Deleted User 298457
Deleted User 298457
Looks like 75% LTV is the norm for first time landlords.
Budget 2021: Mortgage guarantee to help buyers with 5% deposit
- Thread starter dowie
- Start date
Not so much the governments and more to do with TV programmes like Homes Under the Hammer and its ilk.
Of course we need people to be into the "buy, renovate, sell" business else we would be in a worse situation with many derelict and substandard houses just being left to rot as no one will buy them (I mean the proper wrecks, not the houses needing a little TLC). The issue is that the aforementioned programmes have encouraged everyone and their dogs to have a go.
Got you so for us there is no point jumping now as there is no benefit if we buy another property now or say next year as we would not qualify for the deal?
Deleted User 298457
Deleted User 298457
Basically. Unless you want to rent to a friend for cash.
The reduced SDLT rate will still apply though. She's a first time buyer so would get a lower rate anyway but there still might be a saving buying now compared to next year.
You mean people like moon man that think they did something really clever but only made a tidy profit because of generally increasing house prices?
Moral standing aside, I'd be wary that you'd have no claim over the property at all after gifting her the deposit and putting everything in her name.
New report
https://www.cityam.com/house-prices-first-time-buyers-in-london-now-need-average-deposit-of-132685/
FTBs in London now need a deposit of £132,600. This is up from £111k just a year ago. This is a saving of £1000 a month, for 11 years. Obviously at this rate, in 11 years, you'll likely need a much higher deposit, i.e. being permanently priced out of the market.
Outside London, people on average needed an extra £12,000 deposit compared to just a year ago, with average FTB deposit outside London is now £59k. A saving of £1000 a month for 5 years.
https://www.cityam.com/house-prices-first-time-buyers-in-london-now-need-average-deposit-of-132685/
FTBs in London now need a deposit of £132,600. This is up from £111k just a year ago. This is a saving of £1000 a month, for 11 years. Obviously at this rate, in 11 years, you'll likely need a much higher deposit, i.e. being permanently priced out of the market.
Outside London, people on average needed an extra £12,000 deposit compared to just a year ago, with average FTB deposit outside London is now £59k. A saving of £1000 a month for 5 years.
That's more than I paid for my whole house 2 years ago.
Sadly this is where we're going as a country, the people who are born in the last decade will likely never be able to buy their own home without inheritance/gifts if current trends continue, with median income to housing approaching 15x now and likely getting closer to 30-50x in the next couple of decades.
Very important boomer stat: £132,600 is equivalent to about 35,000 avocado toasts, or 1 toast per day for about 100 years
So if young folk just sacrifice a century of their avocado toasts, they can buy their own home!
FTBs "need" a 24% deposit?
Deleted User 298457
Deleted User 298457
Not equity release in general, but equity release that is done through a lifetime mortgage or some other product aimed at the over 50s.What's wrong with equity release?
What's wrong with lifetime mortgages?
Nothing wrong with the concept, only that it's a very poorly regulated and predatory industry right now.
Deleted User 298457
Deleted User 298457
Are you arguing otherwise or genuinely asking? If the former, share an opinion; if the latter, Google it. I hope you haven't got family who have fell victim/poorly informed/aren't going to die quick enough for the maths to work.What's wrong with lifetime mortgages?
Might it be calculated on average wage too?
If average pay is 30k
And 5x is highest (150k lend)
130k deposit
Takes you to 280k
I needed a 20 percent deposit for this house
No , I doubt I'd be able to afford it
It isn't at all, this is a very outdated view.
I'm asking why somebody who presumably is not a qualified adviser is giving such a strong opinion on something they clearly have an outdated understanding or an outright misunderstanding of.
For a lender to provide a lifetime mortgage they will require documentary evidence that the individual has received regulated financial advice and independent legal advice to consult on the risks of taking out a lifetime mortgage as well as arranging completion and payment of the funds. It is commonplace to involve the children/heirs of the mortgagor in discussions too to avoid any nasty surprises when it comes to administering the estate. In the case of couples, they must be consulted independently of one another to ensure that they are not being coerced into the arrangement by their spouse. The overwhelming majority of lifetime mortgage providers are bound by a promise to not allow the lender to fall into negative equity and this is enforced by the Equity Release Council. The risk of not dying "quickly enough" really only arises if the mortgagors gift away the borrowed capital and don't survive long enough for the transfer to be exempt for inheritance tax purposes, but this isn't a risk specific to lifetime mortgages. Lifetime mortgages are also an exceptionally useful way to reduce the value of an individual's estate below £2 million thereby preserving their entitlement to the Residence Nil Rate Band which tapers off above the £2 million threshold.
But I'll Google it just to see what the people on the MSE forums think after having read the Sunday Times.
Deleted User 298457
Deleted User 298457
See, now that was a much more informative post than posting smilies now wasn't it? Everyone got something out of that - it is a shame you had to front yourself as a know it all across several posts before you shared something of interest.
Presumably you are in the industry and hence a bit triggered? Can you vouch for the regulation being bullet proof or are there still black holes? Are all mortgage providers part of the Equity Release Council, or is that optional membership? How much is the cost of a 20% release, typically? Is your debt doubling over 11 years worth a new bathroom that you've sold some old grandma?
Edit: love that you felt the need to edit your post to add the sarky comment at the end lol. Pathetic.
I'm far from a know it all, but if I see posters nailing their colours to very wonky masts I'm absolutely going to have a bit of fun with it. Don't take it personally.
No regulation is bullet proof and the current regulations are a direct result of what was (a long time ago) a bit like the wild west. Thankfully this has been addressed due to cases coming to light where spouses had coerced their partner into a mortgage (or taken one out behind their back) or borrowers had fallen into crippling negative equity. But on the scale of people being duped by minibonds or unregulated investments, lifetime mortgages are actually pretty vanilla products. The FCA is also (rightly) adopting a very harsh stance on assessing vulnerable clients and advanced age (65+) is very much considered by them to be a vulnerability.
Not all equity release providers are ERC members and it is voluntary, but it's also pretty much like the kite mark. It doesn't cost anything to be a member and nobody worth their salt would use a non ERC members product. The interest rate on a lifetime mortgage is fixed for life or if variable must have a stated cap, generally speaking the interest rate offered will be guided by loan to value - larger loan = higher interest rate. The last few I've arranged were around 30-35% LTV and the interest rates were fixed at between 2.3 - 2.6%, so really doubling of debt would be closer to 20 years and even then you've got to factor in house price growth over that same period which will help to offset the cost of the loan. Mortgagors can make optional repayments too if they choose, though it usually makes more sense to borrow a lesser amount.
Given the absolute arse ache of arranging a lifetime mortgage, it's not really a product you'd recommend without very sound reasoning. Plus there's the incredible long tail for complaints if the client or their heirs believes the product was missold to them. So would I trash my career over a lifetime mortgage for home improvements? No chance. Would I recommend one to mitigate a six figure inheritance tax bill that is demonstrably in the client's best interest? It's a no-brainer.
Home reversion plans on the other hand... I wouldn't touch them with somebody else's barge pole. They are now subject to much more rigorous regulation, but generally speaking the provider will pull your pants down over the price of your home in exchange for a quick sale and no debt. Thankfully it's a very niche market.