AIBU to think if you’re STUCK in the RENTAL TRAP…

[Didyousaysomethingdarling]

...and been reliably paying years and years of rent, you should qualify for a mortgage, which equals your monthly repayments?

If so, it looks like the Tory ‘Lifetime Mortgage’ pledge is aimed at getting your vote.

In a bid to get more people on the housing ladder the Tories have pledged to ease affordability rules arguing that more than two million people could afford a mortgage at a rate of 2.35pc but would fail the current tests of 7pc and above (taken from The Telegraph).

I think they’ve stolen the idea from the Jamie Pogson petition. Could this make a difference to you?

I hadn't realised the policy was quite so far into cloud cuckoo land. The idea of it being a full-term fix wasn't mentioned in the OP.

The market value of a product is not just a random number picked out of thin air, it is a reflection of the cost to supply a product on the part of the supplier, balanced by additional factors to take into account the level of demand vs the supply. If there would be a high demand and the market couldn't sustain meeting all that demand, then you have to price higher to manage demand. If demand is low then you have to price low to attract customers, but if the price to attract a customer is less than the cost to supply then you haven't got a business model.

I don't think a 25 year, 95%LTV mortgage product exists at the moment but we can derive a reasonable guess at its price if it were to exist.

The longest term products I can find are 15 years. At 85% LTV the APR is typically c2.95%, whereas at 90% LTV the APR is typically c3.75% so I couldn't see a 95% LTV product having a market interest rate of less than circa 4.55% with a 15 year term. Comparing the increase of premiums between 10 and 15 year term products, a 95% LTV product with a 25% fixed rate term would have a market value in excess of 5% - probably around 5.5%. Possibly higher if the banks could only afford to supply a limited number of such mortgages (likely, given the risk) such that they need to discourage over-demand.

I expect the banks would have a more complex formula to work it out, but it would be somewhere in this ballpark, and that would reflect their real costs and risks. The rate of 2.35% as per the OP is laughable as a 25 year fixed rate price. It could only be managed with massive taxpayer subsidies as the banks certainly couldn't afford to supply a product in unlimited quantities at that kind of price.

What's not fair is social housing where repairs are done free of charge and the rent stays low..With shared ownership you pay rent, will prob never afford to buy the house outright, your rent increases annually and yet you have to do all repairs and maintenance. Grrr!!

I apologise for causing offence but the comment was only made in relation to comparison with shared ownership (see full para above) where you pay rent and are responsible for all repairs and maintenance. Just a basic service on our air source heating system is £130 which we have to pay although DH is unemployed and i'm on minimum wage. Those in the social housing in the exact same houses will have it serviced for free.

Yes. Because - and I know you are having a hard time grasping this - we do not have any equity in the house.

If you can't afford the expenses related to owning your house then sell the shares back to the HA, and you get your repairs for free.

Jesus, the tory pr machine is in full force on mn isn't it

Also i had no intention of implying that those in social housing should not be allowed to rent them...that wasn't what i was saying. Those in need of housing and to prevent homelessness of course should be housed. I was only comparing this to shared ownership where the HA still gets rent out of you, albeit not as much, and you are still liable for all maintenance and are restricted in what you can actually do to the house and also cannot sub let. Just a comparison..no offence intended

Boosey a lot of people think HA is social housing.
They don't realise HA have shareho!dear just as any profit making company.
They believe the rhubarb about affordable housing and shared ownership.
It's a trap!

As an aside.
The rent people pay already has the repair/maintenance built in so the tenant does pay for repairs just not in a lump sum.
For social housing it is worked out across the whole housing stock and divided according to property size.
(I know the point you were making isn't about this)

They believe the rhubarb about affordable housing and shared ownership.
It's a trap

Thank you Queef. This is exactly what i'm trying to say! The HAs make money from others misfortune. Same as private landlords. Everyone who rents is trapped. We were tempted to take out a huge mortgage when they were lending way over the limit for what you earn. You would have a loan for the deposit which you'd have to pay back eventually. I can't recall the exact details now but we backed out when we saw how much the repayments were gonna be! Rented for a few more years then the SO house came up and we jumped at it. The rent has been increased annually by the HA and we can't afford to staircase. We're trapped but at least it is better than private renting and i'm hoping more secure.

No wonder the housing market is in crisis.