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  1. #1
    Join Date
    Sep 2003
    High up above and deep down under

    Default Investors bend deposit rule

    Hi Guys

    Investors bend deposit rule
    1st Aug 2005, a Monday

    Property investors have been circumventing the rules on buy-to-let lending by counting discounts on new flats as deposits, according to an article published in the Financial Times.

    Under the strict criteria of most lenders, investors can only take out buy-to-let mortgages if they have a large deposit, typically 15% or more. It is understood that many members of property investment clubs have secured large loans with tiny deposits, exacerbating the risk that they will wind up with mortgages exceeding the value of their homes.

    The FT said that one large property investment club, which did not wish to be named, said it was common for members to obtain a buy-to-let loan with a deposit of about 5%. This was possible because loans were measured against the original asking price, which was sometimes reduced by up to 15%.

    The Council of Mortgage Lenders is concerned that difficulties in the new-build apartment sector could unfairly tarnish the reputation of the buy-to-let industry

    News Source:
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #2


    I was reading an article the other day about a guy who topped himself with £150,000 worth of credit card debt. His wife had no idea. The UK is the most debt ridden country in the world. We (? - or they?) have more credit cards per head than any other country. They (the banks) target people that don't know any better. The guy above was still getting pre-approved credit card offers 3 months after his death!! There is a story there of a dog getting a £10k card offer in the post.

    It's maddness.

  3. #3
    Join Date
    Sep 2003


    This has gone on for years and is quite normal practice - almost institutionalised. Lenders started coming down quite heavlily on it about two years ago after some damning tv documentaries showing brokers and lenders telling borrowers how to fill in the forms to get the most money, that sort of thing.

    Now lenders say you must declare any "gift" or incentive over 5%. There are still ways around the lenders' criteria which are commonly followed.

  4. #4
    Join Date
    Aug 2003

    Default I'm guilty

    Umm that sounds very familiar as a wee 24 year old I used my credit card for the deposit on my first house (top floor terraced flat in Ealing).

    Good thing I did too! The only problem was I then continued to use the credit card for overseas travel, clothes, shoes, entertaining - you name it and got into a wee bit of trouble....that was soon sorted out when a friend (Accountant) cut up my card in front of me and that was that!

    A lesson learned.....that I could live without it!


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  5. #5
    Join Date
    Jun 2004


    Hi Donna,

    Credit cards can be the best gift from banks, if we are disciplined in using them. I put almost everything on my credit card. Thanks to the large number reward points accumulated, we get supermarket vouchers and free tickets to movies, as well as Sotherncross travel insurance worth a couple of hundred dollars when we travel. The golden rule in using credit cards is: PAY IT OFF EVERy MONTH!


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