Why use this system of mortgages?

danbohan

Dannyboy83 wrote: »

BTW, "scrape together" and "23k" are a rather odd combination I would have thought!

I know one woman who is self employed, her husband works, they have 1 child and rent a 2 bed house.

The most they can save is 500 per month.
So your talking 4 years (with absolutely no unnecessary expenditures such as car repairs etc.) before they can "scrape together" 23k.

did you ever ask yourself why 60%+ of Germans rent , and are happy to continue to rent , and as far as i can see they have a much more balanced economy than us , and have a fraction of personal debt that irish people do and have much greater level of savings , its time for irish people to completely revalue their obsession with owning shoeboxes

Mad_Max

Can't really believe this thread.

Inside a week I've seen people lashing the regulator out of it for...regulating and now someone wants 100% mortgages back.

The_Honeybadger

doubleglaze wrote: »

You took out a loan to buy a car??!

A word of advice: don't do that again. You're p!ssing money down the drain on interest that you could be saving up instead. Next time, consider buying an older and smaller car for €1000. Cash upfront. That's the sort of thing rich folks do.

doubleglaze wrote: »

Someone on a 35K salary has no business taking out a mortgage of 150K. Their salary is too low for that level of mortgage. More realistically, someone on a 35K salary should be looking out for a mortage of no more than about 100k. Houses within that price range are already coming on stream and will become increasingly common with time. Meanwhile, it should be possible to gradually save up 10,000 euro deposit, by avoiding expensive car purchases and living frugally (no unnecessary travel; no debt; living in cheap accommodation, if necessary living in a house-share rather than renting out a full housing unit on one's own; cut out the expensive social life; no eating out; no p!ssing money down the drain on the nieces' and nephews' confirmations and communions; and no wastage of food from the fridge, etc).

Good posts doubleglaze, if more people thought like you we wouldn't be in such a horrible mess. What amazes me is the amount of people I encounter in everyday life who are clueless about the extent of our economic difficulties, and reckon "sure give it a year or two and things will be back to normal". I also have a friend who can't wait to get on the property ladder even now, when they see prices in freefall around them. I also personally know a young couple who took out a 110% mortgage a number of years ago to buy a 3 bed semi, a car, and a holiday :eek: utter utter madness. One has become unemployed and luckily the other has a good job in the PS but they are only just managing. We have become obsessed with owning property and some people still can't see it was a pyramid scheme that will be a noose around our neck for a generation. Attitudes like this must change if we are to move forward from here.

Treehouse72

Dannyboy83 wrote: »

I already made it clear (how many times?) that I'm not talking about an expensive house.
Just a regular, 3 bed semi d in Cork: http://www.daft.ie/1390925

€474 over 35 years (avg rent in Cork is still around the €850 mark)

Danny, on page 1 you said you were cynical. Believe me mate, you are so far from cynical it's not true. Your level of credulity is frightening.

> The €474 figure you got in that Daft link is a 2.25% special introductory teaser rate. The average rate over the lifetime of the loan is likely to be twice that, perhaps more.
> The €474 figure is based on - oh ironies of ironies!! - having a 10% deposit! Whoops! Lose the deposit as you are advocating and the €474 figure goes up.
> And you are terming the mortgage over 35 years....so if you get it when you are 30 you'll own your house the day you retire. 35 years to pay off €138,000. Does that sound healthy to you?


So on a basic level your numbers are gobbledegook.

But in many ways that's not the important bit. The important bit is that after the very obvious carnage and destruction wrought by the property bubble, here we are - before that bubble has even fully deflated - talking about how to get more property at a better deal. Have you learned nothing Danny? Can you not at this stage see the amount of trouble 100% mortgages have caused? Are you aware that the only thing keeping mortgage holders in their homes is the mortgage moratorium and taxpayer bailouts? Do you not understand this?

Finally, here's the solution to the problem you are trying to fix: let house prices fall more. Why in the name of sweet jumping electrical Jesus Christ are you looking for exotic ways to borrow more money to buy houses when there is a simpler option: make the houses cheaper?? What in the name of God is wrong with this solution? Why are you so eager to see prices sustained at somewhere close to where they are now? Seems to me you are emotionally and intellectually incapable of even envisaging this for some reason.

I feel depressed after reading this thread.

Dannyboy83

Treehouse72 wrote: »

Finally, here's the solution to the problem you are trying to fix: let house prices fall more. Why in the name of sweet jumping electrical Jesus Christ are you looking for exotic ways to borrow more money to buy houses when there is a simpler option: make the houses cheaper??

I would love to see that happen.
That's not the dilemma.
A cheaper house just means the bank will want a bigger deposit.
A huge chunk of potential customers are still locked out either way. (and I don't mean the sub-prime crew or whatever)

What in the name of God is wrong with this solution? Why are you so eager to see prices sustained at somewhere close to where they are now?

Who said I was eager to see that happen?
I'd like to see them sink as low as possible.
That's not what the thread is about.

Seems to me you are emotionally and intellectually incapable of even envisaging this for some reason.

Seriously, what the fcuk is all this about?

You can't even come and ask a normal question on this forum anymore without getting attacked!

Grow up children!

Dannyboy83

Mad_Max wrote: »

Can't really believe this thread.

Inside a week I've seen people lashing the regulator out of it for...regulating and now someone wants 100% mortgages back.

They say a general never fights the current battle, only the last one.

That would appear to be the case on this forum.


ooooooooooops - I said the "P" word!!!!! oooooooohhhhhhh!

Dannyboy83

danbohan wrote: »

did you ever ask yourself why 60%+ of Germans rent , and are happy to continue to rent , and as far as i can see they have a much more balanced economy than us , and have a fraction of personal debt that irish people do and have much greater level of savings , its time for irish people to completely revalue their obsession with owning shoeboxes

Good post.

On the other hand, long term renting is an established method in Germany, and there is a bit of legislation to back you up (my brother in law is German).

This is not the case in Ireland. There is sod all protection and consequently, nobody does it, consequently there is sod all protection & new legislation, consequently nobody does it etc. etc.

Sarn

I can see the frustration. I imagine there are a lot of people watching the price of houses falling, thinking that they are missing out on perceived bargains. Whether this be due to the absence of a deposit or the banks not lending enough. However, this is serving to protect everybody, homeowner, lender and tax payer. As mentioned above it acts as a buffer in the event of a default by the borrower.

With prices continuing to fall, a 100% mortgage immediately leads to negative equity and dramatically increases the risk to the lender. They can offest this by charging a penal rate of interest or request a deposit. We can see what happens in the event that a person in negative equity defaults (the current moratorium aside). They lose their home and the bank chases them for the remaining debt, and perhaps legal fees. An 8 - 10% deposit can offset this risk. The requirement for a deposit worked out quite well before the advent of 100% mortgages.

In addition, the requirement for a deposit makes people pause and think about this major purchase. Some people need this. It slows the market down and stops some people grabbing a 100% mortgage on a whim without considering the financial implications.

K-9

Dannyboy83 wrote: »

I know plenty of people paying rent of €800 to €900 per month.
But there are houses available on mortgage for €500 to €600 per month.

At times of low interest rates which will rise. I'd wonder how long the term is for those repayments too.

Edit: Answered in the thread, 35 years. Thanks. Fecking working for the bank that is. A 20/25 year term is plenty.

fontanalis

Three cheers for the knowledge economy.

Scofflaw

Treehouse72 wrote: »

Danny, on page 1 you said you were cynical. Believe me mate, you are so far from cynical it's not true. Your level of credulity is frightening.

...

Finally, here's the solution to the problem you are trying to fix: let house prices fall more. Why in the name of sweet jumping electrical Jesus Christ are you looking for exotic ways to borrow more money to buy houses when there is a simpler option: make the houses cheaper?? What in the name of God is wrong with this solution? Why are you so eager to see prices sustained at somewhere close to where they are now? Seems to me you are emotionally and intellectually incapable of even envisaging this for some reason.

I feel depressed after reading this thread.

However shocked or depressed you may feel, can you restrain yourself from insulting other posters, please?

moderately,
Scofflaw

daltonm

Dannyboy83 wrote: »

About interest rates, I can agree.
This is a good point.

The thing is, as long as we are in the Euro, we are not going to see 1980s style interest rates.
AFAIK, the absolute ceiling would be 10%, and any of the Germans I know say this is just plain unrealistic as it would screw the German economy, so 4 or 5% is more realistic, perhaps 8% maximum.

Danny, I have to come back to the point about your view on interest rates. In the past week 2 main banks have hiked up their interest rates by half a % point, you will note that the ECB did not change their rates. The banks are not BOUND to the ECB rates, it is a guide.
The Germans therefore, who are considered the savers of europe, and who have a low percentage of mortgages (someone mentioned that 60% rent, it is important to realise here that the remaining 40% may own their own home BUT - not have a mortgage on it - major difference, they are not called the savers of Europe for nothing) look at interest as what they can GAIN on their savings rather than what they can LOSE on paying a mortgage.
In and around 5/6/7/% is seen as a NORMAL interest rate in a healthy economy - 10% in Europe could only mean that in Ireland we would be looking to 13/13/15%.
If the banks decide they need to up rates, then they will and have already started to, then when they ECB rates start to rise, then the banks will rise again.

Dannyboy83

daltonm wrote: »

Danny, I have to come back to the point about your view on interest rates. In the past week 2 main banks have hiked up their interest rates by half a % point, you will note that the ECB did not change their rates. The banks are not BOUND to the ECB rates, it is a guide.
The Germans therefore, who are considered the savers of europe, and who have a low percentage of mortgages (someone mentioned that 60% rent, it is important to realise here that the remaining 40% may own their own home BUT - not have a mortgage on it - major difference, they are not called the savers of Europe for nothing) look at interest as what they can GAIN on their savings rather than what they can LOSE on paying a mortgage.
In and around 5/6/7/% is seen as a NORMAL interest rate in a healthy economy - 10% in Europe could only mean that in Ireland we would be looking to 13/13/15%.
If the banks decide they need to up rates, then they will and have already started to, then when they ECB rates start to rise, then the banks will rise again.

Assuming you are correct about the 15% interest rate, then I agree, the question I proposed seems ridiculous.

But a 15% interest will see most who have bought since the year 2000 bankrupt anyway, so it shouldn't be an 8% deposit but a 20% minimum.

daltonm

Dannyboy83 wrote: »

Assuming you are correct about the 15% interest rate, then I agree, the question I proposed seems ridiculous.

But a 15% interest will see most who have bought since the year 2000 bankrupt anyway, so it shouldn't be an 8% deposit but a 20% minimum.

Not ridiculous Danny, I feel people are being very harsh on you, it's hard at your age to view buying a home as anything other than a secure investment. From your teens on you have only ever seen wealth acquired, as a result of owning a home.

It really depends on the financial situation, if someone bought in 2000, paid a deposit and most importantly - didn't use their home as an ATM machine - i.e. released equity - then they should be fine.

For me if I was buying a home (I have said this on other sites) I would base it on 3 max 4 times ONE income and have a reasonable deposit. I would divide my salary into 48 or 50 weeks (as opposed to 52) to allow for being ill or on holiday. I would base the interest repayments as high as possible - rather than cheap teaser rates. And my term - max 25 years. On adding all that, I would then look for houses in that price range, if the house of my dreams was not in the bracket - then I wouldn't buy it because - I can't afford it.

Edit - it doesn't mean that the average person will never afford their own home, they will - when prices go down, and they will, because they have to.

Any broker or EA for example, who tell you that "it's the right time to buy" ask them to sign a guarentee to pay the difference in your pay packet or the difference in the interests rates if either or both of these things change, and they will and what seems affordable today could break your back in 6 months time.

Remember it is YOU that repays, no-one else.

Mad_Max

Dannyboy83 wrote: »

ooooooooooops - I said the "P" word!!!!! oooooooohhhhhhh!

Huh?

Dannyboy83

daltonm wrote: »

Not ridiculous Danny, I feel people are being very harsh on you, it's hard at your age to view buying a home as anything other than a secure investment. From your teens on you have only ever seen wealth acquired, as a result of owning a home.

It really depends on the financial situation, if someone bought in 2000, paid a deposit and most importantly - didn't use their home as an ATM machine - i.e. released equity - then they should be fine.

For me if I was buying a home (I have said this on other sites) I would base it on 3 max 4 times ONE income and have a reasonable deposit. I would divide my salary into 48 or 50 weeks (as opposed to 52) to allow for being ill or on holiday. I would base the interest repayments as high as possible - rather than cheap teaser rates. And my term - max 25 years. On adding all that, I would then look for houses in that price range, if the house of my dreams was not in the bracket - then I wouldn't buy it because - I can't afford it.

Edit - it doesn't mean that the average person will never afford their own home, they will - when prices go down, and they will, because they have to.

Any broker or EA for example, who tell you that "it's the right time to buy" ask them to sign a guarentee to pay the difference in your pay packet or the difference in the interests rates if either or both of these things change, and they will and what seems affordable today could break your back in 6 months time.

Remember it is YOU that repays, no-one else.

Great post, Thank You!

All I can say is that if interest rates are realistically capable of approaching 15% in the short to mid future, then we are going to have an epidemic/crisis, it will be back to the taxpayer again (including me who has been renting for 7 years and doesn't own a home) to bail out all these people.
That would be the straw to break the camels back for me, I would have no choice but to leave the country.

What is the likelihood of this I wonder?
Is it even conceivable that interest rates would go that high?
Surely that would just wipe out any miniscule chance the country has of recovering in the next 50 years?

Dannyboy83

Mad_Max wrote: »

Huh?

I was being attacked for bringing up property.
I didn't realise I wasn't allowed to say the P word on here.

My comment basically meant, the Generals who fought World War 2 were trying to fight the last battle (WW1) and using those tactics and got their asses kicked, meanwhile Guderian and Rommel were using new tactics and fighting WW2 and cleaned the floor with them.

I understand there are drawbacks and considerations to the 100% mortgage scenario, but mostly, people have been giving reasons which are relevant to what happen from 1997 to 2007, not what is happening now.

They are two totally different scenarios, pyramid vs. collapse

cranks

how about house prices fall to a level that could be paid for comfortably over a maximum 20 year period by a single/couple (take your pick).
What'd that make yr average 3 bed, semi - if we assume AIW somewhere in region of 35k?

The_Honeybadger

cranks wrote: »

how about house prices fall to a level that could be paid for comfortably over a maximum 20 year period by a single/couple (take your pick).
What'd that make yr average 3 bed, semi - if we assume AIW somewhere in region of 35k?

2-3 times AIW making it 100k or under for a decent 3 bed semi. That would be perfectly reasonable IMO, as they can be built for less than this, assuming the developer hasn't paid 30 million for a 5 acre site. However the national obsession with property ownership will never allow prices to fall this low.

daltonm

Dannyboy83 wrote: »

Great post, Thank You!

All I can say is that if interest rates are realistically capable of approaching 15% in the short to mid future, then we are going to have an epidemic/crisis, it will be back to the taxpayer again (including me who has been renting for 7 years and doesn't own a home) to bail out all these people.
That would be the straw to break the camels back for me, I would have no choice but to leave the country.

What is the likelihood of this I wonder?
Is it even conceivable that interest rates would go that high?
Surely that would just wipe out any miniscule chance the country has of recovering in the next 50 years?

But you are already paying for it with - NAMA.
The crisis is here, it's being covered up with SW payments, banks restructuring loans (3000 per month).


What you have is freedom - a lot of people do not.

Imagine a situation where a couple who bought a home in 05/06/06/08/ (maybe 09, it depends) using max multiples of two working people and basing it on the lowest teaser rate, 1 or 2%
Now one of them is unemployed, the mortgage is rising and the one left in employment is now looking to take a paycut/higher taxes to pay for NAMA.
Yes you will pay, but count up 7 years of renting, paying out for this service and then compare it with the above scenario.

AARRRGH

This thread is hilarious.

I have no doubt if the bank gave dannyboy83 a 100% mortgage, in 6 months time when he realises he is in quite a bit of negative equity he would be here complaining how the bank forced him to take out a large mortgage.

oflahero

Scofflaw wrote: »

However shocked or depressed you may feel, can you restrain yourself from insulting other posters, please?

moderately,
Scofflaw

I hope his/her skin is toughening up, because 'tis nothing compared to the comprehensive kicking being meted out over on the 'Pin: http://www.thepropertypin.com/viewtopic.php?f=4&t=29563

Dannyboy83

oflahero wrote: »

I hope his/her skin is toughening up, because 'tis nothing compared to the comprehensive kicking being meted out over on the 'Pin: http://www.thepropertypin.com/viewtopic.php?f=4&t=29563

People are entitled to say whatever they like, all I'm asking is that you answer the questions and not be rude about it.
If you think it's ridiculous or just want to insult me, how about you just close the thread?

As far as I'm aware, I'm asking a fairly legitimate question here.
I'm not so sure what is so funny, only a handful of people have been able to give a decent answer and not simultaneously insult me.

Btw, I read the pin too, I'm a user over there.
They are not exactly the most optimistic crowd - are they?:rolleyes:
LMFAO!:D

The Mods had to enforce an "anti-glee" rule to prevent them laughing at people in misfortune, why do I care about people who take so much pleasure in other people's misfortune?

There are a lot of good posters, but its also heavily populated by many of the pessimists who populate these parts. If you were to take everything the pessimists say to heart, you wouldn't get out of the bed in the morning and probably turn the gun on yourself tomorrow.:p

DONT TAKE A BATH -- YOU CAN DROWN IN 3 INCHES OF WATER!!! SHOCK!!

K-9

AARRRGH wrote: »

This thread is hilarious.

I have no doubt if the bank gave dannyboy83 a 100% mortgage, in 6 months time when he realises he is in quite a bit of negative equity he would be here complaining how the bank forced him to take out a large mortgage.

In fairness, I don't think he would. That usually is reserved for people who bought thinking the house was a goldmine.

Dannyboy83

AARRRGH wrote: »

This thread is hilarious.

I have no doubt if the bank gave dannyboy83 a 100% mortgage, in 6 months time when he realises he is in quite a bit of negative equity he would be here complaining how the bank forced him to take out a large mortgage.

Your posts are hillarious.
You never tackle any questions on the subject, you just swoop in with a personal attack of some sort.

Negative equity doesn't matter a great deal unless you plan to move.
Things won't stay bad forever, no matter how much the doom mongers here would like to scream and shout:rolleyes:

oflahero

Dannyboy83 wrote: »

People are entitled to say whatever they like, all I'm asking is that you answer the questions and not be rude about it.
If you think it's ridiculous or just want to insult me, how about you just close the thread?

It's tough love. You'll be glad of it when it's over. No-one wants to see someone getting into property-related difficulties *only now* considering the last couple of years we've had. I'd say that's the reason for the singular shoeing you've been experiencing.

Dannyboy83 wrote: »

The Mods had to enforce an "anti-glee" rule to prevent them laughing at people in misfortune, why do I care about people who take so much pleasure in other people's misfortune?

You'd do well to remind yourself that you're one of the fortunate ones - debt-free. There's thousands of people all over this island staring down the barrel of mortgage debt, job insecurity, pay cuts, rising rates and being stuck in a boghole in nowherestown. Why so keen to join them?

AARRRGH

Dannyboy83 wrote: »

Your posts are hillarious.
You never tackle any questions on the subject, you just swoop in with a personal attack of some sort.

Are you for real?

AARRRGH wrote:

Saving should be a normal part of life.

You should be saving for a number of years before you buy a property.

If you can't afford to save money, you can't afford an expensive house.

AARRRGH wrote:

The reason banks want you to have a deposit is because:

a) you are sharing the risk with them
b) if the value of their investment falls, they have an 8% - 10% breathing space.

murphaph

Dannyboy83 wrote: »

Negative equity doesn't matter a great deal unless you plan to move.

...but you'd be asking a bank to lend you 150k for an asset that will be worth 140k in a couple of months time, without giving them any of YOUR money as a deposit/incentive to repay the loan. Can you see why the bank wouldn't be too keen on lending someone 150k for an asset that will soon be worth less, whilst at the same time not even asking for a deposit to incentivise the borrower to repay? The borrower could leg it to Australia in 3 months time when they realise the loan is worth a lot more than the house.

Dannyboy83

oflahero wrote: »

It's tough love. You'll be glad of it when it's over. No-one wants to see someone getting into property-related difficulties *only now* considering the last couple of years we've had. I'd say that's the reason for the singular shoeing you've been experiencing.

The reason for the shoeing is because the board is half populated by total pessimist ****, who don't know why they are screaming and shouting slogans, who can't explain the reasons behind the slogans, they just shout them.

PROPERTY=BAAAAAAAADDDD!!!!

You'd do well to remind yourself that you're one of the fortunate ones - debt-free. There's thousands of people all over this island staring down the barrel of mortgage debt, job insecurity, pay cuts, rising rates and being stuck in a boghole in nowherestown. Why so keen to join them?

<

---

Look at my join date
<

---

Look at my post count

Are you for real kid?

Do you not think I'm living in this world too?
Do you no think I've been reading this forum too?
Have you actually read any of the posts I've made?

If you want to tackle the subject specifically, you're more than welcome.
Giving me big bad and mostly irrelevant stories is just plain useless, I'm not a daily fail reader.

fontanalis

Dannyboy83 wrote: »

Your posts are hillarious.
You never tackle any questions on the subject, you just swoop in with a personal attack of some sort.

Negative equity doesn't matter a great deal unless you plan to move.
Things won't stay bad forever, no matter how much the doom mongers here would like to scream and shout:rolleyes:

Might just stick in your craw a bit when your paying golden egg prices for a turd.
I truly believe no lessons have been learned from the previous mess and the same thing would easily happen again.

Dannyboy83

AARRRGH wrote: »

Are you for real?

See my follow posts.

You make a whole load of statements, but cannot justify any of them when questioned.

Then out come the personal attacks and whatever.

p.s. I await the - well, if you don't know, then there is no point in telling you!:D

fontanalis

Dannyboy83 wrote: »

See my follow posts.

You make a whole load of statements, but cannot justify any of them when questioned.

Then out come the personal attacks and whatever.

p.s. I await the - well, if you don't know, then there is no point in telling you!:D

Ooh a smiley, you really showed him!

Dannyboy83

murphaph wrote: »

...but you'd be asking a bank to lend you 150k for an asset that will be worth 140k in a couple of months time, without giving them any of YOUR money as a deposit/incentive to repay the loan. Can you see why the bank wouldn't be too keen on lending someone 150k for an asset that will soon be worth less, whilst at the same time not even asking for a deposit to incentivise the borrower to repay? The borrower could leg it to Australia in 3 months time when they realise the loan is worth a lot more than the house.

Thanks, good answer.

About legging it to Australia, people who leg it to Australia now will be pursued regardless. It's not a viable reason imo. (just my opinion of course)

Even if you declare bankruptcy, as far as I understand, you can still be pursued for every single cent, if you ever acquire any, at any future date.

If 100% mortgages were an option, I imagine the market would begin to stabilise.
Most people who sign onto property in this scenario are not buying investments, they are buying 'homes'.
They are buying it to live in it.

Its a completely different scenario compared to the last decade.

Do we have any figures on how many homeowners have done a runner from Ireland since 2008?

Dannyboy83

fontanalis wrote: »

Ooh a smiley, you really showed him!

:rolleyes:

oflahero

Dannyboy83 wrote: »

Are you for real kid?

Do you not think I'm living in this world too?
Do you no think I've been reading this forum too?
Have you actually read any of the posts I've made?

Getting angry and patronizing about it won't help. Plenty of concrete analysis has been thrown your way answering your queries on this thread alone, so I'm sorry if that's the way you still feel, and you still are unconvinced as to why easy credit is a bad thing.

Dannyboy83

fontanalis wrote: »

Might just stick in your craw a bit when your paying golden egg prices for a turd.
I truly believe no lessons have been learned from the previous mess and the same thing would easily happen again.

What golden egg prices?
Are we reading the same thread?

The house example given is 150k on a 35k salary .... i.e. 4 times!
Traditionally, its always been 3 times!

What are you talking about 'learning from the previous mess'?
The subject here is the DEPOSIT!!!!!
D-E-P-O-S-I-T!!!!!


Seriously, I understand some of you have gotten burned by property, but life goes on fellas! get a grip! People are still gonna continue getting married, having babies and buying houses, long after this financial crisis is a distant memory!

Dannyboy83

oflahero wrote: »

Getting angry and patronizing about it won't help. Plenty of concrete analysis has been thrown your way answering your queries on this thread alone, so I'm sorry if that's the way you still feel, and you still are unconvinced as to why easy credit is a bad thing.

Angry and patronising?

Who tried to ridicule me on my own thread by linking this post to another forum?:rolleyes:
Who told me "the shoeing will do me some good, for my own benefit"?

Seriously, go away and grow up kid, stop annoying me, will ya?

K-9

Dannyboy83 wrote: »

What golden egg prices?
Are we reading the same thread?

The house example given is 150k on a 35k salary .... i.e. 4 times!
Traditionally, its always been 3 times!

What are you talking about 'learning from the previous mess'?
The subject here is the DEPOSIT!!!!!
D-E-P-O-S-I-T!!!!!


Seriously, I understand some of you have gotten burned by property, but life goes on fellas! get a grip! People are still gonna continue getting married, having babies and buying houses, long after this financial crisis is a distant memory!

Would a Rent to Buy scheme work for the deposit?

oflahero

Dannyboy83 wrote: »

Angry and patronising?

Who tried to ridicule me on my own thread by linking this post to another forum?:rolleyes:
Who told me "the shoeing will do me some good, for my own benefit"?

Seriously, go away and grow up kid, stop annoying me, will ya?

Ah what's the point...

Sarn

Dannyboy83 wrote:

You make a whole load of statements, but cannot justify any of them when questioned.

AARRRGH wrote: »

The reason banks want you to have a deposit is because:

a) you are sharing the risk with them
b) if the value of their investment falls, they have an 8% - 10% breathing space.

In fairness, I would consider the above justification.

If the banks were to start handing out 100% mortgages again where would the line be drawn? They were originally intended for 'professionals' in secure well paying jobs. The eligibility criteria rapidly disappeared which further fuelled our housing bubble.

If the housing market requires 100% mortgages to stabilise it, the requirement for deposits is all the greater given that this would suggest there is worse to come.

ei.sdraob

Dannyboy83 wrote: »

The reason for the shoeing is because the board is half populated by total pessimist ****, who don't know why they are screaming and shouting slogans, who can't explain the reasons behind the slogans, they just shout them.

PROPERTY=BAAAAAAAADDDD!!!!

no you got that wrong > BAD LENDING=BAAAAAAAADDDD!!!

nothing wrong with buying property for living in, hell i bought one recently (with no debt involved) after years of working hard, living like a monk :P and saving, yes it can be done

but alot is wrong with wanting the types of dodgy lending that got us here
the banks have finally copped on that they cant continue bad lending, if anything i find it amazing that they are giving away 92% mortgages still!

you said that it be "hard" to save up 15 grand over 5 years for a 10% deposit
I have shown you that:

* in 5 years there's a good chance that this house (or similar ones) will drop in price by more than that amount
* you will pay 15 grand in first 4 years in interest alone! barely scraping at the principal

and of course all of that is assuming that rates are fixed and would stay low, the mortgage you seen is called "teaser" for a reason
its incredible that banks who took so much money from us are still up to these tricks

murphaph

Dannyboy83 wrote: »

Thanks, good answer.

About legging it to Australia, people who leg it to Australia now will be pursued regardless. It's not a viable reason imo. (just my opinion of course)

Even if you declare bankruptcy, as far as I understand, you can still be pursued for every single cent, if you ever acquire any, at any future date.

If 100% mortgages were an option, I imagine the market would begin to stabilise.
Most people who sign onto property in this scenario are not buying investments, they are buying 'homes'.
They are buying it to live in it.

Its a completely different scenario compared to the last decade.

Do we have any figures on how many homeowners have done a runner from Ireland since 2008?

A bank would not practically be able to find you, nevermind sue you for monies owed if you wanted to disappear to the likes of Australia.

Dannyboy83

K-9 wrote: »

Would a Rent to Buy scheme work for the deposit?

The problem with the rent to buy schemes (which I've seen) is that most of the properties are still hugely overvalued.

If I could find a rent to buy scheme at a multiple of 4 times my salary, I would certainly consider it.

But most are minimum 6 times - it's just not an option for me, too much risk.

K-9

Dannyboy83 wrote: »

The problem with the rent to buy schemes (which I've seen) is that most of the properties are still hugely overvalued.

If I could find a rent to buy scheme at a multiple of 4 times my salary, I would certainly consider it.

But most are minimum 6 times - it's just not an option for me, too much risk.

If you could get one that reflects the market value when you go looking for the mortgage, that takes some of the risk out of it.

Dannyboy83

Sarn wrote: »

In fairness, I would consider the above justification.

If the banks were to start handing out 100% mortgages again where would the line be drawn? They were originally intended for 'professionals' in secure well paying jobs. The eligibility criteria rapidly disappeared which further fuelled our housing bubble.

Good post.

I would suggest the line could be drawn on something around the equivalent of the current criteria.
i.e. 100% mortgage for a property which is 3-4 times the salary of the main earner.

It doesn't need to be flexible.
Its simple.
If you fit the criteria and the bank stress test successfully, you are eligible.
If you don't fit the criteria and the bank stress test was unsuccessful, you are ineligible.

There are people out there who want to buy, who don't have the deposit and who are paying the equivalent sums in rent.

Why not bring those sales forward?
(given that the situation now is completely different to those sales which preceeded the collapse).

The main two obstacles thusfar are:
1) Interest rates
2) Guarantor

Dannyboy83

K-9 wrote: »

If you could get one that reflects the market value when you go looking for the mortgage, that takes some of the risk out of it.

Unfortunately, this is the 'trick' with rent to buy.

When you sign on the dotted line for rent, you are agreeing to be 'locked in' to a price.

So if I rent a property in 2010 which is valued at 240k, and by 2012 I have built up my deposit, then I still need to get a mortgage for the 2010 value (240k), not for the 2012 value (150k)

ei.sdraob

Dannyboy83 wrote: »

Good post.

I would suggest the line could be drawn on something around the equivalent of the current criteria.
i.e. 100% mortgage for a property which is 3-4 times the salary of the main earner.

It doesn't need to be flexible.
Its simple.
If you fit the criteria and the bank stress test successfully, you are eligible.
If you don't fit the criteria and the bank stress test was unsuccessful, you are ineligible.

There are people out there who want to buy, who don't have the deposit and who are paying the equivalent sums in rent.

Why not bring those sales forward?
(given that the situation now is completely different to those sales which preceeded the collapse).

The main two obstacles thusfar are:
1) Interest rates
2) Guarantor

Look

i realize you think you have good intentions

but I will make it simple


we (the country) are borrowing money at 6% with 10-20 year repayment periods

we are giving this money to banks directly or/and indirectly

you think the banks will lend this at 2-3% now for 35 years?


you need to be factoring in bank rates increasing sharply to at least 8% in future, hell they already went up 1.5% in one year regardless of the ECB rates remained flat

there simply is no money in banks now

and I would bet that if you go to the banks (BOI are doing that loan that caught your attention) you quickly find out how happy are they to lend you anything

Dannyboy83

ei.sdraob wrote: »

no you got that wrong > BAD LENDING=BAAAAAAAADDDD!!!

nothing wrong with buying property for living in, hell i bought one recently (with no debt involved) after years of working hard, living like a monk :P and saving, yes it can be done

but alot is wrong with wanting the types of dodgy lending that got us here
the banks have finally copped on that they cant continue bad lending, if anything i find it amazing that they are giving away 92% mortgages still!

you said that it be "hard" to save up 15 grand over 5 years for a 10% deposit
I have shown you that:

* in 5 years there's a good chance that this house (or similar ones) will drop in price by more than that amount
* you will pay 15 grand in first 4 years in interest alone! barely scraping at the principal

and of course all of that is assuming that rates are fixed and would stay low, the mortgage you seen is called "teaser" for a reason
its incredible that banks who took so much money from us are still up to these tricks

Good post, I take all your points onboard here ei.sdaorab.

But iirc, you spent time abroad working and saving, invested in Gold etc.
None of that is available to me or many of the people I work with or went to school with us, at the present moment.
Many of us have an unemployed partner, we already live like monks.

Your points are fair, but I'm just trying to explain that you are trying to put a triangular peg through a square hole.
Honestly, I am seriously good with money, very careful and repsonsible.
However, since my girlfriend is unemployed, well, there is only so much you can do.


I accept the argument that not everyone is entitled to own a house. I agree.
I was mainly curious as to why the mortgage system which we have, is designed the way it is.
It seems to lock a lot of potentially safe people out.

I understand a car is a much smaller investment, but you can easily get a 100% loan for a car.
If you couldn't, less people would drive.

Dannyboy83

ei.sdraob wrote: »

Look

i realize you think you have good intentions

but I will make it simple


we (the country) are borrowing money at 6% with 10-20 year repayment periods

we are giving this money to banks directly or/and indirectly

you think the banks will lend this at 2-3% now for 35 years?


you need to be factoring in bank rates increasing sharply to at least 8% in future, hell they already went up 1.5% in one year regardless of the ECB rates remained flat

there simply is no money in banks now

and I would bet that if you go to the banks (BOI are doing that loan that caught your attention) you quickly find out how happy are they to lend you anything

I'm aware, my sister was turned down for a sub-5k loan by an Irish bank, because she is a German resident.
One of pals here in work in French, he was turned down by an Irish bank, (BOI), however, he rang up a French bank and they gave it to him without blinking.

I have been approved for a mortgage by AIB, but it's not gonna happen because of the deposit.

ei.sdraob

Dannyboy83 wrote: »

invested in Gold etc.

Firstly I never touched gold (always suspicious of people trying sell it)

Dannyboy83 wrote: »

I was mainly curious as to why the mortgage system which we have, is designed the way it is.

its not "designed" this way, it just is that way,

there is alot of risk in lending now (92% is a way of pricing in some of the risk), and the banks still have holes in their balance sheets that you can drive a supertanker thru

if anything im surprised banks are still being (on paper at least, dont know about practice) so loose with their lending

if that mortgage was "fixed" for 35 years at that ~3% (which would be absolutely incredible offer!) then yes it seems like a no brainer as compared to renting, but its not, whichever way you look at it its not pretty

Dannyboy83 wrote: »

It seems to lock a lot of potentially safe people out.

yes it might, but its better than the alternative where people who clearly cant repay these were given 100%+ mortgages and are now in serious trouble and things will only get worse


if you want affordable housing then try to stop this madness called NAMA and Anglo and watch prices plummet to their real levels, letting the market do its own thing and cope with the oversupply