Author Topic: Negative Equity, explain?  (Read 5752 times)

Offline Thomas

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Re: Negative Equity, explain?
« Reply #40 on: November 7, 2008, 01:03:08 pm »
I'm pretty sure lenders are obliged to drop their rates on tracker mortgages, although there will probably be a minimum cut off.

I have some borrowing on a tracker and I know Nationwide will cut off any more decreases once it hits 2.75%, which I thought, when I took the product out, there was no way in 1,000,000 years going to be in any danger of getting close to that! I'm loving the 0.34% above bank base rate on my tracker mortgage though....cushty! (although I do have the majority on a fixed rate of 5.19%, which again, is still pretty good)

If its linked to the BOE then they will have to pass it on immediately if your interest is calculated daily, which most highstreet lenders do.

Problem some people will have is if they took out a discount rate that tracks the lender own base rate, and then you are at the mercy of the lender as to whether they will reduce.

I have spoken to so many people over recent weeks with a view to doing them a remortgage, and just can't due to mortgage = value of property. They are just stuck going onto the SVR rate of around 7%.

This is only going to get worse as more and more people come off 4/5% fixed rates that were arranged for them 2/3 years ago at 85%/90% then.
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Offline Mad Men

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Re: Negative Equity, explain?
« Reply #41 on: November 7, 2008, 01:15:23 pm »
to be honest i have no real concerns apart from the banks being c*nts!

i know i can afford the morgage and have the track record of paying
i know i have £12K of savings for a deposit if need be
i know my house has gone up 10%
i know i can get a big enough mortage just on my wages alon never mind the misses money too
i know if my misses didnt work we could get by without eating into savings
i know my wages have gone up 25% since we took the morgage out
i know i am on a shit rate now so my repayments should go down not up on remortgage

So i am in a decent financial position personally, my worry is the banks!

thing i arent so sure about:

will the bank accept the higher value of my house to enable a 90% mortage to be taken and betters rates
should i fix my rate (really want to get onto a fixed rate but it'd just be silly right now)
bloody house prices! they best not go down far, i aint planning on selling for 5 years but i cant afford them to drop much

All in all i am confortable with things, i know we can afford the house i know we can afford it and have a good standard of living.

My only fear is the banks being a c*nt!

I have a share in a company thats low on working capital. Our bank have been total c*nts for the past 3 years as the company as shown 3 years of losses; we need 300k in working capital to increase our inventory and they won't give us what we need....had to close 2 stores because of that...

total c*nts!
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Offline INABITSKI

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Re: Negative Equity, explain?
« Reply #42 on: November 7, 2008, 01:32:08 pm »
I'm pretty sure lenders are obliged to drop their rates on tracker mortgages, although there will probably be a minimum cut off.


That's what I currently have. Since Jan I've had about £100 per month drop in my payments and hoping for another £60 or so, so I'm happy with it.

Offline attic

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Re: Negative Equity, explain?
« Reply #43 on: November 7, 2008, 09:02:54 pm »
I can't believe how things have dropped in the last year. I took out a new ISA about a year ago. To date, I've paid in £1950 and as of today, it's worth £840!! I wish I'd just put the extra onto paying my mortgage off each month. Might have to look at this now!
Hi El Phes,
It's just a paper loss...hang in there with it.  You'll still make a good return in the long run.  Whatever you do, don't 'cash it in' unless you absolutely have to...but I'm sure you knew that already  ;)
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Offline El Phes

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Re: Negative Equity, explain?
« Reply #44 on: November 10, 2008, 11:40:25 am »
Hi El Phes,
It's just a paper loss...hang in there with it.  You'll still make a good return in the long run.  Whatever you do, don't 'cash it in' unless you absolutely have to...but I'm sure you knew that already  ;)

Yes, you're right attic, it is just a paper loss, but it's going to take ages to get back up to what I have paid in + at least 10% increase for the risk of dealing in stocks/shares. I will still make a good return (I hope!) and yes, I'm not going to cash this in for a while yet. I've had a rethink of what I'm going to do in future...

When the market is riding high, I will pay my monthly fee into my mortgage and reduce that debt. When the market is low, I will pay more into my ISA as I will be able to buy more units for the same amount of money. About 6 months ago, I was buying roughly 24 or 25 'units' for my monthly fee. Currently, with the same monthly fee, I am able to buy about 52 - 55 'units' which is great for the future, but it's doesn't make me happy to know I've paid so much for them in the past! The risk of dabbling I guess...

Offline Something Else

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Re: Negative Equity, explain?
« Reply #45 on: November 10, 2008, 11:42:44 am »
I might sound like a moron (doesn't normally stop me) but how would you know you were in negative equity unless you had your property valued?

Our current fixed rate deal ends next year, we didn't have a 100% mortgage so assume we'll be fine but am I unlikely to be offered as good a deal as 5 years ago and therefore end up with larger monthly repayments?

possibly

my last mortgage deal we got a lower fee as we had a certain percentage of mortgage that meant the % went down

it all depends though

i personally think we got lucky, but then I am sure if you shop round enough you should be ok


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Re: Negative Equity, explain?
« Reply #46 on: November 10, 2008, 02:52:01 pm »
possibly

my last mortgage deal we got a lower fee as we had a certain percentage of mortgage that meant the % went down

it all depends though

i personally think we got lucky, but then I am sure if you shop round enough you should be ok

Cheers. How early in advance should I start looking around? If I sound clueless it's because I am! The wife bought the place with her brother and when we got married I bought his half of the place so I wasn't involved when they arranged the initial mortgage.

Offline Something Else

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Re: Negative Equity, explain?
« Reply #47 on: November 10, 2008, 03:35:03 pm »
Cheers. How early in advance should I start looking around? If I sound clueless it's because I am! The wife bought the place with her brother and when we got married I bought his half of the place so I wasn't involved when they arranged the initial mortgage.

I would start looking as soon as you want, I would give yourself a few months to search, as it gets dull pretty quick and there are a lot of things out there

I looke on and off for three months, trying to find the best deals and just trying to increase my knowledge of what the hell it was all about and all the terms etc.

Also set up a few meetings, if you have the time with a number of banks mortgage people, you usually have to book but it is worth it, despite the fact they will tell you theres is the best

There are also stuff like money supermarket now which can come in very useful for getting an idea of what is going on.

you can always set up one to happen in a few months as I think you can actually go up to a year in advance now, however these deals are not always as good as the ones you can get now, but its edging your bets that they may well be better than the ones in 12 months, but who knows.

I would defo try and sort it with a month to spare so you dont end up paying a higher rate to your current company when it runs out, if that is the clause.

Good luck though, it is a mindfield but if you take the time you can save yourself a fair bit of money

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Re: Negative Equity, explain?
« Reply #48 on: November 10, 2008, 03:40:32 pm »
Great stuff mate thanks - I'll stop with the questions before you charge me an IFA rate! The missus has a spell of maternity leave coming up so a better rate would certainly be useful. I'll start planning ahead.

Offline ttnbd

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Re: Negative Equity, explain?
« Reply #49 on: November 10, 2008, 06:15:01 pm »
Just to note, you'll be lucky to find a tracker mortgage at the moment.  There's generally only fixed and svr/discount available at the moment, and even some SVR deals have fees attached to them.
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Offline El Phes

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Re: Negative Equity, explain?
« Reply #50 on: November 11, 2008, 10:51:03 am »
On MSN this morning...

Rates may see no-interest (0%) mortgages

Some homeowners could be enjoying an interest-free mortgage next year if interest rates continue to fall steeply, it has been disclosed.

Cheltenham & Gloucester, which is part of Lloyds TSB, offered a two-year tracker mortgage of 1.01% below the Bank of England base rate in July and August 2007.
The deal means that if interest rates fall to 1%, as many economists are predicting, people who took out the loan will not have to pay any interest on their mortgage at all, and will only have to make capital repayments.

With the base rate at 3%, homeowners who took out one of the loans are currently paying interest of just 1.99% - the lowest rate members of the industry can remember.
Anyone who took out the loan on an interest-only basis will have monthly mortgage costs of just £165.83 on a £100,000 loan, while those with a repayment mortgage will be paying £423 a month.

But borrowers had to pay a fee of 2.5%, or £2,500 on a £100,000 mortgage, to take out the deal, and once this is taken into account the so-called pay rate is considerably higher, although still highly competitive, at the equivalent of base rate plus 0.24%.
It is not just borrowers with Cheltenham & Gloucester who could see their mortgage rate fall below 1% if interest rates continue to be cut.

In August 2007 the Co-operative Bank was offering a two-year tracker at 0.61% below base rate and Nationwide also had one of 0.27% below. But these deals only run for two years, meaning that borrowers who are currently on them will have to remortgage within the next 12 months on to considerably higher rates, or stay on their lender's standard variable rate.
However, people who took out lifetime tracker mortgages have the rate they pay in relation to base rate fixed for the life of the mortgage.
« Last Edit: November 11, 2008, 10:53:53 am by El Phes »