100% mortgages

[Cromwell Road Gull]

I read this week that the treasury expects it to stay this low until the back end of next year at least, but if anybody banks on that to do their calculations they should think very, very carefully.

Oh absolutely - like i say im no expert just offering an opinion.

However lets face it how many of these so called experts predicted the events that have transpired in the financial world over the last year - im sure for every article saying rates will remain low, there is another expert contradicting it.

Like you say should thin very carefully about it - at least with a fixed you know how much is leaving your account each month.

 

[Uncle Spielberg]

Whilst we are on the subject of mortgages, I am currently half way through a 5 year fixed rate mortgage I took out before the mortgages dropped dramatically. If I want to get out of my current mortgage it will cost me about £3000 but it will reduce my payments by a little over £200 a month if I go on a tracker rate, so I would be better off on a day to day basis although only if the interest rates don't shoot back up in the next two years or so.

Anyone else done this or would I be a fool to do it?

PM me for figures. I would be happy to help.

 

[Uncle Spielberg]

Tinx, you would have early redemption penalties so be careful , you could not just jump into a fixed rate. Re interest rates NO ONE knows what is going to happen. Bearing in mind the Bank base rate has averaged just under 9% in the last 20 years and NEVER gone below 2% in its 400 year history NO ONE predicted in late 2007 BBR would fall from 5.75% to 0.5%. 0.5% is very unhealthy for the economy. It is a disaster only measure and is the sign of a busted and bankrupt country. Its is NOT good especially for savers and the retired as well. In a low inflation economy BBR should be between 4-5% not 0.5%.

Also in my opinion it is very unhealthy for people to get used to paying virtually nothing on their mortgage on a SVR of 2.5% or tracker of less than 1%. People are now used to these ridiculously low payments and many will have adjusted their lifestyles to paying diddly squat on their mortgage so when rates rise it will have a massive effect on many people now.

People are now talking as if a 2% base rate for example would be bad and high !. This worries me and I would advise people DO NOT bank on rates being 0.5% until 2014 !.

 

[Tricky Dicky]

- im sure for every article saying rates will remain low, there is another expert contradicting it.

That is how the 'city' works, an expert judges the market to move one way while another somewhere must be of the opposing view. One wins, one loses.

 

[tinx]

Tinx, you would have early redemption penalties so be careful , you could not just jump into a fixed rate. Re interest rates NO ONE knows what is going to happen. Bearing in mind the Bank base rate has averaged just under 9% in the last 20 years and NEVER gone below 2% in its 400 year history NO ONE predicted in late 2007 BBR would fall from 5.75% to 0.5%. 0.5% is very unhealthy for the economy. It is a disaster only measure and is the sign of a busted and bankrupt country. Its is NOT good especially for savers and the retired as well. In a low inflation economy BBR should be between 4-5% not 0.5%.

Also in my opinion it is very unhealthy for people to get used to paying virtually nothing on their mortgage on a SVR of 2.5% or tracker of less than 1%. People are now used to these ridiculously low payments and many will have adjusted their lifestyles to paying diddly squat on their mortgage so when rates rise it will have a massive effect on many people now.

People are now talking as if a 2% base rate for example would be bad and high !. This worries me and I would advise people DO NOT bank on rates being 0.5% until 2014 !.

Sound advice,

I actually had it in my mind to basically change mortgage to tracker on a low rate and then overpay the difference so I would be paying the same as I am now but would be paying off more of the capital and then if the rates rise I can just reduce the amount I would be overpaying. That way my lifestyle stays the same as it is currently but I am paying off more while the rates are so low.

 

[Uncle Spielberg]

Do you want me to PM you the best rates ?.

 

[eastlondonseagull]

re: house prices, I think my current situation sums up how silly things have become over the years...

Our next-door neighbour bought their terraced house at the height of the market, paid extra to get it done up, and are now lumbered with £2,000 + per month mortgage. They've had to rent out both their spare rooms to help pay the mortgage. They are desperate for prices to RISE again, so they can sell and move on.

We, on the other hand, are in an identical house, same size, spec, the works. We're paying half what they're paying in rent. But we need prices to DROP massively for us to be able to get back on the ladder. We have savings, enough for a 10% deposit on a smaller property, but interest rates make it prohibitive. We've not a hope in hell of buying the place we're in (landlord has offered to sell it us) because it's ridiculously expensive.

In parts of the north, it's even more ludicrous. House prices are crazy, only a touch cheaper than the cheapest parts of London, but wages are much lower. We need northern weighting these days, not London weighting!

.

 

[Arthritic Toe]

re: house prices, I think my current situation sums up how silly things have become over the years...

Our next-door neighbour bought their terraced house at the height of the market, paid extra to get it done up, and are now lumbered with £2,000 + per month mortgage. They've had to rent out both their spare rooms to help pay the mortgage. They are desperate for prices to RISE again, so they can sell and move on.

We, on the other hand, are in an identical house, same size, spec, the works. We're paying half what they're paying in rent. But we need prices to DROP massively for us to be able to get back on the ladder. We have savings, enough for a 10% deposit on a smaller property, but interest rates make it prohibitive. We've not a hope in hell of buying the place we're in (landlord has offered to sell it us) because it's ridiculously expensive.

In parts of the north, it's even more ludicrous. House prices are crazy, only a touch cheaper than the cheapest parts of London, but wages are much lower. We need northern weighting these days, not London weighting!

.

That sums up nicely why we are really in the poop. There's no way out of the current situation without a huge amount of pain for one group or the other. Its infuriating that we've got into this situation, although few were complaining during the boom years, when they were remortgaging year after year, to cream off un-earned cash to buy BMW's and have nice holidays.

 

[Uncle Spielberg]

I agree it was too easy to get credit before but it is now over corrected and is far to hard to get credit or a mortgage. To a large extent all the FSA's " after the Horse has bolted " proposals are not needed as the market has corrected itself already. Its going to be very tough for 3-5 years and the landscape of home ownership in the UK will never be the same again with a lot of people having to rent for life and more like Europe with a far higher % of people renting.

 

[Alfie22]

Have PM'd you a question US, any help appreciated.

Ta.

 

[Arthritic Toe]

I agree it was too easy to get credit before but it is now over corrected and is far to hard to get credit or a mortgage. To a large extent all the FSA's " after the Horse has bolted " proposals are not needed as the market has corrected itself already. Its going to be very tough for 3-5 years and the landscape of home ownership in the UK will never be the same again with a lot of people having to rent for life and more like Europe with a far higher % of people renting.

People were saying this in the early 90's. Its roughly a 15 year cycle. For some reason that I cant understand, a sort of blind madness grips people during the boom years making them think that this time, the boom will go on for ever. This madness affects homeowners, financial regulators and prime ministers alike.

 

[eastlondonseagull]

People were saying this in the early 90's. Its roughly a 15 year cycle. For some reason that I cant understand, a sort of blind madness grips people during the boom years making them think that this time, the boom will go on for ever. This madness affects homeowners, financial regulators and prime ministers alike.

I think Gordon Brown is quoted somewhere as saying that the boom would pretty much last forever

.

 

[Sarisbury Seagull]

The mortgage inflexiblity is really going to cause a housing problem soon unless things are changed.

I work for a letting agent and the private rental sector has to a degree benefitted from the lack of available credit in recent years as we have had plenty of Tenants looking for decent affordable accommodation who are now unable to get a mortgage. It has also provided a way out for vendors who have to move but have been unable to find a buyer.

We are now desperately short of properties though, this is the same for all companies in all areas throughout the country. Any property that becomes available is snapped up straight away and for the first time ever I have experienced gazumping on a rented property! With buy to let mortgages now virtually a thing of the past and potential Landlords very few in number, we are very soon going to get to the stage where there are hardly any properties available to rent.

With regard to 10% mortgages, I am currently moving and approached the Post Office and Co-operative bank about their competitive deals but as my salary is heavily commission based I had no chance with them as they are very very strict on income/credit history etc so I have bitten the bullet as I have to move and gone with a 2 year fixed deal with the Abbey.

 

[eastlondonseagull]

The mortgage inflexiblity is really going to cause a housing problem soon unless things are changed.

I work for a letting agent and the private rental sector has to a degree benefitted from the lack of available credit in recent years as we have had plenty of Tenants looking for decent affordable accommodation who are now unable to get a mortgage. It has also provided a way out for vendors who have to move but have been unable to find a buyer.

We are now desperately short of properties though, this is the same for all companies in all areas throughout the country. Any property that becomes available is snapped up straight away and for the first time ever I have experienced gazumping on a rented property! With buy to let mortgages now virtually a thing of the past and potential Landlords very few in number, we are very soon going to get to the stage where there are hardly any properties available to rent.

Totally agree. I think many of the properties that are up for sale atm are being snapped up by buy-to-let landlords who've got hefty deposits available. Many home-owners who do get into difficulty and are on high-interest deals, cannot get a rental value that covers the mortgage.

In London, and probably elsewhere, new-build schemes are actively being marketed to foreign investors, and that really does my head in. A new development of flats is being built in Lewisham atm, where there's a real need for decent affordable property. But they're being aimed at Hong Kong investors, as the price is high. It's all wrong.

And when rags like the ES keep banging on about the beauty of part-rent, part-buy schemes, there are never any family homes available like that. They're nearly always pokey one-bed, two-bed flats at a stretch, and far too expensive at that. Families live in London, too!

.

 

[Gazwag]

The self employed will have lending based on net profit which anyone who is self employed knows is as low as possible with allowable business expenses. The employed lending is based on gross salary so there's already a discrepancy there against the self employed.

I dont agree with you there, self employed people's profit is the equivalent of an employed persons gross salary, both are before tax and NI. A good self empoyed person's profit should be at least what they would earn employed in the same sector.

When you work out how much to charge for your services as a self employed person you would be stupid not to take into account your overheads.

 

[The Antikythera Mechanism]

Double post - see below

 

[Uncle Spielberg]

The mortgage inflexiblity is really going to cause a housing problem soon unless things are changed.

I work for a letting agent and the private rental sector has to a degree benefitted from the lack of available credit in recent years as we have had plenty of Tenants looking for decent affordable accommodation who are now unable to get a mortgage. It has also provided a way out for vendors who have to move but have been unable to find a buyer.

We are now desperately short of properties though, this is the same for all companies in all areas throughout the country. Any property that becomes available is snapped up straight away and for the first time ever I have experienced gazumping on a rented property! With buy to let mortgages now virtually a thing of the past and potential Landlords very few in number, we are very soon going to get to the stage where there are hardly any properties available to rent.

With regard to 10% mortgages, I am currently moving and approached the Post Office and Co-operative bank about their competitive deals but as my salary is heavily commission based I had no chance with them as they are very very strict on income/credit history etc so I have bitten the bullet as I have to move and gone with a 2 year fixed deal with the Abbey.

Nat West may have done it.

 

[The Antikythera Mechanism]

We've just finished working on the One Hyde Park project. The most expensive penthouse sold for £100 million, reputedly bought by a Saudi Prince for his son as a 21st Birthday present. I wonder what sort of mortgage he needed

 

[Uncle Spielberg]

I dont agree with you there, self employed people's profit is the equivalent of an employed persons gross salary, both are before tax and NI. A good self empoyed person's profit should be at least what they would earn employed in the same sector.

When you work out how much to charge for your services as a self employed person you would be stupid not to take into account your overheads.

I would get a small Garage now if I got a new mortgage based on my net profit.

 

[Gazwag]

I would get a small Garage now if I got a new mortgage based on my net profit.

and employed person has to have a job though, how many employees have been made redundant in the mortgage sector, or should I say how many still have a job.