Tricked by Brian Lenihan into buying a house :O

Kasabian · 08-02-2011 10:39AM

Bought a house in 2000 for 120K. Had it valued the other day , it is worth

120K.

Sand Wedge · 08-02-2011 11:11AM

As has been discussed, negative equity only comes into it if you are looking to sell.

Someone who bought a house a couple of years ago are likely to be on a tracker mortgage of +1% so on a mortgage of 400,000 their repayments would be €1,478 over 30 years.

If the house was bought today at 270,000 over 30 years at PTSB new rate of 5.19% then repayments would also be €1,478.

Even though house drop of 32.5% in this scenario mortgage payments would still be same comparing how much higher interest rates are now to how low interest rates were in the boom!

08-02-2011 11:16AM

I stubbed my toe last night and it was ALL Brian Lenihan's fault!!

Negative equity isn't only relevant when you're selling. If you bought the same house in 2007 or 2011, the difference in mortgage repayments would probably give you an extra few hundred euro per month disposable income to socialize or buy nice things.

So? If I won the lotto i'd have more disposable income too, but that has nothing to do with anything.
It is only relevant when selling or changing lenders

JCDUB · 08-02-2011 11:46AM

Kersh wrote: »

Why would you pay 400k for a house thats only worth 200k????

You should do a bit of reading on one of the most basic concepts of economics: supply and demand.

If demand states that an item is worth €400k then it is worth €400k.

If I own a house that an estate agent says is worth €200k but one particular buyer really likes it and buys it for €300k, then it is worth €300k to that buyer.
It doesn't matter how much it's worth the next day, that's irrelevant.

mickydoomsux · 08-02-2011 11:51AM

You deserve to get burned if you base a 30ish year 400k commitment on what someone in a floundering government says.

If Lenihan had told him to jump off a bridge etc.

melekalikimaka · 08-02-2011 11:53AM

JCDUB wrote: »

It doesn't matter how much it's worth the next day, that's irrelevant.

Tell that to the thousands in debt.

The market was inflated, it was madness to purchase

08-02-2011 11:56AM

Kasabian wrote: »

Bought a house in 2000 for 120K. Had it valued the other day , it is worth
120K.

IR£120K in 2000
€120K in 2011

A valuation is pretty hit and miss too these days.

gurramok · 08-02-2011 12:03PM

Sand Wedge wrote: »

As has been discussed, negative equity only comes into it if you are looking to sell.

Someone who bought a house a couple of years ago are likely to be on a tracker mortgage of +1% so on a mortgage of 400,000 their repayments would be €1,478 over 30 years.

If the house was bought today at 270,000 over 30 years at PTSB new rate of 5.19% then repayments would also be €1,478.

Even though house drop of 32.5% in this scenario mortgage payments would still be same comparing how much higher interest rates are now to how low interest rates were in the boom!

That person would have saved over the last couple of years to offset any extra interest paid. Plus when the ECB rates go up this year on those trackers, expect alot of moaning on boards from overstretched borrowers.

Kasabian · 08-02-2011 12:07PM

RoverJames wrote: »

IR£120K in 2000
€120K in 2011

A valuation is pretty hit and miss too these days.

Bought at €120K.

Bruthal · 08-02-2011 12:09PM

RoverJames wrote: »

IR£120K in 2000
€120K in 2011

A valuation is pretty hit and miss too these days.

What does it mean anyway, nothing. What you get for it is its value. If no one is buying then whats its value? It was accurate when large amounts of houses were selling, now its hit and miss for certain.

€120k is not too bad anyway, even if they value it at €80k in a year or 2 its not a big deal. Its a much bigger deal for someone that bought one for €350k 3 years ago for example and now only €120k and in trouble paying mortgage.

If you had it as an investment home then thats a much worse situation then, but as a home its more or less all the one whether it went from €120k to €300k and back to €120k. If you sell to move to another house the other houses will be in the same situation.

Im in similar position as kasabian myself, bought in 2003 for €163k, valued at €320k in 2006, now more or less back to the original price.

faceman · 08-02-2011 12:17PM

Is it any wonder policitians get away with having no accountability in this country when the spite in the thread is directed at the teacher.

Granted the chap was rather foolish to buy his house when he did, however there are other factors that need to be considered:

Politicans said we turned a corner.
Cover ups in some of the banks as to their balance sheets.
No one saw the need for a bailout back then.
The impact to our take home pay as a result of increased taxes, new taxes not to mention indirect taxes has been rather steep in a short space of time.

All of the above have been unprecedented in this country. Sure, there have been people saying a crash was coming from as early as 2000, but even they couldnt predict when the crash would occur and many people milked it for another 7 years before it did.

When Iceland went bust, the government forced the banks to revalue existing mortgages at the current level of hosue prices to erode the negative equity that had accumulated. This was one step that helped a speedier economic recovery. Meanwhile back in Ireland, we will be crippled with higher taxes, less public services, and a signficant percentage of individuals in high level of debt for many years to come, which is a barrier to recovery.

So the issue is far bigger than whether or not the teacher was a gobsheen or not.

jimmycrackcorm · 08-02-2011 12:25PM

faceman wrote: »

Is it any wonder policitians get away with having no accountability in this country when the spite in the thread is directed at the teacher.

Granted the chap was rather foolish to buy his house when he did, however there are other factors that need to be considered:

Politicans said we turned a corner

....
So the issue is far bigger than whether or not the teacher was a gobsheen or not.

I wouldn't let that teacher teach my kids......

danbohan · 08-02-2011 12:27PM

faceman wrote: »

Is it any wonder policitians get away with having no accountability in this country when the spite in the thread is directed at the teacher.

Granted the chap was rather foolish to buy his house when he did, however there are other factors that need to be considered:

Politicans said we turned a corner.
Cover ups in some of the banks as to their balance sheets.
No one saw the need for a bailout back then.
The impact to our take home pay as a result of increased taxes, new taxes not to mention indirect taxes has been rather steep in a short space of time.

All of the above have been unprecedented in this country. Sure, there have been people saying a crash was coming from as early as 2000, but even they couldnt predict when the crash would occur and many people milked it for another 7 years before it did.

When Iceland went bust, the government forced the banks to revalue existing mortgages at the current level of hosue prices to erode the negative equity that had accumulated. This was one step that helped a speedier economic recovery. Meanwhile back in Ireland, we will be crippled with higher taxes, less public services, and a signficant percentage of individuals in high level of debt for many years to come, which is a barrier to recovery.

So the issue is far bigger than whether or not the teacher was a gobsheen or not.

So the issue is far bigger than whether or not the teacher was a gobsheen or not.

i think thats well and truly decided , he was , and he did not do himself or any other public servants any favors by having a whinge about croke park deal .people just expect better from people who are supposed to be role models for our kids

As for rest of your points , nobody saw nothing because they were too busy to see if mrs jones next door was looking at their bigger car or bigger extension etc etc , many were delibratley blind

Mike 1972 · 08-02-2011 12:57PM

Run_to_da_hills wrote: »

Not necessarly, it can effect you mentally if you know that your house is only worth half what you paid for it .

It affects you mentally only if you dont understand the difference between negative equity and not being able to afford the repayments on your mortgage

People who can borrow money to buy cars are effectively in negative equity as soon as they drive off the forecourt (unless they paid a hefty portion out of their own savings) but as long as they can afford the monthly payments it doesnt become an issue for them.

Negative equity /=/ Not being able to afford the repayments
Reposession /=/ Homelessness

Orando Broom · 08-02-2011 01:33PM

bobblepuzzle wrote: »

Yeh, people must love paying a €400,000 mortgage on a house thats now worth €200,000... and faced with unemployment etc :rolleyes:

A house is only worth the amount you sell it for. People miss this concept.

Most people buy a home, not a house.

Bruthal · 08-02-2011 01:57PM

jimmycrackcorm wrote: »

I wouldn't let that teacher teach my kids......

So you have asked all the teachers that do teach your kids how much they bought their house for and when, and who they voted for in the last election? Maybe you should teach them yourself so:)

Monty Burnz · 08-02-2011 02:04PM

bobblepuzzle wrote: »

Just saw this poor guy on The Frontline who bought a house because Lenihan told us we had "turned the corner" in 2009 hahahaha :pac:, now he's screwed in negative equity and can't leave the gaf

I don't know whether to laugh or have pity

He must have been a FFailure true believer or something. Having said that, Comical Lenny is scarily plausible. Even though I know he's talking horse feathers, he always sounds convincing, until you think back to what he actually said and did previously.

Monty Burnz · 08-02-2011 02:09PM

RoverJames wrote: »

that teacher dude was a bit looney buying when he did, still, hindsight and all that.

Jesus Christ - hindsight?? Not a bit of it. That's a bit like saying, 'yeah, in hindsight it was a bad move to sit into a burning car'. Some things actually are obvious beforehand - and buying a house in 2009 was one of them.

By the way, so is buying in 2011, and 2012 for starters. Don't come crying back here if you do.:pac:

Sean Quagmire · 08-02-2011 02:19PM

Monty Burnz wrote: »

By the way, so is buying in 2011, and 2012 for starters. Don't come crying back here if you do.:pac:

Nice sweeping generalisation there. What about the couples who have decent savings, earn a good wage in a secure job and can afford a house that has had over 100k knocked off it?

You would not be mad for buying today with that criteria. Yes they will come down a bit more but for normal punters like me, the house im looking for will probably come down another 10-15k in the next two years.

What do you expect people to live with there mammy or in a ****ty apartment for the next 10 years because the big bad recession is out there. grow up.

sbsquarepants · 08-02-2011 02:23PM

melekalikimaka wrote: »

Tell that to the thousands in debt.

The market was inflated, it was madness to purchase

They owe exactly what they signed up for, no more.

It's like if you're buying a car, you see one you like for 10 grand say, you take out a loan and buy it. A week later you see the exact same car for 8 grand, that's just too bad - you STILL owe 10 grand. You don't owe any more than you originaly agreed so shut the f'uck up whinging and pay it!:mad:
If you seen it for 12 grand the garage wouldn't come looking for the extra 2 and if they did would anyone feel sorry for them?
The mortgage applies to the price AT THE TIME OF PURCHASE, not any other time that may or may not suit you better!

Monty Burnz · 08-02-2011 02:29PM

Sean Quagmire wrote: »

Nice sweeping generalisation there. What about the couples who have decent savings, earn a good wage in a secure job and can afford a house that has had over 100k knocked off it?

In that case, you won't be crying here, will you? Of course it's a fcuking generalisation, I'd be here all day qualifying every phrase otherwise

Sean Quagmire wrote: »

You would not be mad for buying today with that criteria. Yes they will come down a bit more but for normal punters like me, the house im looking for will probably come down another 10-15k in the next two years.

True, for some people it will make sense to by as long as they do not mind losing at least another 30% of what they spend. It could be worse though - prices may well halve again in my view.

Sean Quagmire wrote: »

What do you expect people to live with there mammy or in a ****ty apartment for the next 10 years because the big bad recession is out there. grow up.

You do know that the choice is not 'live with mammy or in an apartment'? That is what we call a false dichotomy. You leave out the possibility of renting a nice house. Either you didn't think of it or you were being dishonest. Grow up.

Bruthal · 08-02-2011 02:38PM

Sand Wedge wrote: »

As has been discussed, negative equity only comes into it if you are looking to sell.

What if the house is repossessed, the shotfall is still liable to the mortgage holder. Even if it is never repossessed, its an added pressure for people struggling to keep up.

Someone who bought a house a couple of years ago are likely to be on a tracker mortgage of +1% so on a mortgage of 400,000 their repayments would be €1,478 over 30 years.

All well and good if you can keep your tracker for the duration of the mortgage. No worries of ever having to pay the higher interest rates so? Who knows what will happen with interest in future.

If the house was bought today at 270,000 over 30 years at PTSB new rate of 5.19% then repayments would also be €1,478.

Which position would you prefer? The 400k tracker mortgage, or the 270k PTSB one? At the end of the day the buyer still owes 400k and has a debt of 130k should the house be repossessed.

Its far better to be in a house with a 270k mortgage and can sell for or cover the 270k mortgage if repossessed, even if the repayments are the same as the 400k owner with tracker at present.

Even though house drop of 32.5% in this scenario mortgage payments would still be same comparing how much higher interest rates are now to how low interest rates were in the boom!

It would be better to have a 100k mortgage with high interest than a 300k one with low interest even if both monthly payments are the same at the moment in my opinion anyway. Which will be the best one to have for a 1% interest rise?

My house i bought for €163k in 2003, and if it fell to 80k then yes i would not be too bothered, it does not make a lot of difference really at this stage even of the mortgage is a struggle, i needed a house in 2003 not 2011. But for someone who paid 400k and then in a much shorter time it drops to 250k etc, then that is not a good position.

If they are comfortable paying the mortgage then thats fine. But if arrears and threat of repossession looms then the negative equity becomes a factor, and repossession is not the same as selling.

Its sort of the opposite to when people bought for 200k and they go on and on about how their house is now worth 400k, but its not really to them, unless it was an investment house. For people with it as a home it was meaningless in reality except if they were going to move somewhere cheaper.

So negative equity not only affects someone selling, but aso in a
repossession. And also restricts them from changing lenders if better deals came along. If there is no threat of repossession then, which negative equity does not increase the chance of or should not anyway, then negative equity is not really a factor if the owner is not intending to sell. But it definitely is a major restiction on options for a homeowner.

Bruthal · 08-02-2011 02:42PM

sbsquarepants wrote: »

They owe exactly what they signed up for, no more.

It's like if you're buying a car, you see one you like for 10 grand say, you take out a loan and buy it. A week later you see the exact same car for 8 grand, that's just too bad - you STILL owe 10 grand.

Very hard to get the furniture and tv etc into a car though.

fontanalis · 08-02-2011 02:50PM

hotmail.com wrote: »

Negative equity only affects you if you have to leave your house.

No, if you're house goes up in value you are rich!

wil · 08-02-2011 02:53PM

Aldebaran wrote: »

We've turned so many corners that we're now back where we started.

Think you havent accounted for the third dimension.

"We've turned so many corners that we're now underneath where we started"

FF broke that for ya:(

fontanalis · 08-02-2011 02:55PM

If the house doubled in value would he be putting on a green jersey and offering to pay more tax to help the country?

wil · 08-02-2011 02:57PM

fontanalis wrote: »

No, if you're house goes up in value you are rich!

You must be FF's star economic adviser.

Bruthal · 08-02-2011 03:01PM

fontanalis wrote: »

If the house doubled in value would he be putting on a green jersey and offering to pay more tax to help the country?

He should if this...

fontanalis
No, if you're house goes up in value you are rich!

were true, but somehow i dont think it is.

fontanalis · 08-02-2011 03:03PM

wil wrote: »

You must be FF's star economic adviser.

Cheapest ever, so far! If you're going to start cribbing I suggest suicide.

wil · 08-02-2011 03:07PM

fontanalis wrote: »

Cheapest ever, so far! If you're going to start cribbing I suggest suicide.

Bertie??
What you doing here?

Tricked by Brian Lenihan into buying a house :O

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