80% finance investment mortgage

[ClubMan]

I better look into that one! Not intending to default but that really seems unfair!

I presume that the terms & conditions of the loan agreement should clarify matters.

 

[Maine]

The banks want the cash back not the keys. They will take the keys if they have to and then pursue against other assets for full recovery. If they have to take the keys they will ramp up the charges and interest rates and pursue against other assets inlcuding PPRs / shares etc. Add in legal fees dealing with their massive legal teams and it will add up.

There is far too much sentiment among some investors of " I will just hand back the keys" - the banks will always get their money back hence they can take more risk with high net worth investors.

Only totally non recourse will save investors and I would think there is little of that out there.

I would be surprised if being a LTD is much protection - they usually can get behind those

 

[Maine]

"At the time of the last price crash in the UK, 'debt advice agencies' sprung up and frequently advised people to hand over the keys to the bank\building society. Some of those people are now being pursued for the 'negative equity' shortfall- with interest -which arose when the banks sold up (the 'advice agencies' being long since gone of course).

Correct 15 years after the UK crash the UK banks are coming back to people who handed the keys back and are now looking for the balance that was not recovered at the time from the sale of their property.

Typically this is people who have since bought a PPR and now have some equity in it ..........that the bank now want to get their hands on. I think they continue to add charges and interest to the unrecovered balance.

 

[liteweight]

I would never consider just handing back the keys as an option! I really don't undertand why this phrase is bandied about so much.

Surely anyone can see when they might be heading into financial difficulty. I'd much rather be pro-active, sell up and keep my credit rating clear for better times ahead!!

 

[tosullivan]

The banks want the cash back not the keys.

and to add to that, they just want the interest as a MINIMUM. When I took out my recent mortgage and asked for various options on 80% Interest/20% capital etc. repayments, the bank just said and I quote "Look, all we are interested in is getting the interest. If you make the capital repayments then its in your favour. Why don't you just take out the interest only option and if you have any left over at the end of the month, lodge it, whether it be €1 or €1000."

 

[dubinamerica]

So if I approached say BoS with two buy-to-let properties they would look at rental alone? I'd like to avoid having my salary and PPR brought into the equation. Originally purchased a second buy-to-let well over a yr ago and it is not complete but our circumstances have changed. below 75% ( actually 50% or less) LTV would be fine for us as long as I had the option of going interest only.
Any idea of BoS (or other lender) would look at providing mortgage for a property that has already drawn down some money from EBS but will not be completed for a few weeks?
Also - is it best to go through a broker for this ?
ICS was mentioned as best here - do they have the most competitive rate for buy-to lets?

 

[Cityliving]

I don't think so - if the borrower defaults then the property can be repossessed in full by the lender as far as I know. If the property then sells for twice what's owed then the lender keeps the lot as far as I know.

When a bank repossess the property it is sold and any excess is returned to the customer less any and all expenses incurred by the bank/lending institution.

 

[euroDilbert]

I would never consider just handing back the keys as an option! I really don't undertand why this phrase is bandied about so much.

Surely anyone can see when they might be heading into financial difficulty. I'd much rather be pro-active, sell up and keep my credit rating clear for better times ahead!!

I lived in the UK during one of the boom/bust phases.

The reason people "handed their keys back" were :

(1) Their property wouldn't sell or
(2) The property would only sell at a significant amount less than the original loan (negative equity).

This may happen in the Irish property market at some stage (huge int rate increases, oil crisis etc.).

My own property was on the market for 6 months - no sale. Took it off for 6 months. Then sold it after another 3 - luckily for slightly more than my loan (having owned it for 7 years).