Do you feel sorry for people

[andyfromotley]

No. You are not 'misled' if you choose to ignore warning bells in order to accept the advice that tickles your ears. When we took out our second mortgage we were offered vastly more money than would have been prudent to borrow. At the end of the day 'you' are responsible for the decisions you make, no one else.

i posted on here recently that about 5 years ago we were remortgaging and increasing our loan by about 85K (iirc) We sweated on the figures for weeks and worked out with sound budgeting, no unforseen disasters etc we could just about afford it.

Imiagine our shock when the mortgage adviser plugged our figures in and said yes no problem, in fact he was able to authorise us up to £225K extra. Absolutely scandalous.

The culprit - Nationwde (alledgedly one of our nore conservative lenders!)

 

[gbb]

You're never surprised by the naivety of some as well.
A guy i know stretched himself to the limit to buy the house of his dreams. Not a stupid dream, he just wanted the best he could afford, but not wasting money on frivolous items.
So, interest rates went up...and he felt the pinch. Nothing he couldnt absorb, but it dented his disposable income.
Then the credit crunch hit in the States just before xmas...that started to worry him.
'What if house prices fall'
'What if interest rates keep going up' etc etc

I explained we'd seen it all before (he didnt see the property crash last time round.)..it could get grim..people losing everything they'd worked for.

'But they can't' he said...'they can't allow that to happen'

'They' wont have any control over it' ...i said.

'But that can't happen again'...he said.. in denial

I said...'It can....IF the interest rates go up, economy goes tits up, unemployment goes up, house prices fall...... IF all or most of these things happen together...all of a sudden, theres a few millon people in the mire.

Funny, i only said that 6 months ago. He didnt want to hear it...didnt want to believe it.

 

[Mr Pig]

Imagine our shock when the mortgage adviser was able to authorise us up to £225K extra. Absolutely scandalous.

Yip. But who's fault is it? The lenders are not looking out for you. They are there to make themselves money, and if you ever think differently then you're an idiot.

When you go to a car dealers do you think that because the salesman is a friendly bloke he's trying to save you cash, get you the best deal, even if it costs him money? No. That would be dumb.

This casino let me gamble more than I could afford to loose. How dare they! Give me a break...

 

[yenrod]

who are in danger of losing their homes through their own stupidity. I know a lot of people are in a position through no fault of there own and I feel really sorry for them but not these idiots below.

I was out there grabbing a bit of lunch there and bumped into a mate who is an IFA. General chat turned to him talking about clients of his who are heading in the direction of losing their homes. He's trying his best to sort them but he told me about how he's sick of all the ones who have put themselves firmly there themselves by lying to him last time round.

He told me about 3 separate couples who within the last 2 years re mortgaged with him and told him the reason was they were going to extend their houses, sell up, make a profit and go and buy something cheaper that needs some work (property ladder brigadetypes who think it's easy money)

Anyway, he was saying that they've all met with him recently in a panic as they are heading into the $hit and want to sort things out. High mortgages, negative equity etc....

none of the 3 couples done what they said they would do. One couple went and bought his and hers Range Rovers and now can't get shot of them either, plasma TV's etc. One couple bought a boat for weekends in loch lomond and 3 luxury holidays instead. The 3rd couple went on a 5star trip round the world to Dubai, Hong Kong, Japan etc..... and bought 2 new cars.

These kind of people who 'piss it up the wall' have themselves to blame and no one else should bail them.....

Like i said not so long back - you get a small house but a stupidly BIG car X5 or such like!

It just doesn't make sense !

I was out running on Tue night and seen in at least every 2-3 house's, a flat screen TV with 2 cars outside.

Thats quite an outlay straight off: never mind a re-mortgaging situ. Can everyone be on at least 20k + and thats taking it to minimal situation !!!!

 

[snorri]

When you go to a car dealers do you think that because the salesman is a friendly bloke he's trying to save you cash, get you the best deal, even if it costs him money?

It never fails to amaze me how many otherwise sensible people tell me of how they obtained some special deal from a car salesman.

 

[cheadle hulme]

No neither do I but you could do it 'sensibly' and a Range Rover or high prestige vehicle might be better. For instance, and I don't actually know the prices but for example.

Range Rover costs 40K. Trade in for old car is £15k (it's a good car . Equity taken out of house is £25K. Value of Range Rover after three years is 25K.

So after 3 years you sell it and return the equity to the house. Your running costs on the equity loan are about £150 a month. So for 3 years you've had a Range Rover for not a lot of money compared to an equivalent 25K loan.

Compare and contrast with just taking 40K out the house and buying it new.

Like I said, not a great choice in my book but perfectly feasible and even sensible.

Surely it has cost you £5k pa (your trade in) plus servicing the £25k loan plus the remortgage costs?

So about £600 a month and nothing to show for it after 36 months?

It's only sensible compared to something completely mad.

 

[Crackle]

Surely it has cost you £5k pa (your trade in) plus servicing the £25k loan plus the remortgage costs?

So about £600 a month and nothing to show for it after 36 months?

It's only sensible compared to something completely mad.

Yes but you have the same depreciation costs (OK more on Prestige cars) on any car, so yes, take it as read that the actual costs weren't reflected in my rather simple example but what would a 25k loan cost over three years, £500 a month?

Where it goes completely mad is if you carry on paying for it over 20 years. I dunno what you'd pay back but my guess is around 70K compared to a normal loan where you'd perhaps pay back 29k: Complete guess those figures but roughly in the right ball park.

Also, well spotted nothing to show for it after 36 months because you're original car was part of the deal, though equally you might actually have saved the money. The only point I was trying to make is that it's possible to do it responsibly even if it isn't particularly wise.

 

[CopperBrompton]

Yes but you have the same depreciation costs (OK more on Prestige cars) on any car

Depends on the car. If you bought wisely, then that £15k car was bought at 7-8 years old and was originally a £40-50k car. That being the case, it isn't going to depreciate more than another couple of thousand over a three year period, so ...

£15k car costs over 3 years:
Depreciation: £2,000
Total: £2,000

£40k new car costs over 3 years:
Depreciation: £15,000
Loan costs (3 years @ 6.5%): £5,200
Total: £20,200

Ben

 

[cheadle hulme]

Fair enough Crackle. Assets should never be funded for a period greater than their useful life. Certainly not over the life of a mortgage!

I know your example was for illustration but some 55 plate Range Rover Vogues (61k new) have been going for under £16k at auction. The diesels are a little better.

A lot of leasing companies are going to fold as the stuff they get back from the lessee is worth much less than their business models forecasted.

 

[Crackle]

<Bangs head on desk>

Look chaps, you'll be able to pick lots of holes in my example as it was off the top of my head to illustrate a point. Equity release is not new, people have been doing it for years and years, normally to fund home improvements and maybe divert a bit to that dream car/holiday. Where it's gone wrong is how much is available to release and what it's used for and the idea somehow that it's a given because it's backed up by the rising house value. In fact i wonder how many actually truly understand what it's backed up by or how much it will actually cost them.

Edit: wrote this before I saw your reply Cheadle

 

[Crackle]

A lot of leasing companies are going to fold as the stuff they get back from the lessee is worth much less than their business models forecasted.

That's always been true of Leasing companies. They go in with an aggresive price hoping to make money on maintenance, tyres etc... They folded/got swallowed by another pretty regularly before this happened.