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What you are arguing for is zero deposit mortgages. They are a terrible idea, because they encourage irresponsible risk taking in two ways: - People who are n

by mafribe 10y ago

What you are arguing for is zero deposit mortgages. They are a terrible idea, because they encourage irresponsible risk taking in two ways: - People who are not stable enough to be able to carry a mortgage until it's paid off suddenly can buy dwellings. - It fuels speculation: just get a dwelling in a desirable area, wait for a year and flip it. Indeed this was what caused the financial crisis of 2007–2008. Do you want to go back to this? Asking for ~ 1/3 of the dwelling's price as deposit is a good (and time-tested) heuristic for filtering out those who have a substantially high probability of being financially irresponsible. prevented from obtaining more capital Typically owners of buy-to-let do not acquire more capital while paying off the property. They only do so after the 2nd mortgage is paid off, which is typially when they retire.

sobani 10y ago
In the Netherlands zero deposit mortgages for your primary home are the default. While there have been shenanigans in the past, up to so called 'career mortgages', where the mortgage amount was based on your career potential, nowadays the lending norms are pretty strict. I guess it helps there is a 2% tax on the total sum when buying a house, so flipping becomes even less attractive. At least I've never heard anyone about flipping, that is a foreign concept to us. According to a graph[0] I found housing prices dropped 15-25% between 2008 and 2013. But I feel this was caused by the financial crisis, not the other way around. Yes, a lot of mortgages went under water, but there is simple fix for that: don't move. Requiring 1/3 down payment seems like it wouldn't allow anyone to buy a home. That would basically require you to 'pay' the mortgage twice, once as rent and once as savings, for about 10 years. Using the average income of €35K, which leads to a max mortgage of €154K, you suggest not living in a home worth over €77K?? I'm not even sure those exist. [0] https://www.berekenhet.nl/nieuws/prijsontwikkeling-huizenprijzen.html https://www.berekenhet.nl/nieuws/prijsontwikkeling-huizenpri... (the lines are different types of homes)

by mafribe 10y ago

sobani 10y ago

In the Netherlands zero deposit mortgages for your primary home are the default. While there have been shenanigans in the past, up to so called 'career mortgages', where the mortgage amount was based on your career potential, nowadays the lending norms are pretty strict. I guess it helps there is a 2% tax on the total sum when buying a house, so flipping becomes even less attractive. At least I've never heard anyone about flipping, that is a foreign concept to us. According to a graph[0] I found housing prices dropped 15-25% between 2008 and 2013. But I feel this was caused by the financial crisis, not the other way around. Yes, a lot of mortgages went under water, but there is simple fix for that: don't move. Requiring 1/3 down payment seems like it wouldn't allow anyone to buy a home. That would basically require you to 'pay' the mortgage twice, once as rent and once as savings, for about 10 years. Using the average income of €35K, which leads to a max mortgage of €154K, you suggest not living in a home worth over €77K?? I'm not even sure those exist. [0] https://www.berekenhet.nl/nieuws/prijsontwikkeling-huizenprijzen.html https://www.berekenhet.nl/nieuws/prijsontwikkeling-huizenpri... (the lines are different types of homes)