PJ87
Journeyman Pro
That's my point you can't. Because it's been let to get so out of control any reset now will completely nuclear warfare the entire economy
Housing Market
- Thread starter PNWokingham
- Start date
That's my point you can't. Because it's been let to get so out of control any reset now will completely nuclear warfare the entire economy
larmen
Head Pro
Stamp duty and council tax the investment market to death?
Tashyboy
Please don’t ask to see my tatts 👍
Am not sure there should be a reset, but there should be regulations in place that make sure a mortgage is given on say 3 times your salary. Having a maximum of 25 years payment instead of 40. Trying to do anything is better than nothing.
PJ87
Journeyman Pro
That would make it impossible to buy a house in many areas tho
Why a max 25 years aswell? We did 35 year mortgage it's affordable so once paid we put
Can't remember how many times my salary it was at the time but it's well over 3 times now.
Tashyboy
Please don’t ask to see my tatts 👍
That’s my point though, it’s a 35 year mortgage because it’s affordable over a longer term.
It would suppress the market though. If buyers can not buy then prices have to drop. If you keep stretching terms and salary multiples then you are encouraging the upwards trend, not literally but by accident.
Watch The Big Short to see how out of control things can get. If you give mortgages to people that are out of control then you are just building up problems down the line.
D
Deleted member 29109
Guest
What is wrong with that?
The numbers you have chosen were presumably those from when you got a mortgage? Why not make them 2.8x or 4x or 20 year or 30 years?
What if I didn’t need to spend £500 pm on a car. Could I take that money and add it to what I’m allowed to spend on a house?
And do I have to re mortgage and buy a new house when I get a pay rise and a promotion?
It’s impossible to regulate.
road2ruin
Q-School Graduate
Surely the only people this would hurt are those on the more standard salaries? It'd enable those with the cash to go buying up huge swathes of property as they're the only ones who can afford it, essentially you're just helping the rich. We got a 35 year mortgage way back when, without that option we'd have not been able to buy, I don't see the issue if you're buying a house with that term in your younger years.
D-S
Well-known member
I think the issue is that very long term mortgages are stirring up trouble for later years. In the years prior to retirement many people in the past and now have paid off their mortgages and are using that money to put into pensions to fund retirement - now that money will continue to have to be paid to banks and building societies (who will profit as the overall money paid will be considerably higher).
I fully understand that for people today to be able to buy they of course need such long terms but this is proof of the fact that prices are just too high. An alarming proportion of lifetime income is paid to house builders/sellers and financial institutions due to vastly inflated house prices.
I fully understand that for people today to be able to buy they of course need such long terms but this is proof of the fact that prices are just too high. An alarming proportion of lifetime income is paid to house builders/sellers and financial institutions due to vastly inflated house prices.
Tashyboy
Please don’t ask to see my tatts 👍
This, this and this
Also I didn’t say 3 x salary as cast in stone. I said “ say 3 x salary” for example. As it stands if nothing is done about how much and how long it can be paid over. Prices will continue to sky rocket.
Also when I bought my first house I was encouraged to borrow more so I could do home improvememts. It was not for my benefit but for the banks.
PJ87
Journeyman Pro
This, this and this
Also I didn’t say 3 x salary as cast in stone. I said “ say 3 x salary” for example. As it stands if nothing is done about how much and how long it can be paid over. Prices will continue to sky rocket.
Also when I bought my first house I was encouraged to borrow more so I could do home improvememts. It was not for my benefit but for the banks.
ATM 4.5 times my salary still doesn't cover what my house is and I'm "overpaid"
Whilst it would suppress the market as @Lord Tyrion says but it would just reset it .
35 years is affordable yes but gave us options
We use the difference to overpay the mortgage but if suddenly something happens over payments stop .
It builds a buffer into the mortgage rather than cost or living goes up I'm ruined
SwingsitlikeHogan
Major Champion
We looking at buying a ‘care costs annuity’ to limit the call on my MiLs savings, investments and home. Depending upon her age/health assessment it could be very expensive…but a buy/no buy decision is a call we’ll make when we know the cost. Our primary objective is to protect her home as that is the home for my BiL…if the home were to go and the capital from it used to pay back care costs, then my BiL would be homeless without means of any great significance.
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SwingsitlikeHogan
Major Champion
…and that encapsulates in two words a big part of the problem…an expectation of an inheritance. The inheritance I got and most value from my parents are my education, values and love of Scotland, my country.
PJ87
Journeyman Pro
I take it that no part of the ownership of the home has been transferred across to him?
D-S
Well-known member
This is exactly the issue, people are paying for their house and paying the bank large amounts of interest for it in the process and using that as their retirement/care costs. So then everyone is hoping for house price inflation as this helps their future funding just increasing the problem.
If prices were more sensible then they would be saving this money to their own retirement fund themselves and receiving interest not paying it.
Alan Clifford
Well-known member
Because
1. £30k for stamp duty and estate agent has to be found from somewhere. It's like throwing money in the dustbin.
2. Golf and tennis clubs are one mile away
3. Gatwick and Heathrow are 24 miles away with bus from Guildford to terminal 5 and train to Gatwick.
4. To much junk to clear out.
PJ87
Journeyman Pro
Very valid point, if interest rates were higher and prices were sensible people would have more free cash for those savings to find themselves
I mean my house does become a lifeline, If everything else failed I sell it and retire somewhere cheaper
But it's just insurance policy as I don't want to move
This has to be a joke surely? Or are you living in a dreamworld? They need to do the opposite of what you are describing and actually help, such forcing banks to follow the base rate closer and come down as quickly as they go up, extending support given by ISAs and supporting not for profit shared ownership schemes.
Average household income in my borough is around £50k. Much less than that in the age that you would traditionally look to buy a first property. Average price of a 2 bed in the borough is £380k.
People need to be financially prudent in taking out an affordable mortgage and this often means a longer term. Capping at 3x salary would mean the median family on the street (ignoring the bottom 50%!!) might just about be able to afford a studio flat.
'Reset' or crashing the market in other terms would see a huge amount of first time buyers stuck in negative equity and trapped in their first home.
In this world you're describing the rich get richer by snapping up even more property, as most under 40 don't have the salary to meet a more restricted market, and wouldnt have the capital to invest. Rich people would, as would many retirees who own their own.
Too much support is given to older people in this country as they are ones most likely to turn up and vote, so government policy is favourable to that generation over others. Pension reform is long overdue and support should be redirected to young people.
larmen
Head Pro
If you price 1st time buyers out of the market you make it a paradise for investors. If a family can’t buy a home an investor will and turn the rent screw right up.
