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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think the banks should shoulder some of the responsibility?

67 replies

dingdongthewitchisdead1 · 28/01/2017 17:31

I've NC'd for this.
We are in negative equity on an interest only mortgage. Bought the house just on the cusp of the property crash, paid top dollar for it.
Now we are in a position where we can't move and will have to pay back a mortgage which is almost double the value of the house.
When we bought it, we put down a 20% deposit.
I don't want to shy away from my responsibilities and I want to pay the mortgage, but I've had a niggling feeling for a while that the bank should also take some of the responsibility. They made a bad investment too! I'm not sure what a fair outcome is in this scenario, but I wanted your thoughts! Thanks!

OP posts:
5amisnotmorning · 28/01/2017 18:14

This pisses me off. I wish people would take responsibility for their own financial situation. Presumably you were aware of the risks and were happy at the time of being offered the mortgage. Maybe there should be a test before you can take a financial product out to ensure there is a shred of financial literacy.

Newbrummie · 28/01/2017 18:14

Where has dropped by 50% ?

Our old house we sold in 2005 has pretty much doubled in value since - not London - or commutable even

Original poster
dingdongthewitchisdead1 · 28/01/2017 18:15

5am... read my posts ffs

OP posts:
Essexgirlupnorth · 28/01/2017 18:15

That's a big drop on value.
We bought our last house in 2008 again before the crash and we were in negative equity but with a repayment mortgage.
Last year the value had gone up to what we paid so we sold and moved. We didn't make any profit but we were just relieved we didn't loose any money.
It wasn't the banks fault we bought when we did. And we borrowed what we could afford though the bank would have lend us more.
The banks are far more strict about affordability now but is wasn't the banks fault people borrowed more than they could afford.

RandomMess · 28/01/2017 18:22

Hmm but I thought in NI the house prices did over inflate very quickly in part because of the banks being over confident, offering interest only mortgage (rare as hens teeth elsewhere) and so on. The banks collectively are partly responsible for some of the economic down turn. The UK economy is very linked in with house prices...

ShotsFired · 28/01/2017 18:23

dingdongthewitchisdead1 Buttered can't move house.. mortgage is £200k, house is worth around £100k. Paid just shy of £250k before the crash.

The "crash" - are you referring to the events of 2008? If so, where on earth are you that prices have not picked themselves up at least a bit since then? I know my house went down, but has since picked up and risen back above the pre-crash prices.

I am sorry to say you are being U, however shitty and unfair it seems/feels (and being stuck on the SVR is the anti-cherry on top, they could at least help with that side of it). As a pp notes though, you will still have the house paid for at the end of the mortgage term - it is not worth more or less than you paid for it, UNLESS you need to realise the value by selling.

londonrach · 28/01/2017 18:23

Where in the uk are you? Yabu by the way...at least you paying rent. Property prices go up and down but halved in the uk is unheard of.

5amisnotmorning · 28/01/2017 18:27

I have read the thread. It is the attitude of wanting to blame someone else for your own decision. You don't want to share the upside but want someone to partake in the downside. Why would any investor do that?

Allthebestnamesareused · 28/01/2017 18:28

You borrowed 80%LTV therefore the bank wasn't being unreasonable eg which you might argue if they gave you a 100% mortgage.

The risk on any investment is entirely yours. The risk will pass to them when and if you stop psying for any reason. That's how mortgages work!

GenerationEx · 28/01/2017 18:29

An 80% LtV interest only loan is not reckless lending in general. Northern Ireland suffered the worst of the downturn and it looks like you probably paid a premium on market value in the first place which is unfortunate. Was it a new build? I can't imagine you would get such a drastic price drop on anything else.

I think you have been unlucky but at no stage has the bank been reckless in its lending. You could only really hope that the same bank gives you some credit for making all you payments on time and allows you to fix at an ok rate on a repayment mortgage. More likely they will find it very difficult to offer you any mortgage at >100% ltv as they are bound by strict regulations now.

Original poster
dingdongthewitchisdead1 · 28/01/2017 18:29

No we are happy there.. see it as a forever home, and who knows what will happen to prices over the next 30 years.
I think maybe I'm annoyed at my lack of options! God forbid if anything awful happened we would be kinda stuck!

OP posts:
HelenaGWells · 28/01/2017 18:29

The niggle is feeling like you need to blame someone because you feel shit about being in negative equity. Unfortunately there is no one to blame as it's one of those things you risk when you buy a house. You can't expect the bank to do anything as they had no say in the house you bought or the price you paid they simply facilitated it.

I understand the frustration as I've had a house in negative equity but there's really nothing you can do. It took us several years to sort ours out and get rid. It's was frustrating but it was entirely our choice to buy the house at the price we did.

If you swap to repayment the prices will likely go up and your mortgage will go down and you will meet in the middle. If you are happy in your home it's not really an issue. Just swap to repayment and the gap will close.

Reality16 · 28/01/2017 18:31

Can you explain why you think the bank is responsible?

KateDaniels2 · 28/01/2017 18:33

. I just have a gut feeling that we shouldn't take sole responsibility for this situation.

Why? You keep saying you shouldnt have to shoulder the burden yourself, but cant say why. You wanted the house, applied for the mortgage and they gave it to you. The choices were all yours.

InvisibleKittenAttack · 28/01/2017 18:34

Thing is op, we bought in 2009, for 3/4 years before that there were lots of articles in the press saying that house prices were unsustainable, that in some areas they were clearly inflated, and I do remember there was lots of hand wringing about NI because the wages and housing stock levels didn't seem to make the rises seem realistic.

You took a risk and it didn't pay off. You've continued to take a big risk by not repaying your mortgage - most people after owning for that long would have paid off a lot of the debt by now.

If you think it's fairer that the bank takes a share of the risk, then they should get a share of the benefits of taking that risk, i.e. House price rises and profits. At 30 you are old enough to have lived through other house price falls, you knew it had happened before that house prices fell, you chose to ignore that and take the risk.

Pay back as quickly as you can. Overpay whenever you can, get the debt down.

Original poster
dingdongthewitchisdead1 · 28/01/2017 18:35

Helena you are spot on. It sucks! But you know what.. it is what it is, there is nothing we can do about it. We will keep paying and hopefully things will level out as they have done in the uk. We are still young so have ample opportunity to make the repayments!

OP posts:
Newbrummie · 28/01/2017 18:39

You just need to pay it off as fast as possible, that's how you get your own back at the banks by reducing the amount of interest you pay. They hate that

inniu · 28/01/2017 18:40

Unfortunately I would not hold my breath waiting for a substantial rise in house prices in NI. The economy is very depend on U.K. Government and EU financial support.

Eminybob · 28/01/2017 18:48

To be honest I'm annoyed for you that a mortgage lender allowed you to take an interest only mortgage with no repayment vehicle.
I'm a mortgage adviser for a major lender and even 10 years ago you would have needed an endowment or isa or something before an interest only mortgage would be approved.
That said, I've seen plenty of customers who were placed with us through a broker who don't have anything in place.
You are right op, it isn't right if you weren't made aware of the risks of an interest only mortgage, however the "banks" can't take responsibility for your house value falling.

RandomMess · 28/01/2017 18:50

Exactly inniu, yet the banks kept on offering mortgage long after the warnings signs were yelling that the house prices were over inflated!

Eminybob · 28/01/2017 18:53

get your own back at the banks by reducing the amount of interest you pay. They hate that

Not true. Maybe years ago it was but the policy where I work is to recommmend a shorter mortgage term where the customer can afford it to reduce interest payable.

Newbrummie · 28/01/2017 18:57

Eminybob - well that's good news

ButteredToastAndStrawberryJam · 28/01/2017 19:05

Ireland is a different kettle of fish for sure. I have family in southern Ireland in a similar situation. I must admit I don't know much about Northern Ireland though, re mortgages etc, are the mortgages through Bank of Ireland.
The amount of houses that are left derelict and half build is just awful.

trashcansinatra · 28/01/2017 19:09

I'd say, don't worry about it. The house 'value' is only a fantasy number unless you actually want to sell (or re-mortgage). If you don't, it's irrelevant so don't stress about it. (And as pp have said, not the bank's responsibility)

harderandharder2breathe · 28/01/2017 19:13

No such thing as Southern Ireland buttered it's The Republic of Ireland

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