That's the problem with mortgages; it involves people who are for the most part, financially illiterate, and in some case, intellectually deficient, making a decision to spend 10 times or more their annual salary on a single item. Some people need to be protected from themselves, since society ends up paying for their mistakes.
I would say it's poor regulation rather than mis-selling. If it wasn't within the confines of the regulations it would be mis-selling - the issue is that is was, and was widely available.
Some people are in negative equity, but because interest rates have been slashed are actually better off financially in regards disposable income.
The big problem is whether people will be able to move or not in the coming years. This will mean a reduction in stamp duty but the government may move to an annual property tax soon anyway.
I have friends that bought 1-bed apartments at the height of the boom as starter homes. Now they are in a position where they might want to start a family but cannot move and may not want to raise a family in a small apartment. So the long term consequences may be more social than financial for some people.
Shawady, I agree. And even people who are not in negative equity might find it difficult to move. We are not in negative equity and hope to trade up sometime in the next 5 years. However I am looking around at the houses in my estate which have been on the market for a couple of years and wondering if we will be able to sell the house at all.
I don't understand how it's mis-selling. They applied for a 100% loan and that's what they got. In reality all it did was normalise the situation where people previously got their deposits from the credit union.
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Your suggestion is not possible in Ireland. Should a bank take bankruptcy proceedings against someone who defaults, they can have recourse to future income. I think that maybe after 12 years the slate can be cleaned, but it is likely that going through such a procedure would greatly limit a person's ability to ever borrow again.
The sad fact is that the quickest way for someone in Magpie's situation to become financially solvent is to emigrate and default on everything here.
It's interesting that nobody has given a concrete solution to Magpie's situation.
If you have a low salary, one income, kids, house too small, massive negative equity, on interest only, 40 year mortgage are you better off to stay and keep paying, how long before you would ever get to the end of it before you could sell. Never.
Would you not be better off to hand back the keys and let the banks do what they will, what exactly can they do to you if you have one low income and a wife and 2 or 3 kids. People say they can go after your salary for 12 years, so what, they can only go after what is left after you provide for your family and you'd be better off renting a proper decent family home on your income than staying put and ending up paying the bank for the rest of your life and getting nowhere while living in a house too small for your needs and living with the thought that you can never get out of the financial mess. I'd rather have the 12 years of pain and knowing it will end than have the thought that it will never come to an end.
Under the current system in Ireland, you would never get a credit card, personal loan, overdraft or any other sort of credit again even after the 12 years are up. The whole point is that at the moment, there is no end to the consequences of personal bankruptcy so handing back the keys and getting on with your life is not possible.
It's been stated before, and this is a fundamental issue here, but mortgage affordability and negative equity are two separate issues! Negative equity simply means your house is now worth less than the price you paid for it. It does not impact on the amount of your existing mortgage payments in any way shape or form.
They are not seperated if you can no longer afford to pay your mortgage, as being in negative equity means you cannot sell the house and clear your mortgage!
You appear to be confusing association with causality.
+100true, but the solutions being suggested do not apply to individual situations. What has been discussed is a blanket solution for everyone in negative equity, as if negative equity itself was the problem.
If someone has lost their job and can no longer afford their mortgage, i have every sympathy, but their are a number of protections already in place, not least a moratorium on repossessions, directed by the government. Plus banks, provided the mortgage holder is engaging with them, are sure to be sympathetic to situations such as the one you describe.
However, if someone has a house that is now worth less than the outstanding mortgage but can continue to pay their mortgage, there is no reason for them to be bailed out, which is what is being mooted under a nama for homeowners.
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