The rising cost of living

[chrisp65]

Buy to Let is a massive problem.

As mentioned above, BTL they’ll offer you lots of loan because it’ll get covered by the rent you can get out of someone. So that means there are more buyers for properties and starters and young families are competing for property against the casual dabbler in amateur landlording and the professional profiteer. It pushes prices up, and we get young families with ridiculous long term debt and suffering because of the interest rate.

That young family ends up, rather than having a mortgage on a £150,000 house they’re paying rent on a £200,000 house with nothing to show for it at the end. Rent being the mortgage cost, plus a bit more for agents and a cushion for profit for the property speculator. The system is just basically flawed.

For years, my bank has been bombarding me with offers and suggestions I was ‘pre approved’ and sending me examples of the BTL mortgages they could offer me.

[KentVillan]

42 minutes ago, Xela said:

They won't quickly pounce. Banks have absolutely no desire to repossess properties unless there is no alternative. Its simply not an effective use of their time and effort for so little reward. 

What I think will happen instead is banks will inform mortgage holders at high risk of default that, once they’ve worked through the various last ditch rescue plans (mortgage extension, new higher earning job, winning the lottery, etc), it would probably make sense to sell up, and so the same kind of effect as repos will work through the system soon anyway.

Although if you’re already in a small property in a cheap area, your downsizing options are pretty limited.

[Demitri_C]

1 hour ago, chrisp65 said:

Buy to Let is a massive problem.

As mentioned above, BTL they’ll offer you lots of loan because it’ll get covered by the rent you can get out of someone. So that means there are more buyers for properties and starters and young families are competing for property against the casual dabbler in amateur landlording and the professional profiteer. It pushes prices up, and we get young families with ridiculous long term debt and suffering because of the interest rate.

That young family ends up, rather than having a mortgage on a £150,000 house they’re paying rent on a £200,000 house with nothing to show for it at the end. Rent being the mortgage cost, plus a bit more for agents and a cushion for profit for the property speculator. The system is just basically flawed.

For years, my bank has been bombarding me with offers and suggestions I was ‘pre approved’ and sending me examples of the BTL mortgages they could offer me.

agree with all of this. For me id prefer a world like before where my property is worth half its value now and thats the same for everyone in my bracket so we all have lower mortgages.

The biggest load of shit for me is the way house go stupidly up in value and then say reasons are "its near a station" or "near a school"

Just **** off you just want people to be in debt and hav higher mortgages that most will never pay off

Ill never move again thats for sure

[foreveryoung]

3 hours ago, Loxstock92 said:

Just to alleviate any concerns, the loan itself wont be 11 x salary, more likely average house price is. 
 

There is no way any lender will lend 11 x salary to anyone*, as you say it’s insane. I’ve done mortgage affordability assessments for 8+ years and generally the absolute max is 5 x but that’s for higher earners & v v little outgoings. Many factors come into re the multiplier such as income and outgoings, term, location, house price etc
 

*technically BTL mortgages don’t adhere to this as the loan is based on the rent the property generates as it’s seen as a self sufficient mortgage.

You need to get with the times then Chap. My pals a mortgage broker and has been offering up to 6 times salary for people to get on the ladder, 8x for big earners or self employed with certain lenders.

Edited June 25, 2023 by foreveryoung

[Xela]

3 hours ago, StewieGriffin said:

As an aside, if people are on £230 a month repayments and now hitting a £1200 one, what kind of deals were these people on that it's jumped up by 500%?!

Some people now are going to be paying the price for overreaching and having unsustainable mortgages.

Interest only mortgages. 

A lot of the tales of woe appearing in papers seem to be from well off people who purchased a massive house on interest only deals and now that the interest rates have quadrupled, they can't pay. It's a form of gambling in that respect. There was no plan/ability it seems to ever pay the capital off in the term, just rely on prices increasing and downsize when you retire. 

I/O mortgages should be banned. 

[Loxstock92]

2 hours ago, foreveryoung said:

You need to get with the times then Chap. My pals a mortgage broker and has been offering up to 6 times salary for people to get on the ladder, 8x for big earners or self employed with certain lenders.

That would be the exception not the rule my good sir, you certainly wouldn’t get them from high street lenders.

[StewieGriffin]

2 hours ago, Xela said:

Interest only mortgages. 

A lot of the tales of woe appearing in papers seem to be from well off people who purchased a massive house on interest only deals and now that the interest rates have quadrupled, they can't pay. It's a form of gambling in that respect. There was no plan/ability it seems to ever pay the capital off in the term, just rely on prices increasing and downsize when you retire. 

I/O mortgages should be banned. 

Absolutely. I never saw/see the point in an I/O mortgage - the whole thing is contingent on you paying the capital off at the end, so you'd theoretically need to save the money over the mortgage term... so why not just have a regular repayment mortgage? Madness.

You'd think banks would indeed ban, or at the very least avoid, them - although I suppose from their point of view, they get the same amount of money either way.

[Genie]

4 minutes ago, StewieGriffin said:

Absolutely. I never saw/see the point in an I/O mortgage - the whole thing is contingent on you paying the capital off at the end, so you'd theoretically need to save the money over the mortgage term... so why not just have a regular repayment mortgage? Madness.

You'd think banks would indeed ban, or at the very least avoid, them - although I suppose from their point of view, they get the same amount of money either way.

I think the idea is the value of the house goes up over a term and then you sell and take the profit. It’s not a method for buying a “forever” home.

It’s a gamble of course because if either 1) the value doesn’t go up or 2) interest rates shoot up before you sell then you’re in a world of pain. 

[tinker]

Thought Interest only mortgages were only available on BTL properties unless you had very high income.  

[Guest av1]

8 minutes ago, tinker said:

Thought Interest only mortgages were only available on BTL properties unless you had very high income.  

I only bought my first house 2 years ago so I’m definitely not a mortgage expert. But my house only cost 150k and I wouldn’t consider myself a high earner, but when I took out my mortgage I definitely remember being asked if I wanted a repayment or IO because I remember phoning my step father for advice. 
 

 

[Seat68]

I worked for Legal and General Home Finance and they offered interest only. Not .any products but certainly offered it. 

[bielesibub]

1 hour ago, StewieGriffin said:

Absolutely. I never saw/see the point in an I/O mortgage - the whole thing is contingent on you paying the capital off at the end, so you'd theoretically need to save the money over the mortgage term... so why not just have a regular repayment mortgage? Madness.

You'd think banks would indeed ban, or at the very least avoid, them - although I suppose from their point of view, they get the same amount of money either way.

I took out an interest only mortgage on the assumption my pay would increase and then I'd pay the mortgage off. My pay increased by about 400% over time, i never really started to pay any more off the mortgage though, I then got ill, insurance paid out, no-ish mortgage.

[tinker]

49 minutes ago, av1 said:

I only bought my first house 2 years ago so I’m definitely not a mortgage expert. But my house only cost 150k and I wouldn’t consider myself a high earner, but when I took out my mortgage I definitely remember being asked if I wanted a repayment or IO because I remember phoning my step father for advice. 
 

 

The requirements now are household income of 100k with one earning 75k per year,  60% ltv, that's with natwest and barclays, must have a repayment plan as well.

Endowment mortgages existed like this 20+ years ago. They went out of fashion when the investments fell short of the forecasts and couldn't pay the mortgage off at term completion. 

[bobzy]

4 hours ago, StewieGriffin said:

Absolutely. I never saw/see the point in an I/O mortgage - the whole thing is contingent on you paying the capital off at the end, so you'd theoretically need to save the money over the mortgage term... so why not just have a regular repayment mortgage? Madness.

You'd think banks would indeed ban, or at the very least avoid, them - although I suppose from their point of view, they get the same amount of money either way.

Second (or third, fourth etc) homeowners *spits*.

Get an interest only mortgage, cover it and then some with rent.  Sell property after a while.  Profit from rent, house prices goes up.  Win win win.

[stuart_75]

I have a I/O BTL mortgage on a flat. The current deal of 1.5% ends in December, so yes its going to go up big time. But that's the gamble in the BTL game, win some, lose some.

[VILLAMARV]

On 23/06/2023 at 07:39, Genie said:

In my experience a lot of Brexiteers are younger tradesmen types. I reckon a massive proportion of tradesmen voted leave to get rid of the Eastern European competition they had for work. 

In mine there were loads of young chartered engineer types who wanted to get rid of people from other countries.

When you read it back it just sounds silly doesn't it?

[Demitri_C]

I wouldnt fix if your mortgage is up for renewel im almost certain by next election which isnt that far away, the tories will reduce interest rates to get votes  

[bickster]

8 minutes ago, Demitri_C said:

I wouldnt fix if your mortgage is up for renewel im almost certain by next election which isnt that far away, the tories will reduce interest rates to get votes  

But the BoE is independent of the government. Are you suggesting the Government will take control of the BoE again?

 

[Genie]

1 minute ago, bickster said:

But the BoE is independent of the government. Are you suggesting the Government will take control of the BoE again?

 

The BoE is not fully independent. We all know that. Government decides who runs it for a start.

[desensitized43]

35 minutes ago, stuart_75 said:

I have a I/O BTL mortgage on a flat. The current deal of 1.5% ends in December, so yes its going to go up big time. But that's the gamble in the BTL game, win some, lose some.

That's the right attitude to have, but the question is how much of that pain are you going to pass onto your tenant? Just out of curiosity, don't feel the need to answer that if you don't want to.

FWIW I think our mortgage market if **** because this model of renewing every few years or so is ridiculous. Why can't I fix for the entire lifetime of the mortgage?