Do you personally know anyone who.

02-09-2011 4:55pm #1

I don't know if this it the right place for this.

Part of the objection to mortgage forgiveness seems to be based on the belief that people used the equity in there house to fund a lavish lifestyle because interest rated were low, or that people were silly to pay the prices they did for there house.

But do you personally know anyone who behaved like that I am not talking of the anecdote we all here about someones friends cousins who re mortgaged and got a BMW, had the kitchen gold plated, and brought a holiday home in Spain.

I personally don't know anyone who behaved like that and I come from a large family and would know a large amount of people.

I think the vast majority of people who are experiencing difficulty are there because of under employment or unemployment or wage cuts.

username123 · 02-09-2011 5:02pm

mariaalice wrote: »

But do you personally know anyone who behaved like that I am not talking of the anecdote we all here about someones friends cousins who re mortgaged and got a BMW, had the kitchen gold plated, and brought a holiday home in Spain.

My brother in law remortgaged his home to buy an enormous fuel guzzling Jeep type vehicle that he didnt need and will be paying for for the next 25 years. Its been used to do a 1 mile school run for most of its life, and he is currently thinking of getting rid of it.

A friends sister worked part time for her Dad, got him to pretend she worked full time, he put money into her account to look like savings and her and her then bf who was a builder got mortgage approval for 600k. The property is now worth less than 300k and the couple have long ago split up.

So yes, I do know people who behaved like idiots with a massive sense of entitlement.

Sunnyisland · 02-09-2011 5:07pm

username 123 wrote: »

My brother in law remortgaged his home to buy an enormous fuel guzzling Jeep type vehicle that he didn't need and will be paying for for the next 25 years. Its been used to do a 1 mile school run for most of its life, and he is currently thinking of getting rid of it.

A friends sister worked part time for her Dad, got him to pretend she worked full time, he put money into her account to look like savings and her and her then bf who was a builder got mortgage approval for 600k. The property is now worth less than 300k and the couple have long ago split up.

So yes, I do know people who behaved like idiots with a massive sense of entitlement.

Remortgaging his home for 25 years for a jeep that devalued the second he drove of in it, cheeses that's crazy in any mans language

What your sister have to say to that ? (just curious)

paul71 · 02-09-2011 5:09pm

A former workmate remortgaged to buy a rally car.

krissovo · 02-09-2011 5:14pm

Some examples of people very close to me:

Example 1 - Holiday home in Bulgaria funded by equity release of home. Home is now in negative equity to the tune of 120k and holiday home is almost worthless now.

Example 2 - Another equity release in the region of 15k to fund a weekend at the Galway races, a helicopter from Cork, suite in a local hotel and VIP passes for the races.

mattjack · 02-09-2011 5:21pm

A cousin of mine bought a plane..he's unemployed now,his wife only works part time now ..and all his adult children still live at home and are unemployed.

hmmm · 02-09-2011 5:28pm

I have a co-worker who used her house as a credit card, the SUV, kid in private school. Even though I know she's in trouble with the bank, she still seems to be spending big money so I don't know where it is coming from (she recently had lots of work done on her teeth).

jased10s · 02-09-2011 5:31pm

personally know of no one who was reckless .
Only people who brought homes as their main residence.

coolbeans · 02-09-2011 5:35pm

I know a guy who got a mortgage and topped it up to add a 5 series to his crass looking suburban dump in the middle of the countryside. ****ing idiot! No economic sense, no common sense and no taste, just wanton materialism run amok. Save us!

RichardAnd · 02-09-2011 6:06pm

My uncle purchased a house in Tuscany where our family originate. I don't know the details of the purchase (whether or not he re-mortgaged the home) or how much the said house cost him but he is now doing far less business than he was during the boom.

My family mean alot to me but an act like that was foolish when all things are considered. To make matters worse, I'm the only one of my family in two generations that speaks a word of italian! Pazzo!

Now besides that, I know plenty of people who did just buy a home to live in. However, and this has been repeated time and time again, the decision to take on the debt for the property was the decision of an adult. Regardless of what they might have purchased their house for, the purchase was still the act of the "homeowner" and no one else. I'd be in favour of a revision of bankruptcy laws but a blank cheque, certainly not.

username123 · 02-09-2011 6:36pm

realies wrote: »

Remortgaging his home for 25 years for a jeep that devalued the second he drove of in it, cheeses that's crazy in any mans language What your sister have to say to that ? (just curious)

Brother in law as in hubbys brother.

His own wife is as snobby as he is and with as little financial sense (theyre nice people but have a tendency to say things like 'well I wouldnt be seen in what YOU drive' - my answer is 'at least I own what I drive') - so she couldnt see any flaws in the master plan. Currently they have over a years arrears on their mortgage and are talking about a loan to go on a nice holiday - this loan from the wifes parents - 'sure its interest free' is the justification. Some people just never cop on.

Sunnyisland · 02-09-2011 6:42pm

username 123 wrote: »

Brother in law as in hubby's brother.

His own wife is as snobby as he is and with as little financial sense (they're nice people but have a tendency to say things like 'well I wouldn't be seen in what YOU drive' - my answer is 'at least I own what I drive') - so she couldn't see any flaws in the master plan. Currently they have over a years arrears on their mortgage and are talking about a loan to go on a nice holiday - this loan from the wife's parents - 'sure its interest free' is the justification. Some people just never cop on.

Sorry about that for some reason i thought you were male

thanks for the reply

Godge · 02-09-2011 8:34pm

One person on my road who remortgaged to build a huge extension. Also got a big car around the same time, probably on the same mortgage.

Know someone else who remortgaged for an extension, a holiday in America, and college costs for kids.

Know someone else who re-mortgaged to gut their older house and rebuild with all mod cons.

Relative who remortgaged to get deposits for two investment properties that are struggling to be rented.

Know a couple on about 30k each a year who bought two investment properties in Eastern Europe.

Know another couple who had separate houses before they married. Kept both, bought a big house for themselves on another mortgage, remortaged the first two to buy investment properties, are in deep, deep trouble.

All of the above are in deep trouble, all of them enjoyed great lifestyles during the Celtic Tiger era - I can still see the holiday photos on facebook. some were in the public sector, some in the private sector, all have suffered. I live in Dublin so I don't know any of the people who built mansions on the top of mountains in the middle of nowhere and who fitted them out with Italian marble.

Godge · 02-09-2011 8:36pm

username123 wrote: »

Brother in law as in hubbys brother.

His own wife is as snobby as he is and with as little financial sense (theyre nice people but have a tendency to say things like 'well I wouldnt be seen in what YOU drive' - my answer is 'at least I own what I drive') - so she couldnt see any flaws in the master plan. Currently they have over a years arrears on their mortgage and are talking about a loan to go on a nice holiday - this loan from the wifes parents - 'sure its interest free' is the justification. Some people just never cop on.

Wait and see, the government cavalry will come riding over the hill to rescue people like them with a debt forgiveness plan.

murphaph · 02-09-2011 8:36pm

I know folks who needlessly traded up from a 3 bed semi d to a 5 bed detached and with it took on a heap load more debt. There are countless examples of this carry on. If such people need financial help it should come from their families, not the rest of us.

Delancey · 02-09-2011 8:39pm

I have to say that despite hearing lots of stories of excess I actually don't personally know anyone who indulged.

My favourite story has to be the middle-aged couple I saw interviewed on RTE 1 or 2 years ago , their story was one of breathtaking greed : they re-mortgaged their home , cashed in their insurance policies , withdrew their SSIA money , etc , etc and all this was to enable them to buy 4 apartments in the fools paradise of Dubai.
They bought off the plans thinking that they could ' flip ' for a fast buck , of course the market went tits up and the development never went ahead but of course their money has vanished into the ether.

I don't think anyone would argue such greed and stupidity should be rewarded with debt forgiveness.

fro9etb8j5qsl2 · 02-09-2011 8:48pm

Know a couple who remortgaged their house to replace their perfectly good double glazing simply because the PVC rim was white and they wanted it black.

Know another couple who remortgaged and bought a range rover for their sons communion because they couldn't have him arriving to the church in anything else.... Ffs it would've been cheaper to HIRE a HELICOPTER!!

Both examples are earning no more than 50k per couple a year.....

02-09-2011 8:50pm

I know one lady who got a new car after an equity release on an apartment she bought 18 months previously. She's in a well paid job so she's still not overly bothered I imagine.

hinault · 02-09-2011 9:04pm

My cousin and her husband had a nice 3 bedroom house in Dublin but they wanted to "live in the country" in a "bigger house".

They sold their 3 bedroom house which they bought for €200k for €313k, and bought a €450k 4 bedroom house in Clonee.

The development where they bought is in NAMA (as is the developer). The estate that they bought into is unfinished.

thebman · 02-09-2011 9:12pm

Well people I know could have done crazy things, I don't ask many people about their finances.

Someone in the family did buy a house down the country as an investment and failed to sell the collapse despite me advising them to. The house has never been rented and is miles away from where the person works.

Not that crazy considering from his earnings and job security point of view compared to the price of the house though. More crazy in a not knowing when to sell kind of way since I don't think he ever plans to live there.

looky loo · 02-09-2011 9:22pm

Sold my house to a really nasty woman back in 2005, she was a pain, in all dealings....shes now living in my old house with a huge mortgage. The house has halved in price....karma?

I've seen people buy 3 and 4 properties, one guy I know is nearly a million in debt, another is about to lose his home here, even though he bought a property in spain that you wouldnt sell for a fiver now. The property madness was like a drug to some people, the cold turkey is going to last a long time.

Debt forgiveness, no, all adults, its like gambling at the casino, when you lose you dont get your money back.

swampgas · 02-09-2011 9:44pm

There is a whole spectrum of people in trouble, from those who didn't really want to do any more than buy a small family home but over-extended themselves, to those people who really went off the deep end - buying additional properties, buying overseas, buying flash cars, taking expensive holidays, and all the rest as illustrated here.

The thing is, you can't really draw a line and say one guy is somehow a victim and deserves to be bailed out, while the next guy was a selfish idiot who should be left in the hole he dug for himself. Everybody involved should have known better.

The point that many seem to be missing - including, it seems some of our journalists - is that if you are over 18 you are considered "an adult", allowed to vote, and have the right to enter into legally binding contracts. That's quite a privilege - it's also quite a responsibility.

Some people want all of their privileges but none of their responsibilities.

hinault · 02-09-2011 9:47pm

I do know two people who bought houses abroad.
One person bought a house in Murcia (Alicante). The property has fallen in value as a result of the Spanish property bubble.

The other person bought a house in Florida.
This person has told me that the majority of property in Florida is down in value by approximately 20%.

JustAThought · 02-09-2011 9:54pm

I agree with much that has been posted . But. I know young married couples, 27/28, who bought in despair with two salaries paying a 2.5k mortgage per month in an insanely inflated Market.
One lost his job; the other is now pregnant. They will both always have to work toservice this huge debt, for a small, average, suburban house in a nice but bland estate in Dublin. Surely there can be some help here for the huge negative equity that they have; 50% aprox. They wernt speculating; they wanted a house to live in, and were prepared to save to try and buy one; rather than rent forever or expect the taxpayer to fund one for them; like many.
Do we want the next generation society that grows up without proper parental supervision in creches with a high child : adult ratio, and in afterschool " clubs", with the black economy ; typically those not paying tax, pocketing the fees for the childminding over a lifetime.or can we not help with writing some of the negative equity off their debt. Let's face it; we did it for the bankers.

littlejp · 02-09-2011 10:02pm

JustAThought wrote: »

I agree with a lit of much that has been posted . But. I know young married couples, 27/28, who bought in despair with two salaries paying a 2.5k mortgage per month. One lost his job; the other is now pregnant. They will both always have to work toservice this huge debt, for a small, average, suburban house in A nice but bland estate in Dublin. Surely there can be some help here for the huge negative equity that they have; 50% aprox.
Or do we want s next generation society that grows up without proper parental supervision in credits and afterschool " clubs", with the black economy ; typically those not paying tax, pocketing the fees for the childminding over a lifetime.

It's bad for people like that but nobody forced them into that situation.

I think media coverage during the boom was disgraceful with Property sections of newspapers making people feel they were crazy not to buy, rent being called "dead money" for a long time, etc.

But still, people like the couples you mentioned should have been aware of the risks.

I didn't buy because I was worried about the risks. Should I, as a taxpayer, essentially have to pick up other people's tabs.

RichardAnd · 02-09-2011 10:04pm

There is a wonderful quote from the depression era that summed up the fall out of that particular crash.

Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even.

Replace the dates and stocks for houses and you have the future that many are facing into today. There really is no way out for anyone mired in debt that I can see.

Sleepy · 02-09-2011 10:04pm

A good friend went in with his siblings to buy an investment property down the country which is in serious negative equity, it's currently killing him financially.

A cousin re-mortgaged numerous times to finance luxury holidays, cars, house re-models etc. I think herself and her husband are still doing okay as he has a very good job in a semi-state and she's back working a few months after being made redundant albeit at a much reduced salary but they had originally gotten a very good deal on the property as it was an estate sale bought from family but knowing the area it's in, they'd have to be in serious negative equity after the multiple re-mortgages.

Another friend caught a falling knife (against my advice at the time) thinking a 50k reduction in price on a 4 bed semi was a "great deal". Since she worked in a construction related industry and hasn't been working at anything like the same level she was previously.

A friend's father had an investment property portfolio that if liquidated in late 2006 would have left him with around 5/6 million. AFAIK, his home is unmortgaged but the portfolio losses could take him under.

swampgas · 02-09-2011 10:05pm

JustAThought wrote: »

I agree with a lit of much that has been posted . But. I know young married couples, 27/28, who bought in despair with two salaries paying a 2.5k mortgage per month. One lost his job; the other is now pregnant. They will both always have to work toservice this huge debt, for a small, average, suburban house in A nice but bland estate in Dublin. Surely there can be some help here for the huge negative equity that they have; 50% aprox.
Or do we want s next generation society that grows up without proper parental supervision in credits and afterschool " clubs", with the black economy ; typically those not paying tax, pocketing the fees for the childminding over a lifetime.

If their debt is really so unmanageable, the best thing for them - considering they are relatively young - would be some kind of reformed bankruptcy process where they lose their assets, wipe their debts and start again after some small number of years with a clean sheet.

Trying to fix the problem by paying off their debts while allowing them to keep their house is completely wrong - for them and everyone else, IMO.

The media seem to be obsessed with debt forgiveness while ignoring bankruptcy reform, despite the latter being far more suitable as an effective and fair solution.

looky loo · 02-09-2011 10:08pm

The only solution I see for the average joe soap who bought say a 250k upwards house, with these huge mortgages is maybe to let the mortgage go over a longer period of time, with smaller repayments, granted not an ideal solution but if it eases the paying back each month it would help.

Some people got mortgages of 100 per cent, even doctoring their salary figures and incomes....thats deception.

Godge · 02-09-2011 10:30pm

swampgas wrote: »

If their debt is really so unmanageable, the best thing for them - considering they are relatively young - would be some kind of reformed bankruptcy process where they lose their assets, wipe their debts and start again after some small number of years with a clean sheet.

Trying to fix the problem by paying off their debts while allowing them to keep their house is completely wrong - for them and everyone else, IMO.

The media seem to be obsessed with debt forgiveness while ignoring bankruptcy reform, despite the latter being far more suitable as an effective and fair solution.

This post makes so much sense. If you were a discharged bankrupt after say five years (rather than twelve) and it was automatic (rather than dependent on creditors) they would be ok in the long run.

earlyevening · 02-09-2011 10:39pm

I know a self employed professional person who remortgaged to pay her 2006 income tax bill.

She'll pay it 3 times over on a 35 year term.

JustAThought · 02-09-2011 10:44pm

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

swampgas · 02-09-2011 10:53pm

JustAThought wrote: »

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

That's making the assumption that rent is "dead money" and that everyone should aspire to having a mortgage. There's no reason why a renter cannot save or build a pension, in fact it may well be better in the long run than having a property as your nest egg.

However I do think that the rental market in Ireland is under-developed and inadequately regulated, this might improve if more people see renting as a valid alternative to a mortgage.

I also think that someone who was bankrupt 10 years ago but has a solid financial record since then is just as likely to get a mortgage as anyone else, especially if the bankruptcy dated from the bubble. (I have nothing to back that up though, could well be wishful thinking on my part.)

Delancey · 02-09-2011 11:08pm

swampgas wrote: »

If their debt is really so unmanageable, the best thing for them - considering they are relatively young - would be some kind of reformed bankruptcy process where they lose their assets, wipe their debts and start again after some small number of years with a clean sheet.

Trying to fix the problem by paying off their debts while allowing them to keep their house is completely wrong - for them and everyone else, IMO.

The media seem to be obsessed with debt forgiveness while ignoring bankruptcy reform, despite the latter being far more suitable as an effective and fair solution.

No question about it , Irish bankruptcy laws are punitive and utterly Dickensian - the idea of people being branded as financially untouchable for the next 12 years is very counter-productive.
One further reform I would like to see is a move toward non recourse lending - had mortgage lending been on such a basis I suggest we would not have half the problems we now do.

Godge · 02-09-2011 11:20pm

JustAThought wrote: »

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

no, not true, after the period of bankruptcy and the discharge of debts, a person can build up a good credit record and get a new mortgage or long-term debt.

If you are young enough to start again, bankruptcy is a viable option. If they changed the rules, it might be easier.

swampgas · 03-09-2011 6:28am

Delancey wrote: »

One further reform I would like to see is a move toward non recourse lending - had mortgage lending been on such a basis I suggest we would not have half the problems we now do.

This came up a while back - the US experience seems to be that non-recourse mortgages are no magic bullet. Banks were lending recklessly regardless - maybe because they were selling on the dodgy mortgages as securitised products - and borrowers were walking away from loans they could easily pay because they simply didn't want to. I think it needs to be considered all the same though, but only pursued if it would actually work.

dashboard_hula · 03-09-2011 7:49am

I have the opposite actually, thank God.

When my father retired at the height of the boom, my parents made the decision to pay off their mortgage in it's entirety. This was against the advice of pretty much everyone they knew, as they did incur fees for paying off early. But they're the ones laughing now, as economic uncertainty did strike my family a couple of years later, but through it all they were able to manage it because there was no big monthly payment to fear.

I myself carry an amount of personal debt. It's not nearly as big as some, mostly because I never had the collateral or the huge salary to make it possible for me to incur more. But it is personally a big challenge for me. A few years ago it was suggested that if I apply for a mortgage and ask for extra to cover my debt, it would be a handy way to get shot of it and have a house. I did go so far as to make enquiries, and I was horrified at some banks willingness to advance mortgages and doing up money to someone like me, so I ran a mile, again against the advice of people around me. Now again, like my parents, I feel like I've dodged a massive bullet because I was made redundant recently, I struggle to budget and pay off my debts but I'm managing it, and the thoughts of what I'd have to deal with if I got a mortgage make me shudder.

c_man · 03-09-2011 11:02am

Was working for a right pair of tryants a few years back. They bought, and built, two doors up from their existing house. Put in an extra few rooms (the original house was massive already!). Refused an offer on the original place in the summer of '08 in the e600,000 range. Last I heard, the place is still unsold and unlet. They had dabbled in Dubai and Bulgaria as well.

Tbh most of those I know in mortgage difficulty are around my own age (mid to late twenties), they took a gamble and lost. The cases were it was a couple looking a place together are a minority, most were bought as investments/getting on the ladder.

murphaph · 03-09-2011 12:02pm

Any idiot that topped up their mortgage to buy an asset known to depreciate (like a car or dream holiday etc.) has zero sympathy. Mortgages are not meant for that sort of expenditure.

There are countless examples of this sort of person and they are less obvious to spot as it doesn't involve property on the surface.

Bannasidhe · 03-09-2011 12:21pm

Sister - who worked as an office manager in the construction industry - released the equity in her home at least 3 times as property prices increased. She, her husband, adult son and his girlfriend all went on 5* holidays to Thailand, Sri Lanka etc. She had an extension built on her house as bathroom wasn't big enough (for 3 adults tho as her son was in mid 20s and earning loads as a carpenter he could be expected to leave home soon) and she needed a walk-in wardrobe. The estimated cost of the extension was 70k - it cost 150k due in no small part to the 5k spent on tiles and the spa/jacuzzi bath big enough to fit all 3 ...best not to comment on that I felt...plus the separate wet room with multi-jet shower.
Within a year of completion of extension the firm she worked for had gone to the wall - she now works 1 day a week for another company - son has moved out and MABS told her to she didn't need sky multiroom with sports, movies etc - her husband is refusing to cut the sky subscription. She has had to renegotiate her mortgage so it's interest only but has not considered that as she is only 10 years short of retirement age she has just kicked the can down a not very long road.
So despite huge debts she is still in one room watching The Good Wife on a 52 inch flat screen, hubby is watching soccer in another room on similar size screen. Two cars sit on the driveway, They shop in Marks and she has a wardrobe of designer clothes and shoes.

donegal11 · 03-09-2011 12:33pm

murphaph wrote: »

Any idiot that topped up their mortgage to buy an asset known to depreciate (like a car or dream holiday etc.) has zero sympathy. Mortgages are not meant for that sort of expenditure.

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

thebman · 03-09-2011 1:29pm

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

In a regular car loan, the bank can't take your house though. You might sell it to pay the debt but they can't take your house and probably won't try.

If you re-mortgage your house becomes fair game for them. You probably wouldn't go bankrupt for an unpaid car loan given what other say about the cost of bankruptcy proceedings. Far more likely the bank would try to work out something with you.

The_Honeybadger · 03-09-2011 2:34pm

None of my immediate family indulged too much, I have a sibling who likes the finer things in life but can afford to even now. Best example I can think of is an old schoolfriend who left school before the leaving cert to work on the sites around 1998 or so. He then went on to set up his own building company, bought multiple foreign as well as Irish properties, built a mansion for himself, new 4 x 4's etc, and wasn't shy about showing off his new toys as most of his friends struggled through college. Haven't seen him in ages but last I heard he was well and truly buried financially, with no hope of ever paying back a fraction of what he owes. I have also heard of lots of people in my local area whose savings were wiped out in bank shares, but that's a little different to borrowing to fund a lifestyle you never deserved in the first place. My impression is that the vast majority of people who are now in trouble bought a massively inflated family home believing they had to get on the ladder before it is too late, and their circumstances have now changed dramatically (i.e. unemploment, paycuts, new arrival etc.), of course the prudent plan for these things but I still have sympathy for these people.

Head The Wall · 03-09-2011 2:43pm

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

What happens when they want to change the car 5 years into the 35 year mortgage. More finance will be needed and they'll be paying for two cars.

Anyone doing this is super thick

amacachi · 03-09-2011 2:59pm

looky loo wrote: »

The only solution I see for the average joe soap who bought say a 250k upwards house, with these huge mortgages is maybe to let the mortgage go over a longer period of time, with smaller repayments, granted not an ideal solution but if it eases the paying back each month it would help.

Some people got mortgages of 100 per cent, even doctoring their salary figures and incomes....thats deception.

Trouble for people who took out mortgages recently is that 90% or more of what they're paying is interest so extending the repayment time will reduce their monthly payments by very little.

meditraitor · 03-09-2011 3:10pm

Not exactly on topic but a mate of mine put an offer of €890,000 for a 4 bed in a great area in 2006 but was told he would have to come up with 920k by the EA... the bank wouldnt go any higher than 900k....Same houses are going for 400K now....

He gave up on the gaff and not long after things started to go pear shaped so he decided to stay in his old house which he bought for 80K and had only 8 years mortgage left on (nearly paid for now)

He dodged a serious bullet there.

ninty9er · 03-09-2011 3:15pm

My parents did it do renovate the house, upgrade the car and clear some other loans.

That being said the total release was less than €30k and the total mortgage after that was still under 6 figures and a quarter of the value of the house at the time.

donegal11 · 03-09-2011 3:15pm

Head The Wall wrote: »

What happens when they want to change the car 5 years into the 35 year mortgage. More finance will be needed and they'll be paying for two cars.

Anyone doing this is super thick

Don't get your point. The same thing that happens to people who want to change cars with personal finance from a bank? only at a lower rate. My point was that if you can afford to pay back a personal loan you would be better getting an equity release. The problem is when you can't pay the loan back and whether the bank would bankrupt you for a personal loan vs mortgage debt, and under the current situation banks are alot more amicable towards mortgage holders then personal debt(interest only and 1 year hold on repossessions etc).

swampgas · 03-09-2011 3:24pm

donegal11 wrote: »

Don't get your point. The same thing that happens to people who want to change cars with personal finance from a bank? only at a lower rate. My point was that if you can afford to pay back a personal loan you would be better getting an equity release. The problem is when you can't pay the loan back and whether the bank would bankrupt you for a personal loan vs mortgage debt, and under the current situation banks are alot more amicable towards mortgage holders then personal debt(interest only and 1 year hold on repossessions etc).

Hmmm... is the benefit of the lower rate not negated somewhat by the fact that the loan is being repaid over a much longer period than a typical personal loan would be? Say 25 years compared to 3 or 5 years?

So while the monthly repayment will be lower, the total interest paid over the lifetime of the loan could still be quite high?

* Looks for calculator *

donegal11 · 03-09-2011 3:31pm

The time value of money and inflation would negate the effect of increased borrowing term. There is nothing stopping you increasing mortgage repayments(money that would have been paid on personal loan) to reduce the outstanding debt.

murphaph · 03-09-2011 5:23pm

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

You remortgage your house to buy a car for say 15 grand but instead of taking out a 3 or 5 year loan (or shock horror, saving up to buy the blasted thing) you add on the 15 grand to your mortgage and pay interest on that car for another 30 years. You will end up paying a lot more for the car in the long run than if you'd either saved up or taken out a short term personal loan. Also remember that a personal loan usually comes with a fixed rate for the 3 or 5 years....a mortgage usually has a variable/tracker rate which could go any way over 30 years. You could end up paying a heck of a lot more for that car after all.

Do you personally know anyone who.

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