Consumer protection and welfare groups "staggered" by ongoing practice given the state of the market/economy.
Do you think people need to be protected from themselves? I have to admit being surprised that the product was still there and anyone would want to take it on, but I am not familiar with that part of the market. Generally I dont like nanny state rules but this makes me wonder. Some countries require some minimum skin in the game, perhaps we should be one.
Exactly right yarpos,
this shouldnt be permitted to start with as it makes the life of FHO hell esp when they dont know how much it takes to be home ownership with future int rate rise, home repaires, unexpected expenses etc etc. it definitely needs attention.It probably would be ok if the lender factored in a 12% interest rate rather than a 6.5 % interest rate when working out if the FHO can afford to pay the loan back.
Mmmm. I've fine with '100% finance' in the sense that people finance 100% of the purchase by using a 10% deposit via existing equity, but a straight 100% finance deal is a frightening concept at present – if you really can get one. It does call for evidnece of a strong savings plan and stable income though (as you would expect) and is likely to be owner occ only. Have not read the article, so can only generalise but trying to buy a $300k home with 100% finance in nsw still requires about $20k + in funds for LMI and S/D anyway. I think unless someone has a 5% deposit min in these cases they should….
1) Keep renting
2) save /work more
3) Look at buying (and thus moving) somewere cheaper.
4) Perhaps not want a house like 'mum and dad have' for their first home.
5) if you don't liek any of points 1-4 an must proceed, DO NOT even THINK of doing it without income protectio insurance of some sort.
Cheers
Some people need protecting from themselves. I had a friend who was bored with her rental property and having to cover the shortfall each month so she just stopped paying the loan. She just thought the bank would take it and sell it for her!!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Some people need protecting from themselves. I had a friend who was bored with her rental property and having to cover the shortfall each month so she just stopped paying the loan. She just thought the bank would take it and sell it for her!!
creative thinker….how did that work out for her?I honestly think the most important aspect here is consumer education i.e the consumer needs to be educated to budget for 3 or 4% extra percent on top of their minimum payment. The consumer needs to be educated that the reason the banks are so happy to capitalise your mortgage insurance and your establishment fees etc (so that a 95% LVR becomes 97.5%) is because they know you'll end up paying more than the actual number they put in front of you. The consumer needs to be educated that yes, you do still need to fork out legals and SD and that this will generally set you back ~12%.
Once the consumer is educated properly, they'll then have the knowledge to make the informed decision for themselves.
Then again, most of us here are eductated through no one else's actions but our own, so should anyone really be responsible for education the consumer? We do live in a free economy…
Im sorry, but I am am firm believer in teaching one to look after ones own a%$e. The type of finance product doesnt matter, at the end of the day it is the banks job to make money, it is the consumers to look out for their finances. There is always fine print in life and the sooner we teach kids to start reading it the better. Then when as adults these options come up then they will have at least practised reading documents before signing.
Sorry for the rant…….I just get sick of compensating for incompetants. I am not refering to those who genuinally need assistance, just those who are too lazy to get off their own butts and then when it hits the fan, it becomes everyone else fault and someone elses problem.
my 2cw
micknewbi2 wrote:Im sorry, but I am am firm believer in teaching one to look after ones own a%$e. The type of finance product doesnt matter, at the end of the day it is the banks job to make money, it is the consumers to look out for their finances. There is always fine print in life and the sooner we teach kids to start reading it the better. Then when as adults these options come up then they will have at least practised reading documents before signing.Sorry for the rant…….I just get sick of compensating for incompetants. I am not refering to those who genuinally need assistance, just those who are too lazy to get off their own butts and then when it hits the fan, it becomes everyone else fault and someone elses problem.
my 2cw
mickWell said.
thats not a rant newbi2 just fair comment I reckon , and generally that would be my first reaction also……..but……when all these people do stupid stuff en masse it drags the overall system and yet again we all pay. I dont have an answer, it seems that we are screwed either way if we leave it to boom and bust.
yarpos wrote:Terryw wrote:Some people need protecting from themselves. I had a friend who was bored with her rental property and having to cover the shortfall each month so she just stopped paying the loan. She just thought the bank would take it and sell it for her!! creative thinker….how did that work out for her?I talked her out of doing it that way by saying they would sell the property too cheap and come after her for any shortfall, plus it would ruin her credit rating. She listed it with an agent and it was sold quickly. Happy!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Unfortunately some people are easily persuaded to take certain actions, and the bank employees may have incentives to get people to take out loans. Not everyone is particularly financially literate, or good with numbers, or particularly bright, and they can get into trouble very easily. Most people can be educated but some need protection.
Terryw wrote:yarpos wrote:Terryw wrote:Some people need protecting from themselves. I had a friend who was bored with her rental property and having to cover the shortfall each month so she just stopped paying the loan. She just thought the bank would take it and sell it for her!! creative thinker….how did that work out for her?I talked her out of doing it that way by saying they would sell the property too cheap and come after her for any shortfall, plus it would ruin her credit rating. She listed it with an agent and it was sold quickly. Happy!
The idea that the finance company would sell the house too cheap is not always the case. Where it's at all possible, the compnay I work for won't sell the property for less than market value. In many cases there's actually a surplus left over and this goes straight to the customer. Obviously there are many factors involved here though…
The lender has greater control if they list it themselves but a lot of the time they feel pressured to sell quickly, so actually accept less than we would have got had we listed it for them after either a voluntary surrender or after repo'ing it.
I'm not suggesting for a second that it's a rose coloured world if the finance company sells your house, just not necessarily the end of it…
Of course, we all know that the first thing your friend should have done was contact her finance provider.
imugli wrote:Where it's at all possible, the compnay I work for won't sell the property for less than market value. In many cases there's actually a surplus left over and this goes straight to the customer. Obviously there are many factors involved here though…imugli,
So how is this working out for the company at the moment? Are things selling at 'market value'? Are you allowed to discuss it, in a non-specific way of course.
ummester,
Established suburbs where the average LVR is a bit more reasonable seem to be holding up well enough to cover at least the amounts owing. So the lender may in fact have lost equity, but at least they're not coming out still owing money. Some suburbs have basically been written off the financing map, but I'm talking mortgage belt, lower income, high average LVR suburbs here.
That's probably nothing new to anyone here though…
You wanna try selling a 3 year old Ford Falcon or Holden Commodore though…
thx imugli (I'm sure you look alot better than you think
)
creative thinker….how did that work out for her?
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