house equity

[Edt]

chatting to someone here about our monster mortgage (we're paying interest only as cant afford much more right now). She told me that someone she knows 'signed xx%age of their house away to NFU mutual in return they cleared the debt at the end of its term' . When, hopefully many years later, the estate is divided NFU take their chunk. Presumably plus a chunk on top for their trouble.

Anyone have any experience with this?

Not planning on having many, if any, dependants so would suit us down to the ground it seems.

Ed

[PatHeald]

Sorry to hijack the thread before it has even got going, but what a great idea for an investment.

It's like a sooper dooper buy to let.

You certainly aren't likely to get many dodgy tenants who trash your house if they share equity in the freehold with you.

[cotty]

PatHeald said:

Sorry to hijack the thread before it has even got going, but what a great idea for an investment. It's like a sooper dooper buy to let. You certainly aren't likely to get many dodgy tenants who trash your house if they share equity in the freehold with you.

Some councils do this to help first time buyers, I have been wondering if there is a company that does it also that you could invest with. I think I could find £100,000 and if the tennant could find the rest that I think would make a good investment.

[minimax]

caution urged...

[KingRichard]

Edt said:

chatting to someone here about our monster mortgage (we're paying interest only as cant afford much more right now). She told me that someone she knows 'signed xx%age of their house away to NFU mutual in return they cleared the debt at the end of its term' . When, hopefully many years later, the estate is divided NFU take their chunk. Presumably plus a chunk on top for their trouble. Anyone have any experience with this? Not planning on having many, if any, dependants so would suit us down to the ground it seems. Ed

Why would you want to sacrifice equity in your home when you can afford your mortgage repayments.

I would only look at equity share schemes for FTB's with low incomes and KeyWorkers.

Its unlikely to be a great solution in your case. I would suggest having a look to see if your rate can be bettered to lower your payments. Don't forget the base rate has just come down

If your tied to your lender it may be worth considering a downsize in property to help make things more affordable.

Your plans regarding children may change in the future. Be careful before signing X% of your property to a third party. You may wish to change the agreement and find that you can't.

Dave

[deva link]

Edt said:

chatting to someone here about our monster mortgage (we're paying interest only as cant afford much more right now). She told me that someone she knows 'signed xx%age of their house away to NFU mutual in return they cleared the debt at the end of its term' . When, hopefully many years later, the estate is divided NFU take their chunk. Presumably plus a chunk on top for their trouble. Anyone have any experience with this? Not planning on having many, if any, dependants so would suit us down to the ground it seems. Ed

Take independant financial advice (don't rely of stuff you read in internet forums for decisions like this).

Just one the big problems with shared equity is that you can find it impossible to move house, as the share can grow (in line with increasing house prices) to be worth way more than the amount originally 'borrowed'.

[Edt]

KingRichard said:

Why would you want to sacrifice equity in your home when you can afford your mortgage repayments. I would only look at equity share schemes for FTB's with low incomes and KeyWorkers. Its unlikely to be a great solution in your case. I would suggest having a look to see if your rate can be bettered to lower your payments. Don't forget the base rate has just come down If your tied to your lender it may be worth considering a downsize in property to help make things more affordable. Your plans regarding children may change in the future. Be careful before signing X% of your property to a third party. You may wish to change the agreement and find that you can't. Dave

We can afford the repayments (only just) but its interest only, so in 24 year 1 months time we'll still owe the debt. No exciting huge inheritance down the pipeline. Am investigating changing mortgage but need a massive multiple of my salary.. Bank of Scotland were OK with this (through a friendly adviser) so likely stay with them if they offer a decent rate.

I'm really just thrying to think of what'll happen in the future.. plus dont want to move yet!

Ed

[KingRichard]

Edt said:

Stuff

What you have to bear in mind is the affordability of the new loan. Wouldn't say this adviser is all that friendly as he's happy to saddle you with a massive payment each month and doesn't care about you defaulting... what a nice bloke

What you really need to weigh up is wether you want to own your house at the end of the term or not. If you do, you need to switch to a repayment mortgage or find an investment product to run alongside your mortgage. Obvously the repayment is then not guaranteed.

Are you in a position to extend the term? If you could put your mortgage over 30 or even 35 years to enable some of the capital to be paid off for similar monthly payments, at least you would have the certainty of paying it off.

Can't believe you weren't warned of the risks associated with Interest Only mortgages, and i'll bet you were told to tell the lender that you had an investment vehicle in place to secure the loan?

Sharks

[Edt]

He did exactly what we asked of him.. to sort us out with funds to get this house we couldnt really afford.. until the windfall landed about know. Simple plan. Except windfall, um ,fell. So now we've got this fatboy int only mortgage & trying to work out whats best to do.. really isnt his fault its ours. Love this house to bits but hard work.
Ed

[timmy30]

Edt said:

He did exactly what we asked of him.. to sort us out with funds to get this house we couldnt really afford.. until the windfall landed about know. Simple plan. Except windfall, um ,fell. So now we've got this fatboy int only mortgage & trying to work out whats best to do.. really isnt his fault its ours. Love this house to bits but hard work. Ed

If the mortgage industry were properly regulated by the FSA then it would & should be his fault. Okay you love the house, but if you can't afford to repay it, frankly you shouldn't have been lent that amount of money in the first place.

Just out of interest with the NFU Mutual you wouldn't happen by any chance have to switch your mortgage to them would you?

[Incorrigible]

timmy30 said:

If the mortgage industry were properly regulated by the FSA then it would & should be his fault. Okay you love the house, but if you can't afford to repay it, frankly you shouldn't have been lent that amount of money in the first place.

Absolute bollox

If Ed want's to borrow xxx cash at xxx interest rate, that's entirely up to him

I've got an interest only mortgage, because I want one. In 20 years I'll think about about what I'm going to do to pay back the principle, or sell the house etc etc

I'd prefer to live in a bigger, more expensive house for those 20 years, knowing that if house prices quadruple in those 20 years (probable) I'll still have more equity than I would If I lived in a smaller house and payed off the mortgage

OTOH if you want to pay back your mortgage no-one's stopping you

Asking the question is good, but as Minimax says, caution must be excercised. I would enjoy the house you have, 20 years is a bloody long time

[silversun]

It's not necessarily a problem to have interest only at a fixed rate for a couple of years when you first buy. The problem arises when you continue to take out interest only after that to keep the monthly repayments down as you are obviously not paying off the capital.

I have done interest only at fixed rate for 2 years but am planning to remortgage with another fixed rate but as a repayment mortgage instead at the end of the 2 year period.

[timmy30]

Incorrigible said:

timmy30 said: If the mortgage industry were properly regulated by the FSA then it would & should be his fault. Okay you love the house, but if you can't afford to repay it, frankly you shouldn't have been lent that amount of money in the first place. Absolute bollox If Ed want's to borrow xxx cash at xxx interest rate, that's entirely up to him I've got an interest only mortgage, because I want one. In 20 years I'll think about about what I'm going to do to pay back the principle, or sell the house etc etc I'd prefer to live in a bigger, more expensive house for those 20 years, knowing that if house prices quadruple in those 20 years (probable) I'll still have more equity than I would If I lived in a smaller house and payed off the mortgage OTOH if you want to pay back your mortgage no-one's stopping you Asking the question is good, but as Minimax says, caution must be excercised. I would enjoy the house you have, 20 years is a bloody long time

Incorrigable it is unfortunate that people like you are leant very large sums of money by a financial industry that has recently begun to sail very close to the wind. You may well/probably will regret your IO mortgage decision. But it's not for me to spend the time and effort explaining why. In the meantime as you suggest enjoy your house whilst you can.

>> Edited by timmy30 on Monday 22 August 11:07

[Incorrigible]

timmy30 said:

Incorrigable it is unfortunate that people like you are leant very large sums of money by a financial industry that has recently begun to sail very close to the wind. You may well/probably will regret your IO mortgage decision. But it's not for me to spend the time and effort explaining why. In the meantime as you suggest enjoy your house whilst you can.

Actually, I realised "Absolute bollox" was a bit harsh

I won't go too deep into it, and maybe Edt could have been advised better, but as he said, he told the advisor how much he wanted to borrow, it is his decision

As for "probably will regret my IO mortgage" you know nothing about me or my financial position. Suffice to say, that if interest rates doubled tomorrow I would not have a huge problem paying the bills. I appreciate many people have been poorly advised and aren't in this position

I'm suprised you think I would need the risk explaining to me. I didn't realise I came across quite that poorly educated

Anyway "people like me" implies a certain amount of predjudice, not impressed

[timmy30]

Incorrigible said:

[quote=timmy30]Anyway "people like me" implies a certain amount of predjudice, not impressed

Fair enough, tell you what I'll agree that that the above phrase was a bit presumtuos if you agree that a call for the consumer lending industry to be better regulated doesn't deserve to be called 'complete bollx'.

You may well as you say be in a very good situation, but alot of people I know who are on IO mortgages are not, and worse they are slipping into negative equity, having kids, Mrs wants to give up job etc. It's a right mess for them. And as for relying on house prices to quadruple by the time the capital needs to be paid off...... it may happen it may not. For you it may not matter either way, for the guy who started this post I get the impression he doesn't have a massive + cash flow.



>> Edited by timmy30 on Monday 22 August 11:30

[jasandjules]

My first concern in this would be what % of the property would they have? And also, would your mortgage company be happy, there will be a charge on the property so I assume you would have to switch Mortgages, which I suspect will incur arrangement fees etc..

Also, if the house say increased in value by 30k, if they have a half share, you are only looking at 15k for you, 15k profit for them.....

But then I am cr*p with money anyways, so best not to ask me..

[Incorrigible]

timmy30 said:

Fair enough, tell you what I'll agree that that phrase was a bit rude if you agree that referring to a call that the consumer lending industry is in bad need of better regulation 'bollx'.

I did mention that I thought a bit harsh earlier.

The way I see it, there are some good products out there. But while I appreciate how nice a DB9 is, I know I can't afford one. It doesn't seem to work like that with houses/mortgages

I certainly agree that people have been miss-sold. But OTOH I'm not so sure that better regulation would help. I would be interested to hear your expanded views on that

The problem, as with so many elements of our live, is that there seems to be no responsibility for ones own actions

[timmy30]

Incorrigible said:

The way I see it, there are some good products out there. But while I appreciate how nice a DB9 is, I know I can't afford one. It doesn't seem to work like that with houses/mortgages I certainly agree that people have been miss-sold. But OTOH I'm not so sure that better regulation would help. I would be interested to hear your expanded views on that The problem, as with so many elements of our live, is that there seems to be no responsibility for ones own actions

Like the DB9 analogy, I'd love one, I could get the loan, actually buggerit I could buy one, but we digress.

What I'm worried by is mass 'mortgage fraud' where people are i) lying about there income to secure a larger mortgage and the banks effectively turning a blind eye ii) buying a series of properties a using seperate mortgage lenders to build an undeclared property portfolio by claiming they are all the primary residence.

I am concerned that lending multiples have been largely abandoned with the result that people are borrowing 6-8 times salary whilst for example on an accountants training contract.

Endowment mortgages are often held up as a scandal, but at least with those you had to have some kind of repayment vehicle in place, the current trend is for IO mortgages without any requirement for borrowers to have the vaguest idea of how to pay them off.

I would propose i) reinstate and enforce salary/income based lending criteria ii) enforce cross checking of lenders databases to discourage phantom BTL portfolios.

By and large I'm afraid that people have been shown not to be too sensible in many ways, hence the raft of consumer protection regulation. And in the case of the housing market it is asymetrically regulated, with strict artificial controls on the supply side but no regulation/ lax regulation on the demand/financing side.

I have many friends who are not saving, have no pension, hardly any disposable income, and are strugglnig to pay just the interest on an IO loan they aren't even repaying. They have been told by the press/ lenders that housing is a one-way bet and have believed what they have read. There has been no attempt to inform people of the risks, and my friends certainly could not cope with a doubling of interest rates let along a further 1% hike.

One couple I know who are well and truely up the creek without a paddle now had to ask 8 lenders before they could get the level of gearing they wanted. They just wouldn't accpet that the house they wanted to buy was out of their reach, and eventually they found a lender unscrupulous enough to give them the advance, they are now well and truely stuffed.

To me this should be no more possible than buying 100% proof absinthe from a bar because you're drunk and want to get drunker.

[Incorrigible]

timmy30 said:

To me this should be no more possible than buying 100% proof absinthe from a bar because you're drunk and want to get drunker.

Where is this bar of which you speak

I totally agree about the fraudulent BTL, it pains me that I know there are people paying less than me just because they think it's alright to blatently lie

I am in 2 minds regarding the huge mortgages available. I agree that people like the ones you describe should learn to live in a smaller house. But OTOH they have to sign a lot of peices of paper to say they understand what's going on

Good post sir

[timmy30]

Incorrigible said:

[I am in 2 minds regarding the huge mortgages available. I agree that people like the ones you describe should learn to live in a smaller house. But OTOH they have to sign a lot of peices of paper to say they understand what's going on Good post sir

Yep I agree with you that people really should be responsible for their own actions, and I'm generally against nannying, and if they sign the form, well that's their decision as you say, we are all adults, get to vote etc.

I think the real solution probably lies in a reformation of the planning laws which origially were intended to guarentee an affordable supply of quality housing rather than to place a choker on supply. And a reinstatement of some king of sanity by the lenders and public bodies.

Well we digress, anyway cheers for the dicussion.

Oh their is a bar in Marseille that does something pretty near 100% absinthe it's down near Canabiere St, though I can't remember the name of the bar or very much else of the evening.



>> Edited by timmy30 on Monday 22 August 12:30

>> Edited by timmy30 on Monday 22 August 12:31