How far will house prices fall [volume 4]

[kingston12]

superkartracer said:

I'd put money on the more vocal posters having had BOMAD or inheritance funds thrown at them , as they seem to value £ little.

Edited by superkartracer on Tuesday 27th June 18:50

Perhaps, but it is really the Government making debt so cheap to service that has changed things in younger people's eyes.

A lot of people think nothing of borrowing huge sums of money because the monthly payment is so low at sub 2%. Paying the capital back is another matter, but that has become a lot less fashionable.

[98elise]

Justayellowbadge said:

oyster said:

Ownership isn't a basic need.

But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.

Except it genuinely doesn't.

Rents in London have barely moved for years, despite the house price increases.

Yields are low single figures.

London is different due to capital growth. London has lots of empty investment property which is very rare elsewhere.

In my area property has risen 50% in the time I've owned my BTL's, and rents have gone up by about 40%.

[Timberwolf]

oyster said:

This puts that particular household in the top 29% of households by income. So even though you're in the top 29%, you can only afford a top 50% house.

That's as a first-time buyer though. And I reckon buying an "average" house as your first time buy is actually a pretty decent situation to be in - you're going straight into a 2 or 3 bedroom freehold house in a nice bit of town, which immediately cuts out 1 or 2 additional sets of moving fees and rounds of stamp duty compared to those who have to start with a studio or 1 bed flat in a cheap road.

If the hypothetical couple are smart and buy somewhere that needs a bit of DIY-level doing up and overpay their mortgage early and often, there's every possibility that a few years down the line they'll have enough equity to consider one of those top 29% houses, or at least close to it.

[menousername]

98elise said:

London is different due to capital growth. London has lots of empty investment property which is very rare elsewhere.

In my area property has risen 50% in the time I've owned my BTL's, and rents have gone up by about 40%.

Medway average 130k/150k for 2/3 bed family type place historically

Cheeker buggers trying to flip those shoeboxes for 220k, 280k etc after 2 years ownership with no upgrades. Thing is they are now stagnating.

Saw one for offers in excess of 300k. It was bought in 2011 ish for 140k back on market in 2014 or 15 for 315k. Didnt sell and back on in Feb this year for offers over 300k still has not sold.

Saw another today bought about 2012 for 190k. On now for offers over 290k. No upgrades no parking.

Silly prices and things are starting to slow dramatically

[Sa Calobra]

Rents have gone up 40% in your area and I bet your not taking advantage just 'charging market rate'? Maybe you charge a fair rate instead. Fair dues, I don't know your situation.

I'm out of this thread. I own my house but I feel for people. I'll just feel negativity.

[superkartracer]

The problem i have with BTL is the potential to open the doors to people like Corbyn who then musters up some weird garden tax ( other crap ) that then affects people like me that made wealth from not exploiting basic human needs .

[Rovinghawk]

anonymous said:

[redacted]

May I ask where exactly you think they'll go to?

[hyphen]

anonymous said:

[redacted]

What do these tenants do?

I can imagine non-parents who are doing the crap manual jobs saving and leaving with or without Brexit, washing cars for example isn't a long term career, but if you have a decent job and a promotion or two/kids in school then I expect they would stay.

[TeaNoSugar]

Quick question on the issue of property owners (owner occupiers and BTL owners) paying interest-only;

Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?

Sorry if this has been done before on this thread but I couldn't read through the whole thing!

[Jobbo]

TeaNoSugar said:

Quick question on the issue of property owners (owner occupiers and BTL owners) paying interest-only;

Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?

Sorry if this has been done before on this thread but I couldn't read through the whole thing!

My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible. Since I can offset all the mortgage interest against rental income for tax purposes, it's also sensible; you can't offset any capital repayment element.

For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.

[TeaNoSugar]

Jobbo said:

My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible.

For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.

Right, that makes a lot of sense. In fact it's obvious when pointed out!! Thanks.

[Jobbo]

It was only about 3 or 4 years ago that it became this hard to get an interest-only mortgage though; and now lenders are offering ludicrously long terms (I'm 44 and was offered a 31 year term for a repayment mortgage), it's still possible to pay off capital at a very slow rate.

[Equilibrium25]

superkartracer said:

But now you have moved onto couples so add kids/extra cars and lots of other crap , so the situation is far more grim .

What drivel is this? You seem to be suggesting that it's tougher financially being a couple owning a house than being a single person.

[WCZ]

lol @ people here saying an individual who takes home £4k can't afford a £900 mortgage

are you suggesting it's impossible to live on near £2k a month after all bills are paid?

you are delusional and detached from the real world

[kingston12]

Jobbo said:

It was only about 3 or 4 years ago that it became this hard to get an interest-only mortgage though; and now lenders are offering ludicrously long terms (I'm 44 and was offered a 31 year term for a repayment mortgage), it's still possible to pay off capital at a very slow rate.

I genuinely wasn't aware of that. A lot of people I speak to about mortgages are paying interest only on a residential mortgage, the 'strategy' being either using inheritance to pay off the borrowing or just using the equity to move to a cheaper property on retirement.

I am surprised that the removal of interest only mortgages hasn't caused more problems in the market, but I suppose the extra long repayment terms have plugged part of the gap as you say.

[matrignano]

Jobbo said:

My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible. Since I can offset all the mortgage interest against rental income for tax purposes, it's also sensible; you can't offset any capital repayment element.

For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.

But who takes the loss if the house's value has gone down in the meantime (i.e. negative equity)?

[p1stonhead]

WCZ said:

lol @ people here saying an individual who takes home £4k can't afford a £900 mortgage

are you suggesting it's impossible to live on near £2k a month after all bills are paid?

you are delusional and detached from the real world

Superkartracer seems fking furious that people have dared to spend more than he deems acceptable on a house.

[Jobbo]

matrignano said:

Jobbo said:

My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible. Since I can offset all the mortgage interest against rental income for tax purposes, it's also sensible; you can't offset any capital repayment element.

For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.

But who takes the loss if the house's value has gone down in the meantime (i.e. negative equity)?

I imagine the BTL lender doesn't expect a property to be worth less after a 20yr term than it was at the start of it. And you'll only get a maximum 75% LTV, so you're pondering the scenario where after 20 years, a property is worth <75% of the initial value.

Unlikely, but theoretically possible. Anyway, the person who is liable is the owner. The sale of the property might not pay off the whole mortgage but the mortgagee is still due the balance, albeit now as an unsecured debt. This situation is a hell of a lot more likely with your own residential mortgage since you can get up to 90/95% LTV fairly routinely and capital is paid off pretty slowly at the beginning of a 25+yr mortgage.

[hyphen]

Jobbo said:

matrignano said:

Jobbo said:

My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible. Since I can offset all the mortgage interest against rental income for tax purposes, it's also sensible; you can't offset any capital repayment element.

For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.

But who takes the loss if the house's value has gone down in the meantime (i.e. negative equity)?

I imagine the BTL lender doesn't expect a property to be worth less after a 20yr term than it was at the start of it. And you'll only get a maximum 75% LTV, so you're pondering the scenario where after 20 years, a property is worth <75% of the initial value.

Unlikely, but theoretically possible. Anyway, the person who is liable is the owner. The sale of the property might not pay off the whole mortgage but the mortgagee is still due the balance, albeit now as an unsecured debt. This situation is a hell of a lot more likely with your own residential mortgage since you can get up to 90/95% LTV fairly routinely and capital is paid off pretty slowly at the beginning of a 25+yr mortgage.

A BTL'er will normally have other assets, namely his own house. So the bank will take into account the probability of getting their money back from his home in the event of him screwing up on the BTL.

[superkartracer]

Equilibrium25 said:

superkartracer said:

But now you have moved onto couples so add kids/extra cars and lots of other crap , so the situation is far more grim .

What drivel is this? You seem to be suggesting that it's tougher financially being a couple owning a house than being a single person.

Most couples have children and it's expensive, you'll lose the partners salary unless you're one of these idiots that decides to have kids then realising you can't afford it and shoves the kids in some sort of care.

Edited by superkartracer on Wednesday 28th June 10:10