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Mortgages of over 100%..

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  • 19-09-2007 11:59am
    #1
    tHE vAGGABOND
    Registered Users Posts: 6,687 ✭✭✭


    Why in the name of god would someone want or need a mortgages of over 100%

    Over the recent banking hysteria, I have been reading about US banks offering 120% mortgages, and English banks offering 105% mortgages?

    I just don't understand? I'm approved for a mortgage at the minute, and I have saved for a good while and have a good ole deposit ready to go when I want to press the trigger.

    But if I walked into a bank and said something along the lines of "I have no money, and have not bothered my arse to save anything, and not only do I want the full 100% I want an extra 20 grand so I can go on the beer with the lads for a while!" I should get my arse kicked black and blue by the bank manager as he throws me out the door!


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    #2
    calsatron
    Registered Users Posts: 128 ✭✭calsatron


    Banks aren't particularly interested in what you do with the money or how you spend it. The're only interested in making good on their investment. So while the market was rising the bank could be confident that it wouldn't stand to lose out should the person taking the mortgage fail to keep up on the repayments. They can also offer less favourable terms on 100% plus mortgages which in turn generates them a greater return.

    As the market tightens you'll see less and less 100% offers on the table, I'd be surprised if anyone other than doctors or senior civil servants can still get them to be honest.

    The attraction of 100% plus is that you can kit out the house, buy a car etc etc with the excess. I know a few people who've taken them and think its a great deal, pointing out to them how long its going to take them to pay for their couch doesn't seem to bother them. It doesn't bother them because for the last few years you could get 10%+ growth on your 2bed in Ongar so whats an extra 20k? It'll start biting when that extra 20k's the difference between being able to move to a larger property and being stuck where you are.

    Of course at that point everyone who's stuck with huge mortgages will cry foul at the banks for immoral lending. I take the view that banks are basically amoral and will willingly lend you money to do anything you want as long as you prove to them you can pay it back with interest.


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    #3
    TwoShedsJackson
    Closed Accounts Posts: 9,438 ✭✭✭TwoShedsJackson


    On average over the life of a mortgage you'll pay back roughly double what you borrowed, which makes it probably the worst loan you will have in your life. But people are blinded by the prospect of a quick extra 20 grand now so they happily go for a bit extra and don't consider/realise the fact that they'll pay it back twice over.

    If you want a new car, get a car loan, do not tack this sort of stuff onto a mortgage.


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