Mortgage Arrears Problem in Ireland.

dolphin city

Jaysoose wrote: »

I think he is upset at your general arrogant and abrasive attitude, to be honest i cant blame him your coming off as a typical internet sh1thead saying things online that you wouldnt dream of in the real world.

Just my two cents.

Just to set the record straight - I think you are taking my "general arrogant and abrasvie attitude" the wrong way.

I am blunt - I admit that - I don't believe in dressing up the truth - I grew up in a time where if things went wrong you dealt with it - I have absolutely no time for people blaming someone else for their own mistakes - everyone has free will to make their own decisions. I hate the pampered society around now blaming others for their own bad decisions. If you don't like the decision you made, stop wasting time posting on a social page - get up, get out and put it right yourself. Stop waiting for others to do it for you. In fact if you are in dire straits why have a computer at all - sell it - get a student in, get a lodger in, - do what people had to do years ago before the so called celtic tiger came. Stop whinging and get off your asses.

fliball123

Unrealistic wrote: »

I believe the real figure is 250k to 300k mortgages are thought to be in negative equity. Considering buy to let and second home mortgages made up about 40% of mortgages during the peak bubble years, and that these types of mortgages are more likely to have been interest only for an initial period, it is likely that significantly less than 50% of negative equity mortgages are on peoples own homes. Taking it further, the people most likely to find themselves in negative equity situations are the amateur landlords who bought multiple properties on interest only loans so even if it is 300k mortgages that does not mean it is 300k individual mortgage holders. Then you need to consider how many of those in negative equity are currently behind on their mortgage payments. Many are still in the same jobs and, while it may be a kick in the balls to know that that the house they bought has lost value, they can still meet the payments.

So your assertion that 1/6th of the population somehow got fooled is way off the mark.

Me, I didn't claim to see the crash coming that came. I just did a simple calculation and decided I couldn't afford to buy property in Ireland during the Celtic Tiger years. So I spent those years living in a country where I could earn a decent living and afford to buy a home without overextending myself. I didn't sit in a remote village in Ireland and bitch about my 'entitlement' to a job on my doorstep that would pay enough to buy a house and a car.

Well on that note I would say anyone who has a 2nd mortgage..should be told to feck off..I am only interested in the primary home

Duke Leonal Felmet

How will my primary salary be affected?

Jaysoose

dolphin city wrote: »

Just to set the record straight - I think you are taking my "general arrogant and abrasvie attitude" the wrong way.

I am blunt - I admit that - I don't believe in dressing up the truth - I grew up in a time where if things went wrong you dealt with it - I have absolutely no time for people blaming someone else for their own mistakes - everyone has free will to make their own decisions. I hate the pampered society around now blaming others for their own bad decisions. If you don't like the decision you made, stop wasting time posting on a social page - get up, get out and put it right yourself. Stop waiting for others to do it for you. In fact if you are in dire straits why have a computer at all - sell it - get a student in, get a lodger in, - do what people had to do years ago before the so called celtic tiger came. Stop whinging and get off your asses.

Sounds good but in real world terms your just ranting a load of easy answers, your language has changed in this post while in earlier posts was much more abusive and condescending to people that are genuinely at a loss as to what to do. Your part of a growing number of post event experts on these boards that feels clever for not buying property..well done, keep spewing your bs all over the internet im sure you feel your opinion is justified.

Being blunt is no excuse for insulting people.

sarumite

Jaysoose wrote: »

Sounds good but in real world terms your just ranting a load of easy answers, your language has changed in this post while in earlier posts was much more abusive and condescending to people that are genuinely at a loss as to what to do. Your part of a growing number of post event experts on these boards that feels clever for not buying property..well done, keep spewing your bs all over the internet im sure you feel your opinion is justified.

Being blunt is no excuse for insulting people.

I think there have been a lot of abrasive attitudes thrown out in this particular thread as it is one that is extremely divisive. I feel comfortable spreading that charge to many on both sides of this argument. I find the charge of "smug" is wearing a little thin at the moment. I can remember all those people who bought houses when I couldn't afford it and they were telling me how much their property had increased in value and how I was a loser for not getting on the property market now looking to me and others to bail them out. If you cannot see how its possible some may be a little caustic towards that attitude then we simply have to disagree. Smugness, abrasive attitudes and insults are not limited to one person or one side of an argument.

Jaysoose

sarumite wrote: »

I think there have been a lot of abrasive attitudes thrown out in this particular thread as it is one that is extremely divisive. I feel comfortable spreading that charge to many on both sides of this argument. I find the charge of "smug" is wearing a little thin at the moment. I can remember all those people who bought houses when I couldn't afford it and they were telling me how much their property had increased in value and how I was a loser for not getting on the property market now looking to me and others to bail them out. If you cannot see how its possible some may be a little caustic towards that attitude then we simply have to disagree. Smugness, abrasive attitudes and insults are not limited to one person or one side of an argument.

There is no doubt that the topic of negativ equity and proposed solutions get people riled up on here and there are two clear camps regards this issue. It just frustrates me to see posters like dolphin city pop up and throw terms around like "stupidity" and the old classic "the dogs in the street saw it coming" or my personal favourite "my taxes are gonna pay for this". A lot of people in negative equity are paying the mortgage and carrying on as normal, just because some posters on here seem to think that 300,000 people went out and bought "overpriced shoeboxes that they coudlnt afford" doesnt mean they are right.

I for one am in negative equity (granted not as bad as others) as myself and the missus are both working everything is fine and im more of the school of thought that people should face up to responsibility, it just irks me when everybody in negative equity is branded with the same brush by people that dont have the first idea about the situations people are in and feel they are in a position to insult and try to belittle them on boards.

For what its worth im not in favour of people walking away from the responisbility they signed up for and in a minority of cases people most likely did take far to much of a mortgage and they shouldnt be allowed to just hand the keys back. But at the same time we cant just ignore the issue without presenting some sort of rational solution. Nobody knows what the solution is and there should be penalities for people opting out of their responsibilities. I for one am not going to point and laugh at anybody in danger of losing their home, but thats just me.

dolphin city

Jaysoose wrote: »

Sounds good but in real world terms your just ranting a load of easy answers, your language has changed in this post while in earlier posts was much more abusive and condescending to people that are genuinely at a loss as to what to do. Your part of a growing number of post event experts on these boards that feels clever for not buying property..well done, keep spewing your bs all over the internet im sure you feel your opinion is justified.

Being blunt is no excuse for insulting people.

Whats wrong with easy answers - if mortgage holders asked some easy questions at the time of buying their houses they might not be in the position they are now. Easy questions, easy answers sometimes can mean the difference between making a bad decision or a good decision.

Re. the people at a loss of what to do - its simple - if they can't afford it get rid of it. The only reason they are "at a loss" is that they are waiting for some "superman" to come in and fix it. They have to fix it themselves, just like people have done for generations before them.

Im not a post event expert - I just thought out my options for myself at the time and realised if you cannot afford something don't buy it, now matter how shiny it looks. Doesn't take an expert to know this. However the problem is the people are too lazy to think and rely on others to think for them.

dolphin city

Jaysoose wrote: »

There is no doubt that the topic of negativ equity and proposed solutions get people riled up on here and there are two clear camps regards this issue. It just frustrates me to see posters like dolphin city pop up and throw terms around like "stupidity" and the old classic "the dogs in the street saw it coming" or my personal favourite "my taxes are gonna pay for this". A lot of people in negative equity are paying the mortgage and carrying on as normal, just because some posters on here seem to think that 300,000 people went out and bought "overpriced shoeboxes that they coudlnt afford" doesnt mean they are right.

I for one am in negative equity (granted not as bad as others) as myself and the missus are both working everything is fine and im more of the school of thought that people should face up to responsibility, it just irks me when everybody in negative equity is branded with the same brush by people that dont have the first idea about the situations people are in and feel they are in a position to insult and try to belittle them on boards.

For what its worth im not in favour of people walking away from the responisbility they signed up for and in a minority of cases people most likely did take far to much of a mortgage and they shouldnt be allowed to just hand the keys back. But at the same time we cant just ignore the issue without presenting some sort of rational solution. Nobody knows what the solution is and there should be penalities for people opting out of their responsibilities. I for one am not going to point and laugh at anybody in danger of losing their home, but thats just me.

I would say you could look on this thread until your mortgage is paid off to see where I mentioned or used the bolded words above. Please spread your anger to more than one person - although if you want me to be the scapegoat I can handle it, but do try and get your facts right.

as far as you and others dealing with a bad judgement - people do that every day. Its life. Its not something out of the ordinary.

uberalles

Dannyboy83 wrote: »

The people in opposition to this are taking the livelihood of citizens of this country into consideration.

If Person A must pay for the mortgage of Person B through tax, then:
i) Person A will never afford a home themselves
ii) Person B is being rewarded for reckless borrowing
iii) Person A is being punished for responsible borrowing (or for not borrowing recklessly, as the case may be)

And person A) will follow this person at the end of the video.
http://www.youtube.com/watch?v=8JPT3feipJ8&feature=email

BluePlanet

Jaysoose wrote:

for one am not going to point and laugh at anybody in danger of losing their home, but thats just me.

Who's laughing?
We are pissed off that those people are now coming here with the idea that they should pick our pockets to either help them keep their Asset, or to let them walk away from the mess they made.

uberalles

CiaranC wrote: »

Maybe we have a "cosy" life because we saved ourselves the odd half a million quid by not recklessly throwing away our entire lifetimes earnings into the biggest and most obvious property bubble in the world? Maybe we face less "hardship" than you because we chose to be prudent and careful with our hard earned money?

How ironic to be called "the privileged" now after the fact, when we were looked down at and sneered at as some kind of "paupers in our rented flats" for not buying into the myth of the bubble while the madness was going on.

Id rather emigrate than have my taxes go to such a bailout.

+ 1

I had consistent rent hikes from 1998 (600 Punts) to 1400 PM for a two bed apt in Dublin city. In 2006 our rent was increased by 180 PM!
No one gave a feck about our situation.

Tenants have few rights compared to our European neighbours.

The one big advantage is I can give back the keys if you try make me
pay for other people who took out mortgages they now cant afford. I will leave the country. Thats a deal breaker, a final straw for me.

Jaysoose

dolphin city wrote: »

I would say you could look on this thread until your mortgage is paid off to see where I mentioned or used the bolded words above. Please spread your anger to more than one person - although if you want me to be the scapegoat I can handle it, but do try and get your facts right.

as far as you and others dealing with a bad judgement - people do that every day. Its life. Its not something out of the ordinary.

Read the post again and you might understand im not just talking about you, scapegoat...lol. What facts are you talking about by the way my post is very general and i never stated anything was a fact so your off on a tangent with that.

I never said my decision was bad im happy in my house and im paying my mortgage, to say its a bad decision depends on your view of life and depends much stock you put in the value of the bricks around you, i for one am dealing with it just fine.

dolphin city

Jaysoose wrote: »

Read the post again and you might understand im not just talking about you, scapegoat...lol. What facts are you talking about by the way my post is very general and i never stated anything was a fact so your off on a tangent with that.

I never said my decision was bad im happy in my house and im paying my mortgage, to say its a bad decision depends on your view of life and depends much stock you put in the value of the bricks around you, i for one am dealing with it just fine.

well then don't mention only my username. Listen, we all know how angry ye must be but save it for the people who deserve it - leave it at their door, not the people smart enough not to bite.

Jaysoose

dolphin city wrote: »

well then don't mention only my username. Listen, we all know how angry ye must be but save it for the people who deserve it - leave it at their door, not the people smart enough not to bite.

I said people like you, inferring that i was referencing other people its pretty simple. DO you have a trademark on the words 'dolphin' and 'city'?

Lol at your childish attempts to be funny by the way. Well played.

jpb1974

FG 'to help struggling mortgage holders'

http://www.breakingnews.ie/election/news/fg-to-help-struggling-mortgage-holders-493908.html

Looks like they might have 4-5 less boards.ie members voting for them

dolphin city

Jaysoose wrote: »

I said people like you, inferring that i was referencing other people its pretty simple. DO you have a trademark on the words 'dolphin' and 'city'?

Lol at your childish attempts to be funny by the way. Well played.

actually, on these boards, yes I do. :rolleyes:

Jaysoose

dolphin city wrote: »

actually, on these boards, yes I do. :rolleyes:

Sweet.

dolphin city

Jaysoose wrote: »

Sweet.

finally, you get it - thanks
now lets get back to the real issue eh? that is = people who didn't buy for the sake of it vs the people who did and are now in debt over it.

sarumite

jpb1974 wrote: »

FG 'to help struggling mortgage holders'

http://www.breakingnews.ie/election/news/fg-to-help-struggling-mortgage-holders-493908.html

Looks like they might have 4-5 less boards.ie members voting for them

I don't think many disagree with helping struggling mortgage holders, its just the method of help that is disputed. I for one have advocated an overhaul of bankruptcy in order to make it a viable option for those in negative equity that cannot afford to make repayments.

foxyboxer

sarumite wrote: »

I think there have been a lot of abrasive attitudes thrown out in this particular thread as it is one that is extremely divisive. I feel comfortable spreading that charge to many on both sides of this argument. I find the charge of "smug" is wearing a little thin at the moment. I can remember all those people who bought houses when I couldn't afford it and they were telling me how much their property had increased in value and how I was a loser for not getting on the property market now looking to me and others to bail them out. If you cannot see how its possible some may be a little caustic towards that attitude then we simply have to disagree. Smugness, abrasive attitudes and insults are not limited to one person or one side of an argument.

Logged in specifically to thank your post. My sentiments exactly.
Definitely a sense of Schadenfreude from us 'losers' towards specifically those 'Big Time Charlies' who are really in the s**t who not only took 100% mortgages "..to, you know, like become a total property player..." but ALSO borrowed for 06/07 reg Cars, trendy holidays, italian designer kitchens, leather three-piece suites, espresso machines etc etc etc who, it seems to me at least, to be the cheerleaders for the NAMA-for-The Little Guy bandwagon.

Personally, I am single. I do not have a family so I don't really need a Family home. I, and other so called "Smug" people feel sympathy for those who do, have a family, who needed a stable home and have been affected by unemployment etc etc.

Whatever happened to "If I can't pay with cash, I can't afford it...." for such items?
The negative equity situation has happened (the warnings were issued at the time, no-one who bought during the boom listened, almost like the warnings about icebergs issued to the Titanic) but it will work itself out eventually. I'm no theoretical economist for sure, but a possible idea would be would be a means-test on those who register for assistance. Then a seperation could be made between those "Big Time Charlies" and the prudent families. This would determine those who binged on credit and those who didn't. Relief on mortgage repayments? To an extent. Relief on lifestyle funded recklessness (high personal debt)? When hell freezes over!!. Simplistic yes and in before (...and who pays for that??!?!? There's no money!!!!)

I believe the fundamental problem does remains in the education system, where basic personal financial principles have NEVER been taught on the school cirriculum. The country gained access to historically cheap credit and not having even basic financial 'cop on' available or experience, we simply blew the opportunity to enhance our own society. Credit is good for creating businesses, jobs etc, Credit is bad for building ghost estates to avoid paying so much tax for Mr Developer.

History has an awful habit of repeating itself (remember the negative equity problem in the UK in the early 90's?? Hardly mentioned during the celtic tiger boom was it?), so by simply introducing a personal finance semester each year (as is happening currently in the UK), our kids and teenagers will have a greater footing financially and ensure that this never happens again!

Just my 2c

mm_surf

I've just read the entire thread there (a biggie, took a while!)


It's obvious that a lot of people have made it a bit more simplistic that it actually is. I can understand both sides of the argument -


“I didn't have anything to do with you overpaying for your house”


“I'm in trouble paying the mortgage for various reasons that wouldn't have been reasonably foreseeable”


However, I don't think it's in anybody's interest to have major defaulting on mortgages in this country. The bailout of the banking sector has cost enough so far, any mass default (or even significant default) would make the bad situation worse than it already is (we pay the bailout money and the banks still fold)


So what's to be done? Well, who's actually in trouble with their mortgages?

1. - People on reduced incomes (loss of job, job cuts etc.)
   

That should be it, shouldn't it? But there are more to come. Some people are really borderline now, and things are going to get worse.


We're in year 1 or year 2 of a 4 or 5 year austerity plan. More tax hikes, less tax breaks, and now inflation is starting to rise. People with no wiggle room now are going to be in trouble shortly.


I know a lot of people are saying that the tax payer shouldn't have to pay for other peoples' poor judgement regarding house buying. Thing is, we already do. The banks have the mortgages, and we have guaranteed the banks. Sucks, but that's our current situation. Any defaults now (in mortgages held by any banks that we've guaranteed/bailed out) are paid for by us, one way or another.


But no-one (that I noticed) has mentioned that the tax-payer already subsidises mortage holders that are in trouble (http://tinyurl.com/6epypeb)


I would like to see this scheme extended to people in need temporarily. For “the greater good”, similar to the dole, health schemes, etc.


However, the current caveats for that scheme should remain, i.e.


It covers interest only – not the capital parts of repayments
It covers the interest on the original house only (i.e not consolidated mortgages)
It covers the PPR (principal private residence)


The only other requirement that I would add is that if the original mortgage was interest only, then it should not be considered eligible. Those mortgages used for investments, and should carry the same risks.


I think it would be the fairest way to go in terms of society. We have big problems still remaining sorting out our national debt and spending, and the next 5 years at least will be horrendous, whether a person is employed or not, mortgage holder or not.


Just my 2c!
(for backgorund, PAYE worker for 15 years, then made redundant last year, no mortgage, no rent supplement and have 2 interviews next week, wish me luck!)

carm

dolphin city wrote: »

so what makes you any different than anyone else in the country - whether the own a house or rent. Are you under the impression that if you rent, you are somehow getting some extra "benefit" from the State?

don't understand your logic at all.

Actually dolphin, you would get extra benefit from the state.

Unrealistic wrote: »

The point has already been made, by myself and others, that paying rent relief would probably work out a whole lot cheaper for the state than extending mortgage holidays indefinitely. Short term it might well work out to be more expensive to keep people in their homes through the repossession moratorium but sooner, rather than later, we would pass the point where it makes more sense to foreclose and pay the rent relief.

Who mentioned "indefinitely"? I didn't. Do you know how much the HSE forks out for a standard rental house a month in Dublin? E1000 One thousand euros.

As someone made redundant and a mortgage holder bought pre-exorbitant pre-100% mortgage pre-30 yr mortgages handed out willy-nilly, I get E0. Nor have I looked for anything as I understood fully what I was getting myself into.

Could you elaborate a little more please on why you think it would cost the taxpayer more when I never mentioned the word "indefinitely" in my post?

mm_surf

carm wrote: »

Actually dolphin, you would get extra benefit from the state.

No extra benefit. Rent Supplement and Mortgage Interest Supplement are both available.

If you are renting, you can apply for Rent Supplement http://tinyurl.com/6gh9aka

If you are a mortgage holder, you can apply for Mortgage Interest Supplement
http://tinyurl.com/6epypeb

Both are means tested with similar requirements.

M.

carm

mm_surf wrote: »

No extra benefit. Rent Supplement and Mortgage Interest Supplement are both available.

If you are renting, you can apply for Rent Supplement http://tinyurl.com/6gh9aka

If you are a mortgage holder, you can apply for Mortgage Interest Supplement
http://tinyurl.com/6epypeb

Both are means tested with similar requirements.

M.

The difference is, if I'm struggling and I go to the SW/HSE:

If I have a mortgage, you are entitled to temporary, "short term" Mortgage "Interest" Supplement, which covers a small percentage of the "Interest" on the mortgage - to which I am not entitled to anything and most people I know are exempt as there are so many conditions.

If I rent accommodation (assuming I cannot find employment), I get Rent Supplement which covers most if not all of my rent, to which I would be entitled to - E930 to be precise.

So here are some choices:

Walk away from house today with family in debt, nothing to show for it, move the child from settled primary school to his ghost town rental accommodation (as someone posted online recently of what should become of the people with mortgage debt), rent away happily with giant % of tax payer money and leave a house to a lender which will probably not be able to sell, which will cost the taxpayer somewhere down the line aswell.

Or

Stay in house, apply for 20 jobs a week in hope I get one to cover monthly repayments, agree with lender for a short break or IO repayments, costing me longer in the longrun but accepting this is the case and if there is no job (of which a person is entitled or possibly not in some people's eyes) accept that the house keys will be handed over & we must spend the rest of lives paying E20 a week of my current E24 from social welfare a week to the lender. Bet they'll be happy. As will the tax payer.

mm_surf

carm wrote: »

The difference is, if I'm struggling and I go to the SW/HSE:

If I have a mortgage, you are entitled to temporary, "short term" Mortgage "Interest" Supplement, which covers a small percentage of the "Interest" on the mortgage - to which I am not entitled to anything and most people I know are exempt as there are so many conditions.

If I rent accommodation (assuming I cannot find employment), I get Rent Supplement which covers most if not all of my rent, to which I would be entitled to - E930 to be precise.

The means test is the same for both. And according to http://tinyurl.com/65mye8x
the limits are the same (although there is no strict limit in the case of MIS - it could in theory be more than the RS limit for your area)

If you truly believe what you've written above (that you would be entitled to a much bigger Rent Supplement than MIS) then you need to have a long chat with your Community Welfare Officer.

What I'm saying is, if your circumstances qualify you for RS, then they also qualify you for MIS. A good place to ask people in the know would be here http://www.askaboutmoney.com/forumdisplay.php?f=53

I am led to believe that MIS is only valid for a year or so though.
In the current situation I would hope that as a nation we could extend this to be in line with RS.

M.

Unrealistic

carm wrote: »

Unrealistic wrote: »

The point has already been made, by myself and others, that paying rent relief would probably work out a whole lot cheaper for the state than extending mortgage holidays indefinitely. Short term it might well work out to be more expensive to keep people in their homes through the repossession moratorium but sooner, rather than later, we would pass the point where it makes more sense to foreclose and pay the rent relief.

Who mentioned "indefinitely"? I didn't. Do you know how much the HSE forks out for a standard rental house a month in Dublin? E1000 One thousand euros.

As someone made redundant and a mortgage holder bought pre-exorbitant pre-100% mortgage pre-30 yr mortgages handed out willy-nilly, I get E0. Nor have I looked for anything as I understood fully what I was getting myself into.

Could you elaborate a little more please on why you think it would cost the taxpayer more when I never mentioned the word "indefinitely" in my post?

Reading back I see now that I actually wrote the opposite of what I intended. Apologies for the confusion. What I had intended to write was that in the short term it would be less expensive to keep people in their homes but the longer the repayment moratorium has to last the closer we get to the economic tipping point where it makes more sense from a pure cost point of view to repossess now than to prolong the agony.

If we knew things were going to pick up (I don't mean property prices rising but just better employment opportunities so people could resume servicing their debt) in a year or two then I would agree that from a pure cost/benefit point of view it would be better to give people a moratorium than turf them out into tax payer funded rental accommodation. That is why I made the reference to it being indefinite. We've already effectively had a two year moratorium. I'm sure two years ago many people thought two years would be sufficient to give people some breathing space. How many years do you think it will take now? I couldn't even begin to hazard a guess other than that it is going to be many years before we see the employment situation begin to improve. Indefinite is just the correct term to describe any unknown time frame.

As an interesting aside it is not automatic that someone who is unfortunate enough to have his house repossessed will end up on rent supplement. Someone who can no longer afford their mortgage at higher interest rates might still be able to afford rent at current market rates without government support.

Lastly, you say that you have never 'looked for anything' but it seems that you make a distinction between a mortgage payer getting money from the taxpayer into his hand to help you pay his mortgage (a bailout in your terms?) and having the taxpayer pay the same amount directly to the bank so that the bank can afford to give him a repayment extension of some sort (leniency in your terms?). Now I agree there is a distinction in the long term if the leniency option merely postpones repayments that the mortgage holder will eventually make at a later date but it is still not without cost. Every €1 not paid by a mortgage holder this year is another €1 that the taxpayer has to borrow from the ECB and inject into the banks to keep them afloat. I am not saying that leniency shouldn't be an option, just that it should be clearly understood that availing of it at a time when banks are insolvent and being kept alive by the taxpayer is the same thing as availing of a state handout.

Unrealistic

Jaysoose wrote: »

For what its worth im not in favour of people walking away from the responisbility they signed up for and in a minority of cases people most likely did take far to much of a mortgage and they shouldnt be allowed to just hand the keys back.

I would actually argue that a majority of people took out far too much of a mortgage. Maybe I'm over cautious but taking out a 90% mortgage seems crazy to me let alone a 100% mortgage. (Unless you have a big chunk of cash on deposit earning more than the tax adjusted mortgage interest rate to balance things out.) I make no claims about predicting an economic catastrophe but just considering the possibility that something could go wrong in my own life encouraged me to be very cautious when taking out my own mortgage.

I had a deposit saved and I could have used that sum as a 10% deposit and been approved but instead I decided that I should lower my sights and set my budget at a level where that same deposit would make up 30% of the cost of the property and I was only borrowing 70%. That meant my budget was only one third of what it could been but my borrowings were only one quarter of what I actually could have borrowed. Of course the result was that we had a home that wasn't half as nice as many of our contemporaries but being able to sleep soundly at night was worth it.

Immediately after purchasing we spent nothing on improving our home but instead saved as hard as we could until we had put aside a rainy day fund that would cover six months of living expenses including mortgage repayments. Then, instead of saving or spending, we started to overpay the mortgage each month (no holidays, new cars etc.) so that we had the mortgage fully paid off halfway through the fifth year. Maybe it was the thought of having no social safety net (job seekers allowance etc.) available to me that concentrated my mind on this but I just wasn't prepared to take out a mortgage unless I was sure that I would still be able to cover it even in the event of some serious setbacks in life. We figured that even if interest rates doubled (they started at 11% variable) and my earnings were halved we'd still be able to manage.

The crazy thing is that if we tightened up the rules across the board it wouldn't mean fewer people would be able to buy houses. It would just mean that prices would stay at an affordable level as the purchasing power of the whole market would be limited. If banks were again obliged to issue mortgages limited to an 80% LTV ratio and a cap of 2.5 times earnings then house prices will settle at that level and people won't be immediately plunged into potential default situations by interest rates rising a few points.

dolphin city

carm wrote: »

Actually dolphin, you would get extra benefit from the state.


Please elaborate on this so that renters can avail of it.

foxyboxer

Unrealistic wrote: »

Reading back I see now that I actually wrote the opposite of what I intended. Apologies for the confusion. What I had intended to write was that in the short term it would be less expensive to keep people in their homes but the longer the repayment moratorium has to last the closer we get to the economic tipping point where it makes more sense from a pure cost point of view to repossess now than to prolong the agony.

If we knew things were going to pick up (I don't mean property prices rising but just better employment opportunities so people could resume servicing their debt) in a year or two then I would agree that from a pure cost/benefit point of view it would be better to give people a moratorium than turf them out into tax payer funded rental accommodation. That is why I made the reference to it being indefinite. We've already effectively had a two year moratorium. I'm sure two years ago many people thought two years would be sufficient to give people some breathing space. How many years do you think it will take now? I couldn't even begin to hazard a guess other than that it is going to be many years before we see the employment situation begin to improve. Indefinite is just the correct term to describe any unknown time frame.

As an interesting aside it is not automatic that someone who is unfortunate enough to have his house repossessed will end up on rent supplement. Someone who can no longer afford their mortgage at higher interest rates might still be able to afford rent at current market rates without government support.

Lastly, you say that you have never 'looked for anything' but it seems that you make a distinction between a mortgage payer getting money from the taxpayer into his hand to help you pay his mortgage (a bailout in your terms?) and having the taxpayer pay the same amount directly to the bank so that the bank can afford to give him a repayment extension of some sort (leniency in your terms?). Now I agree there is a distinction in the long term if the leniency option merely postpones repayments that the mortgage holder will eventually make at a later date but it is still not without cost. Every €1 not paid by a mortgage holder this year is another €1 that the taxpayer has to borrow from the ECB and inject into the banks to keep them afloat. I am not saying that leniency shouldn't be an option, just that it should be clearly understood that availing of it at a time when banks are insolvent and being kept alive by the taxpayer is the same thing as availing of a state handout.

Great to hear from someone who actually exercised prudence and took time to consider the biggest financial decision of their lives.

Just as an example which highlights the lack of financial education, my younger brother (18 at the time, and just having left school), had a small loan with the local credit union.
The time came when he needed a car for work and a car loan was arranged again with the credit union.

He asked us with all seriousness "You know I still have the 1st loan? Will they forget about that now with the Carl loan?"

:rolleyes:

carm

dolphin city wrote: »

carm wrote: »

Actually dolphin, you would get extra benefit from the state.


Please elaborate on this so that renters can avail of it.

Assuming you qualify and for fear of repeating myself, mortgage interest relief from the state: "short term", rental supplement from the state not "short term". Extra benefit.

Mortgage "Interest" Relief on "interest" of your mortgage.
Rental Supplement - standard rates for counties in Ireland.