Thursday, September 04, 2008

Leanne Donaldson, 28, an administrator, and her partner Paul Langford, 25, an IT worker, are in danger of losing their home in Cheshire.

They are struggling to keep up with the cost of living and fear negative equity if they sell their two-bedroom house.

The first-time buyers, who earn a combined total of £30,000, purchased their home in September 2007 for £116,500, opting for a five-year mortgage deal with Northern Rock, at a fixed rate of 5%. They borrowed £122,500. Repayments cost them £800 per month.

"We can't afford to live," says Leanne. "Food prices have gone up and so has the cost of gas. We don't have any spare money. We have to shop around for bargains, we can't afford new clothes and we can't afford to go on holiday.

"We're worried about the house being repossessed. We've already missed a couple of payments - one last Christmas for presents and one because the car broke down and we had to use the mortgage money to fix it. If we miss any more they'll start to threaten us.

Good to see they have their priorities right. They've borrowed well over 100% of the purchase price of a house at 4 times their COMBINED earnings in SEPTEMBER 2007. Jeezus. It might be a struggle to pay the debts and they might fear repossession, but can't miss Xmas presents!!!


NMMM.NU said...

Excelent post.
However, I am once again amazed, how IT people do not know such simple things like housing bubble...

NMMM.NU said...

>>> 4 times their COMBINED earnings

sory to spam, but what do you mean?

30K / 12mo = 2.50K.

So they have 2500 GBP each mo.

800 GBP go to house, rest 1700 GBP is to spend.

Mortgage is fixed, so they are not in trouble, unless they lost their jobs.

Isn't it? Where is the catch?

Do you mean 122K / 4 = 30K, if so probably there are some mistake, because loan is 5 year.

Just made some *lame* calculation and I calculated that the payments must be NOT 800 GBP, but 2500 GBP instead, which means real payment must be ~1500 GBP.

NMMM.NU said...

hu hu, one more comment:

Monthly payment: 5 Years
Interest rate: 5.000%
Loan amount: $ 122,000.00
$ 2,302.29 a month

Anonymous said...

What the fuck are you on about?

AntiCitizenOne said...


Maybe you could expand on your rude comment or I'll think about deleting it.

CityUnslicker said...

who could have known in sept 2007 with Northern Rock collapsing that we would have a housing crisis...

I'd laugh if I was not finding things hard myself, hubris etc.

Anonymous said...

What I mean is, if their income is 30k a year, their 'take home' pay would probably be around 1700 quid a month, give or take. I don't get where the figures come from from the previous commenter. And I wasn't being rude! If thats your income, to get yourself a mortgage thats costs 800 a month is just insanity.

NMMM.NU said...

>>> who could have known in sept 2007 with Northern Rock collapsing that we would have a housing crisis...

I? :-)

Anonymous said...

Nice find, AC1, baffling, isn't it?, the £120k loan = 4 x £30k so they've borrowed four times their annual income (unclear whether it's gross or net, presumably net).

You seem to be assuming they are paying the mortgage off in 5 years. Hardly! The interest rate is just fixed at a low rate for that period, it'll then go variable thereafter.

Summary: they bit off far more than they can chew and need to grow up and get their priorities in order.