So yes

KERCHINGA ha

But id never max myself when im older .... that why im doing this whole thing so I dont need a pissing mortgage!

anyways i agree with something you said ! but i cant remember what now ... oh its to late

Yeah, i'm slugging away with all this crap while i'm young'ish, so I don't have to worry so much when i'm older. But hey, it's also fun.

You have a bad memory and you're lazy...your b/f is one lucky guy hah 

  he so is , and he knows it haa