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A mortgage question!

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_Darth_
Sex God
A question on equity release next!
If I bought my house for £100K years ago and my mortgage is £50K ... if the value is now £200K that means I've 'made' £100K. Now if I release equity of £50K on the value of my house ... what is my outstanding mortgage? Is it still £50K, or is it now £100K?
I think it'll be £100K otherwise I could just use that £50K and pay off the mortgage ... and everyone would be doing it. An estate agent I was talking to today, seemed to imply that I could take the £50K without affecting the mortgage.
I think her logic was that I bought the house for £100K but it's now worth £200K, since it's my house, it's my money and not the banks ... therefor I wouldn't have to pay them anything for taking 'my money'. I think the only way you can get hold of that money is by selling up.
Libra__Love
Sex God
:P You don't say if you're paying an interest only morgage or not, but essentiall how it works is...If you still owe £50 K and you release R50 K of the equity you now owe £100K. Simple really dunno
At the mo, fixed interest rate re-morgage seems like a good option.
_Darth_
Sex God
I'm on a repayment mortgage at the moment ... in process of selling my place, have looked into these offset mortgages like the Virgin One Acct ... they look really good actually and because your saving and salary offset the mortgage interest, you can pay off the mortgage years earlier than you would with a normal mortgage.
When I move, I'll definitely be getting an offset mortgage.
Quote by Libra-Love
:P If you still owe £50 K and you release R50 K of the equity you now owe £100K. Simple really dunno

that's what I thought, otherwise you could buy a house, wait for it to increase by the amount of your mortgage, release that equity and use it to pay off the mortgage ... in effect, you get a house for almost nothing!
Unknown User
Quote by lil_miz_naughty_0204
They have some nice houses up my end wink

:shock: Certainly looks that way from here lil_miz :wink:
staffy1981
Casanova
Quote by lil_miz_naughty_0204
They have some nice houses up my end wink

You forgot to say about the nice prices they got as well!! If my area is anything to go by!
Unknown User
Ive got a repayment mortgage and definately yes you would owe £100k but you are moving anyway???? May have a look sometime at offset though but I am always cautious as at least with repayment I see year on year it going down.
_Darth_
Sex God
Quote by lil_miz_naughty_0204
They have some nice houses up my end wink

Unfortunately a bit of a long commute to work for me sad ... otherwise biggrin
Quote by corriefem
Ive got a repayment mortgage and definately yes you would owe £100k but you are moving anyway???? May have a look sometime at offset though but I am always cautious as at least with repayment I see year on year it going down.

I agree, I've always had a repayment mortgage for that reason. Offset mortgages can be done on same basis . The difference is that your savings and salary offset the mortage on that amount so you pay less interest.
So, if your mortgage is £50K, you have £10K in the bank and your salary is £2K ... £10K + £2K = £12K ... you only get charged interest on £50K - £12K = £38K so that's interest on £12K you're not being charged for.
... Have I bored everyone yet? ...
_Darth_
Sex God
Quote by lil_miz_naughty_0204
You dont need to worry bout work...
I'll keep you busy :twisted:

Right! I'm moving your way ... lol
staffy1981
Casanova
If it's like that so am I moving down your way!!!
:twisted:
_Darth_
Sex God
Quote by lil_miz_naughty_0204
lol, so i should expect alot of new neighbours shortly then?

I'l say that looks increasingly likely ... last one there's a cissy ... bolt
lil_miz_naughty_0204
Sex God
rotflmao :rotflmao:
I've got a spare bedroom that could be doing with filling if anyone's interested?
lol :twisted:
Bari
Sexlightened
Quote by J3diMast3r
A question on equity release next!
Now if I release equity of £50K on the value of my house ... .

"Releasing equity" is just a mortgage company expression for "borrow more money from us and pay us even more lovely lovely interest, and as it is secured against your house we'll take it off you if you don't pay us".
Its not releasing equity at all, its just borrowing, plain and simple.
Makes me laugh when I hear people say "my house has gone up by £25,000 so we've released some of that extra equity and bought a new car".
No mate, you've just borrowed some money and bought a car, only cos its added onto your mortgage chances are you'll still be paying for that car long after its gone.
The only way you can truely release the increased equity that your house has accrued is sell it. Only then you've got the money, but no where to live. Of course you could buy another house, but they've all gone up as well of course, so you're no better off.
For the vast majority of us the housing boom has done nothing but make us feel richer, and sadly a lot of people have used that as an excuse to borrow loads more on loans, remortgages and credit cards, hence personal debt in this country is at an all time high.
Even moving house has become much dearer if you want to move up as a result of the house value boom, think about it, if you bought a house for £50K and a few years late you want a house worth double then without the increase you'd have to find (borrow) another £50K. Only now your house has tripled in value to £150K you feel richer, but that same move to a house worth double is no longer a £50K jump, its a £150K jump cos it tripled in value too! So you feel better off, but you've actually had to borrow £100K more than you would have if the values had remained the same and you'd not "made" anything on the one you were in.
People I feel desperate for are those trying to buy for the very first time. Where I live 2 bed terraced starter homes which were an affordable £50K only 10 years ago are now £150K! Hows a new family supposed to afford that?
Wish I'd bought a couple at the time they were £50K and let them mind...
What this country really needs is another house value crash like in the early ninties, bring everything down to sensible levels again...
_Darth_
Sex God
Quote by Bari
"Releasing equity" is just a mortgage company expression for "borrow more money from us and pay us even more lovely lovely interest, and as it is secured against your house we'll take it off you if you don't pay us".
Its not releasing equity at all, its just borrowing, plain and simple.

Think that's a good way of looking at it ... same with credit cards and store cards ... they're debt cards.
I don't think there'll be a crash, but with so many reports that prices could drop up to 20% or even 40%, you have to wonder. I don't think they'll go as far as that, but 10 - 15% ... possibly.
SilkandBigG
Sex God
The only real way of " Releasing Equity " is to sell up the house and buy a tent.
Unknown User
I like the theory put forward by one of the BBC Business writers.
In a nutshell it was something like this: He said he'd be more than happy for the price of his £150,000 house to fall to 25p. He rationalised it by explaining that he would still be paying the same amount each month on the mortgage, but with all the other houses being so cheap, he could buy something akin to Buck House by adding about £10 to his current debt.
Sounds simple doesn't it. :shock:
Bari
Sexlightened
He's quite right too. This was the point I was making earlier, the lower the average value, the smaller the jump up to a more expensive house.
To use the analogy I used before, if you bought a house for £50K (with a £50K mortgage) and want to move to a house twice as expensive, then if the value of your house drops to 25p then the house that is twice as expensive will be worth 50p.
Ok, so you've got a £50K mortgage on a 50p house, but the reality is that it has cost you 25p to move, versus £150K to make the same move if house prices had tripled instead.
Unknown User
Quote by Bari

People I feel desperate for are those trying to buy for the very first time. Where I live 2 bed terraced starter homes which were an affordable £50K only 10 years ago are now £150K! Hows a new family supposed to afford that?
What this country really needs is another house value crash like in the early ninties, bring everything down to sensible levels again...

hmmm that would be me then... earning a sensible wage... but not being able to get a big enough mortgage. The reality is this... in order to afford a bedsit I would need to be earning £25000 in order to get a big enough mortgage, and that assumes I can put some deposit forward.... to buy a place with a separate bedroom I would need to be on £40000+ ... and I don't know about you but most people who earn that sorta dogh don't live in a one bed flat... and don't drive a 12 yr old car!! (they drive beamers and live somewhere in the country).
These days in order to buy anything you need two incomes.
I thought a crash was enevitable because the rises are unsustainable... but an accountant friend spent an hour exploding my mind explaining that because everyone needs a house the price won't go down much...
... I didn;t understand what he was getting at... only thing I do understand is that someone has to get re-posessed before I can afford their house at auction... and its a shame to pray on other people's missfortune. (or stupidity if they borrowed against their house beyond their means)