Yes, but you do still have to pay the mortgage back no matter how much your house price falls.
Might pull out of house purchase - housing market looking ever more fucked
- Thread starter ChrisFilter
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Yes, but you do still have to pay the mortgage back no matter how much your house price falls.
ChrisFilter
Like a boss.
Yeah, of course. It's far from rosie, but it's also not anything to feel totally down about - in rennie's position I mean.
Interesting that a lot housebuilders have also been using finance to buy land and also to fund building. They were happy to keep starting new projects as they were just meeting buy-to-let investor demand. Now they have got few buyers and a lot of outstanding finance + overheads.
Looking at Manchester right now is seriously scarier than London
Why? Do you like where you live? Do you plan on moving in the next 5 years? If not, you've got nothing to worry about at all.
Even if you do move, as everyone says, everything else will have fallen. Listen to the positive comments on here that say I should buy, they're all right
I love my flat and have no plans of moving any time soon. But I worry that, when it's time to re-mortgage in a year and a half, I will not be able to borrow the amount I need or the payments will be too high.
But yes, let's look on the bright side, eh?
When I bought my flat, I owned 40 percent of it... but if the price keeps declining, which it will, so will my share of the property.
I don't want to get to the stage where I own less than 10 percent of the flat and have a huge mortgage to re-pay. I know others with 100 percent mortgages are worse off but it's still concerning!
Anyway, sorry for hijacking your thread mr filter.
I don't want to get to the stage where I own less than 10 percent of the flat and have a huge mortgage to re-pay. I know others with 100 percent mortgages are worse off but it's still concerning!
Anyway, sorry for hijacking your thread mr filter.
Chester Copperpot
Triple stones
Interesting that a lot housebuilders have also been using finance to buy land and also to fund building. They were happy to keep starting new projects as they were just meeting buy-to-let investor demand. Now they have got few buyers and a lot of outstanding finance + overheads.
Looking at Manchester right now is seriously scarier than London
There's a ten story block going up around the corner from me and there's been no builders on the site for about the last two months. Apparently the Builder has run out of money and the quarter finished site is on the market for sale.
huh i don't understand how this could happen, surely you still own 40% no matter what the selling price of the house is?
Chester Copperpot
Triple stones
No the amount you deposit and borrow is fixed where as the value can fluctuate. If prices drop the % you own decreases.
Interesting that a lot housebuilders have also been using finance to buy land and also to fund building. They were happy to keep starting new projects as they were just meeting buy-to-let investor demand. Now they have got few buyers and a lot of outstanding finance + overheads.
Looking at Manchester right now is seriously scarier than London
I'm kind of glad that particular bubble has burst though. Seems like all my friends live in minimalist design flats with hardwood floors and plasma tvs overlooking, usually, a roundabout or something. Although I'd prefer my friends not to get their flats repossessed or owt like that, obviously.
DRINK?
bummed by karmachameleon
Yup Manchester does seem worse than London in my limited experience.. albeit only talking about 3 people that I know and they are having nightmares selling....2 flats and one house all been on the market for over a year....dropped prices, changed estate agents, all really nice places though noone is interested....
Exactly, hence my worry.
Do you mean the "% you have paid off decreases"?
ChrisFilter
Like a boss.
Ah, but I do. Besides, it's not a financial decision, and it's all abitrary until I sell.
Were it a short to medium term investment, I'd fully agree, but it's not.
Ms T
Honey-coloured ramparts
Interesting that a lot housebuilders have also been using finance to buy land and also to fund building. They were happy to keep starting new projects as they were just meeting buy-to-let investor demand. Now they have got few buyers and a lot of outstanding finance + overheads.
Looking at Manchester right now is seriously scarier than London
Yup - hendo was saying that there are tons and tons of flats for sale in or near the city centre which noone wants to buy. A clear case of "fur coat and no knickers", according to him.
He says the same about Birmingham (he's working there at the moment). All the high-end shops in the Mailbox are empty or have moved out. Primark is still going strong, but more expensive shops are struggling.
Chester Copperpot
Triple stones
Lets say yo have a £25,000 deposit and you borrow another £75,000 to buy a house for £100,000. You would own 25% of the house and the bank would own the other 75%.
Then the market drops by 25% and your house is worth £75,000. The bank then owns 100% of the house and you own nothing as you still owe the bank the original £75,000 you borrowed (the value of the house). If it drops further in value you're then into negative equity as you'll still owe the bank money after you've sold it.
ETA: A very simplified example based on an interest only mortgage but even if you've gone down the repayment route and the market drops quickly you'd still be in a similar situation as you pay very little capital of in the early years of a mortgage due to compound interest.
Spion
I hear ya
Ah, I see. So, you've got to hope someone buys yours too. Good luck
If it were me, and I did strike lucky in selling soon, I'd rent til the market hit bottom before buying
the bank doesn't "own" that 75% though, you've just borrowed money from them. they would only own it if you stopped being able to pay the mortgage and repossessed it. I guess it is just how you look at it, i see a mortgage as just like a big loan, it might be secured against the house but still it's a loan isn't it?
the bank can't just come and take the house in this case though! you still own 100% of the house, but you also owe the bank £75,000.
Chester Copperpot
Triple stones
I guess you can look at it both ways really. You're right of course, in reality you still own the house but if you fail to pay your mortgage the bank will repossess your house/their asset.
yes that's it... i just think it's unnecessarily pessimistic to see house prices falling and think "the bank is gradually owning more and more of my house", cos it's not really true! basically house prices falling is not really all that bad, whereas not being able to pay your mortgage is very bad.
At the bottom of the market.
It's working out when that is that's tricky
Just after the end of the first world war or just as the third world war starts?
ChrisFilter
Like a boss.
No, I'm renting at the moment. I just meant I haven't lost or gained any value on the purchased property until I come to sell it.
Chester Copperpot
Triple stones
A big worry is that you won't have enough equity in your house to remortgage onto another fixed rate when you come you existing one. Or that they have changed their lending criteria so you can't remortgage because they have moved the goal posts in regards to your earning.
yes i understand that.
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