oh dear: Five-times-salary mortgage offer

[AtW]

Hmm, this could go on for quite a while.

I don't think it would go on for a long time - it amazes me that people (on average) in this country would have just few grand in their bank account, but they would walk into 20-30 years of debt of such a huge number that they can't hope to pay it back in 5-7 years.

Seems very much like Russian attitude

[Ardesco]

Yes and who has got such deposit handy? These money will come in form of another loan - from parents, friends etc.

To use the example of a £250,000 house you are looking at a deposit of £62,500. Do you really think that the banks are going to be handing out £60,000 odd unsecured loans to anybody who wants to buy a house??? If these are kids who have parents who can give them £60,000 loan so they have a deposit the parents are probably in a situation where they could just buy the bloody house outright.

Stop and think about it for a moment AtW, this particular one is nowhere near as bad as you are making out.

[AtW]

Stop and think about it for a moment AtW, this particular one is nowhere near as bad as you are making out.

How many people (couples even) in the UK have got 60 grand of cash to put in as deposit? Note here - not just any people, but also those people for whom that amount is 25% of morgage, which in turn is 5 times their (combined) salary, so at £50k combined salary, how long would it take to save 60 grand cash?

I am positive that most people who would put up with such huge deposit will actually loan most part of it from somewhere else: parents, personal loan, another bank etc.

[Ardesco]

The point that you are missing is that banks will not lend a couple more than thier joint wage as an unsecured loan (It has to be unsecured because the buyer doesn't have a property if they are trying to get into the housing market)

Secondly if thier family can throw around such large sums of money they will be able to run back to mummy and daddy when the going gets tough for a few more handouts. Also if mummy and daddy have this sort of money to throw around they are likely to be financially savvy and will not offer up thier money unless they are confident they will be seeing it again.

Insisting on a 25% deposit means that the people getting the mortgage must have equity elsewhere that they can release and/or a large pot of savings both of which imply they are financially savvy to start with and are not going to be stupid when getting a mortgage.

[AtW]

You are not answering the question: how many average people who are first time buyers on combined £50k salary that wish live in a house worth £250k (just above average price) and have £60k cash as a deposit?

I state categorically that average first time buyers (for whose benefit this scheme is aimed) won't have that much spare cash, and as the result they will just have to borrow it elsewhere, thus actual risk is much higher than this high level of deposit may suggest, of course the risk to Abbey is not that high because they got their cash, but risk to whole market is huge.

[Goya]

I went to see an advisor recently to check out the current deals. Went in & said we we're looking at properties around the £500K mark. After a few taps on the magic calculator the advisor said we could get a mortgage on a £900K property no worries

My wife's eye's opened wide & she's been scanning the property pages for £1m houses ever since.

Seems a ridiculous amount of money to be in debt by, so I'm working on lowering our expectations back to the original plan.

[Mailman]

Yeah but with the requirement of a 25% deposit you are hardly going to be getting chav scum on benefits applying are you!

Mailman

[shaunbhoy]

You are not answering the question: how many average people who are first time buyers on combined £50k salary that wish live in a house worth £250k (just above average price) and have £60k cash as a deposit?

First time buyers do not purchase houses that expensive. They buy what they can afford then upsize over time. Another obvious point that you have spectacularly missed. Best you just keep renting as you clearly have grasped nothing of the UK property market.
Then again why would we expect you to? As you have been overtaken in the Food Chain by items that "flourish in well-drained soil in full sunlight", my hopes for your future well-being were never high!!

[Bagpuss]

Yeah but with the requirement of a 25% deposit you are hardly going to be getting chav scum on benefits applying are you!

Mailman

A couple of credit cards will get you to 25k

[Xenophon]

A couple of credit cards will get you to 25k

Scary, but true.