[Kosh]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 12:23 pm  

John_D wrote:

Getting out of the mindset of a house as an investment rather than somewhere to live is also required. Besides, we all know the valule of investments can go down as well as up, so tough luck. Gamblers often lose.

So on the one hand you say we need to stop seeing houses as an investment (which I agree with BTW), yet on the other hand you say investments can go down as well as up? A tad contradictory?

In any event it's not about investment. If you've bought a house you need to sell it for at least the value of the outstanding mortgage - break even if you will - unless you have sufficient funds to pay the difference. So in practice you're looking at people who have paid off all or the majority of their mortgage being the only folk who can afford to sell at the 'correct' price.

[John_D]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 12:37 pm  

Kosh wrote:

So on the one hand you say we need to stop seeing houses as an investment (which I agree with BTW), yet on the other hand you say investments can go down as well as up? A tad contradictory?

Not at all. What I was saying was that if you've bought something as an investment you should not reasonably expect the whole system to be rigged in order to preserve it's value.

[John_D]

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 12:40 pm  

JerryChicken wrote:

The solution is for lenders to stop equating loans to a ficticious formula that once was a reasonable guide to affordability but now is not.

Its time for lenders to do proper and fit assessements again, possibly to employ people fit do do such assessments and then trust those people to offer a home loan linked to the buyers income and age.

The systems I was developing were in order that someone on the phone to someone applying for a mortgage could click a few buttons and get an automatic decision, thus taking the decision away from someone with experience of what was reasonable to an unblinking box stuffed full with rules the institution specified.

At least now I'm doing something socially responsi..... Oh.

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 7:47 pm  

JerryChicken wrote:

The solution is for lenders to stop equating loans to a ficticious formula that once was a reasonable guide to affordability but now is not.

Its time for lenders to do proper and fit assessements again, possibly to employ people fit do do such assessments and then trust those people to offer a home loan linked to the buyers income and age.

For example with my eldest and her partner at 24 years of age and both working in what a lender would class "professional" jobs, there is no reason why a home loan for them has to be limited to 25 years or three times their income, the absolute criteria should be their household budget which any lender should insist on - "show us how you are going to afford a £900 a month mortgage on your income" and then set the term, interest rate and total offer based on that.

In that respect I am pushing her towards The Nationwide in that they do still employ people who seem to know what they are talking about when it comes to homeloans, being as that is still a major part of their business model.

Again, looking toward our continental neighbours, it is not uncommon to find 50 or even 75 year mortgages. Quite often the children of deceased parents inherit a partially-mortgaged liability, instead of a freehold asset.

When my mother died, I persuaded my old man to switch to an interest-only mortgage, to save himself a few bob each month

Re: Clegg's apology - death throes of a doomed party leader? : Tue Sep 25, 2012 7:55 pm  

Nationwide will accept a mortgage agreement up to the principal borrowers 70th birthday, which is what I did to drop the repayments when our household income went into freefall about four years ago - lost 60% of income overnight - I've left it at that because the master plan is that I won't still be paying the mortgage at that age - assuming that I retire at the "normal" age then thats when this house will be sold with only a small amount left owing on it and a smaller retirement hole in the ground purchased with our own equity.

I couldn't give a damn what the house is worth, the next one just has to cost whatever equity I have in this one when I want to retire.

Its a plan.

[Kosh]

Re: Clegg's apology - death throes of a doomed party leader? : Thu Sep 27, 2012 8:37 am  

John_D wrote:

Not at all. What I was saying was that if you've bought something as an investment you should not reasonably expect the whole system to be rigged in order to preserve it's value.

And what if you haven't bought it as an investment? Is it just 'tough luck' for you as well?

Re: Clegg's apology - death throes of a doomed party leader? : Thu Sep 27, 2012 10:49 am  

Kosh wrote:

And what if you haven't bought it as an investment? Is it just 'tough luck' for you as well?

If you have not bought it as an investment then you won't be expecting to make any money out of it.
Conversely, if you are looking to make money out of it, then it IS an investment.
If the overall market prices go down, so will the price of the next house you want to buy.

[Kosh]

Re: Clegg's apology - death throes of a doomed party leader? : Thu Sep 27, 2012 11:09 am  

El Barbudo wrote:

If you have not bought it as an investment then you won't be expecting to make any money out of it.
Conversely, if you are looking to make money out of it, then it IS an investment.
If the overall market prices go down, so will the price of the next house you want to buy.

As I pointed out earlier, this only works if you've paid down your mortgage enough to be able to afford the sales price shortfall.

Re: Clegg's apology - death throes of a doomed party leader? : Thu Sep 27, 2012 2:02 pm  

Kosh wrote:

As I pointed out earlier, this only works if you've paid down your mortgage enough to be able to afford the sales price shortfall.

Good point and allows me to mention that even if you don't intend it, owning a house becomes an investment anyway.

[DaveO]

Re: Clegg's apology - death throes of a doomed party leader? : Thu Sep 27, 2012 7:36 pm  

John_D wrote:

Pain for the few for the long-term good of everyone. Call me Jeremy Bentham.

The few? I think a housing price crash would bring pain for more than a few which is part of the problem.