How will Brexit affect house mortgages?
"Only you can decide whether it's wise or not given your own personal circumstances. Brexit is certainly a big risk, and noone can really know what will happen yet. The specific worries you mention are certainly valid. Additionally you might find it hard to keep your job or get a new one if the economy turns bad, and in an extreme ""no deal"" scenario you might find yourself forced to leave - though I think that's very unlikely. House prices could also collapse leaving you in ""negative equity"". If you're planning on staying in the same location in the UK for a long time, a house tends to be a worthwhile investment, particularly as you always need somewhere to live, so owning it is a ""hedge"" against prices rising. Even if prices do fall, you do still have somewhere to live. If you're planning on going back to your home country at some point, that reduces the value of owning a house. If you want to reduce your risk, consider getting a mortgage with a long-term fixed rate. There are some available for 10 years, which I'd hope would be enough to get us over most of the Brexit volatility." Nobody can predict the affects of Brexit but it is wise to consider them. We saw the pound weaken after the vote to leave and it is possible the pound will weaken further after Brexit and this devaluation could be quite dramatic. If that happens it is likely to increase inflation, UK inflation has gone from under 1% around the time of the referendum to 3% today and it could well go higher. https://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate If inflation continues to increase, the Bank of England is likely to put up interest rates, as it has historically done this to hedge against inflation.  We have been living in a world of artificially low interest rates since the global crash of 2008 as the BoE has tried to stimulate recovery with lower rates.  The rates cannot continue at this level if inflation starts to rise. http://www.thisismoney.co.uk/money/news/article-2387744/Base-rate-vs-inflation-chart-How-tell-things-really-got-better.html That in turn will put up mortgage rates.  So for example if you have a £100k mortgage at 3.92% (currently this is a reasonable rate to have) your repayments will be £523 a month.  If your mortgage rate goes up to say 7% then your repayments are £707 a month, if it goes up to 10% then it's £909 a month and so on. There is a mortgage calculator you can use to try playing with different amounts here: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator My advice would therefore be try to get as small a mortgage as you can and make sure you can afford it quite comfortably, in case rates go up and you need to find a few hundred pounds a month extra. There are other risks from Brexit as well, house prices could fall as people decide not to buy properties due to excessive interest rates! Overall nobody knows what will happen but it is good to be planning ahead for all eventualities. ** I am not a financial advisor, this advice is given in good faith but with no financial qualification.
Some of the factors that will act on house prices are: There will likely be a recession in that country, which will lower incomes and probably lower housing prices. It will likely be harder to get credit in that country so that too will increase demand and depress demand for housing (cf the USA in 2010.) If Greece leaves the Euro, that will possibly depress future economic growth, through decreased trade and investment, and possibly decreased transfer payments. Eventually the budget will need to come back into balanced which also is likely to push down house prices. In some European countries (most famously Spain) there's been a lot of speculative building which is likely to hang over the market. Both countries have governance and mandate problems, and who knows how long or how much turmoil it will take to sort that out. Some of these factors may already be priced in, and perhaps prices are already near what will turn out to be the low. In the Euro zone you have the nearly unprecedented situation of the countries being very strongly tied into another currency, so the typical exchange-rate movements that played out in Argentina cannot act here.  A lot will depend on whether the countries are bailed out, or leave the Euro (and if so how), etc.  Typically inflation has been a knock-on effect of the exchange rate moves so it's hard to see if that will happen in Greece. Looking back from 2031, buying in southern Europe in 2011 may turn out to be a good investment.  But I don't think you could reasonably call it a safe defensive investment. "This is the best tl;dr I could make, [original](http://www.bbc.co.uk/news/business-40934138) reduced by 61%. (I'm a bot) ***** &gt; The average price of a home in the UK went up by nearly &amp;pound;2,000 to &amp;pound;223,000 in June, according to official figures.  &gt; The Office for National Statistics figures show the wide variation in price movements across the UK. In the month of June, the average price of London home fell &amp;pound;3,000 to &amp;pound;482,000, while a house in the North East of England gained &amp;pound;2,000 to &amp;pound;130,000.  &gt; The biggest change was in Orkney where the average price is 28% higher than a year ago at &amp;pound;148,000.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6txyxk/house_price_growth_holding_steady/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~191667 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **price**^#1 **average**^#2 **while**^#3 **June**^#4 **London**^#5" Personal loans are typically more expensive (have higher interest) than mortgages, because they are not backed by an immovable asset. So you should reconsider the decision to not want a mortgage; it would be cheaper. Aside from that, once you get a personal loan, you are free to do with it whatever you want; this includes sending it to your parents, buying something, gambling it away in Vegas, or take out cash and burn it. So, yes, you can. Sending money from the UK to other EU countries should be easy and simple, once it is in your account, your bank can help you to make the transfer. I assume you understand that if your parents walk away with the money, you are left holding the bag. You are taking the full risk, and you will have to pay it back. "The London Stock Exchange offers a wealth of exchange traded products whose variety matches those offered in the US.  Here is a link to a list of exchange traded products listed on the LSE.  The link will take you to the list of Vanguard offerings.  To view those offered by other managers, click on the letter choices at the top of the page.  For example, to view the  iShares offerings, click on ""I"". In the case of Vanguard, the LSE listed S&P500 ETF is traded under the code VUSA.  Similarly, the Vanguard All World ETF trades under the code VWRL.  You will need to be patient viewing iShares offerings since there are over ten pages of them, and their description is given by the abbreviation ""ISH name"". Almost all of these funds are traded in GBP. Some offer both currency hedged and currency unhedged versions.  Obviously, with the unhedged version you are taking on additional currency risk, so if you wish to avoid currency risk then choose a currency hedged version.  Vanguard does not appear to offer currency hedged products in London while iShares does.  Here is a list of iShares currency hedged products.  As you can see, the S&P500 currency hedged trades under the code IGUS while the unhedged version trades under the code IUSA. The effects of BREXIT on UK markets and currency are a matter of opinion and difficult to quantify currently.  The doom and gloom warnings of some do not appear to have materialised, however the potential for near-term volatility remains so longs as the exit agreement is not formalised.  In the long-term, I personally believe that BREXIT will, on balance, be a positive for the UK, but that is just my opinion." "Not sure why the downvote - seems like a fair question to me. Who owns a house and in what proportions can be totally separate from who is named on the mortgage.  There are two ways to do this - one way would be for you loan them the money  first under a separate contract, which you should have a solicitor draw up; then they buy the house themselves. The contract would state the terms for repayment of the loan, which could be e.g. no repayment due until the sale of the house at which point the original amount is returned plus interest equivalent to the growth in value of the house between purchase and sale (or whatever). You'd need to be clear about what happened if the house lost value or they ended up in a negative equity situation. The other option is where you are directly a party to the purchase of the house and are named as part owners on the deeds. Again the solicitor who is handling the house purchase for them would help with the paperwork. In either case you would need to clear this arrangement with the mortgage company to make sure they were OK with it.  To answer your specific questions in order: - Yes, they would still be eligible for the Help To Buy ISAs (assuming that is what you are referring to) even though you would not be - I'm not sure what ""penalty"" you are referring to. You'd have to pay tax on any income or capital gain you made from the deal. - No-one can say whether this is a good deal for you without knowing a great deal more about your individual circumstances (and even then, any such advice you would get on here is worth as much as you pay for it.... if in doubt, consult an IFA.)" "I think the basic question you're asking is whether you'd be better off putting the $20K into an IRA or similar investment, or if your best bet is to pay down your mortgage.  The answer is...that depends. What you didn't share is what your mortgage balance is so that we can understand how using that money to pay down the mortgage would affect you.  The lower your remaining balance on the mortgage, the more impact paying it down will affect your long-term finances.  For example, if your remaining principal balance is more than $200k, paying down $20k in principal will not have as significant an effect as if you only have $100k principal balance and were paying down $20k of that. To me, one option is to put the $20k toward mortgage principal, then perhaps do a refinance on your remaining mortgage with the goal of getting a better interest rate.  This would double the benefit to you.  First, your mortgage payment would be lower by virtue of a lower principal balance (assuming you keep the same term period in your refinanced mortgage as you have now.  In other words, if you have a 15-year now, your new mortgage should be 15 years also to see the best effect on your payment).  Further, if you can obtain a lower interest rate on the new loan, now you have the dual benefit of a lower principal balance to pay down plus the reduced interest cost on that principal balance.  This would put money into your pocket immediately, which I think is part of your goal, although the question does hinge on what you'd pay in points and fees for a refinance. You can invest, but with that comes risk, and right now may not be the ideal time to enter the markets given all of the uncertainties with the ""Brexit"" issue.  By paying down your mortgage principal, even if you do nothing else, you can save yourself considerable interest in the long term which might be more beneficial than the return you'd get from the markets or an IRA at this point. I hope this helps. Good luck!" "Please clarify your question. What do you mean by ""..loan in Greece""? If you are referring to taking a mortgage loan to purchase residential property in Greece, there are two factors to consider: If the loan originates from a Greek bank, then odds are likely that the bank will be nationalized by the government if Greece defaults. If the loan is external (i.e. from J.P. Morgan or some foreign bank), then the default will certainly affect any bank that trades/maintains Euros, but banks that are registered outside of Greece won't be nationalized. So what does nationalizing mean for your loan? You will still be expected to pay it according to the terms of the contract. I'd recommend against an adjustable rate contract since rates will certainly rise in a default situation. As for property, that's a different story. There have been reports of violence in Greece already, and if the country defaults, imposes austerity measures, etc, odds are there will be more violence that can harm your property. Furthermore, there is a remote possibility that the government can attempt to acquire your private property. Unlikely, but possible. You could sue in this scenario on property rights violations but things will be very messy from that point on. If Greece doesn't default but just exits the Euro Zone, the situation will be similar. The Drachma will be weak and confidence will be poor, and unrest is a likely outcome. These are not statements of facts but rather my opinion, because I cannot peek into the future. Nonetheless, I would advise against taking a mortgage for property in Greece at this point in time." Regarding the mortgage company, they will want to know where the down payment came from, and as long as you are honest about it, there is no fraud. It's possible that the mortgage company may have some reservations about the deal now that they know where the down payment came from, but that will depend on the size of the deal and other factors. If everyone involved has decent credit, and this is a fairly standard mortgage, it will probably have no impact at all. That really depends on the lender, and in the current climate this is extremely unlikely. In the past it was possible to get a loan which is higher than the value of the house (deposit considered), usually on the basis that the buyer is going to improve the property (extend, renovate, etc.) and this increase the value of the property. Responsible lenders required some evidence of the plans to do this, but less responsible ones simply seem to have given the money. Here in the UK this was often based on the assumption that property value tends to rise relatively quickly anyway so a seemingly-reasonable addition to the loan on top of the current value of the property will quickly be covered. That meant that indeed some people have been able to get a loan which is higher than the cost of the purchase, even without concrete plans to actively increase the value of the property. Today the situation is quite different, lenders are a lot more careful and I can't see this happening. All that aside - had it been possible, is it a good idea? I find it difficult to come up with a blanket rule, it really depends on many factors -  On the one hand  mortgage interest rates tend to be significantly lower than shorter term interest rates and from that point of view, it makes sense, right?! However - they are usually very long term, often with limited ability to overpay, which means the interest will be paid over a longer period of time. "Just to get the ball rolling, here's an answer: it won't affect you in the slightest. The pound happened to be tumbling anyway.  (If you read ""in the papers"" that Brexit is ""making the pound fall"", that's as valuable as anything else you've ever read in the papers.) Currencies go up and down drastically all the time, and there's nothing you can do about it. We by fluke once bought a house in Australia when that currency was very low; over the next couple years the currency basically doubled (I mean per the USD) and we happened to sell it; we made a 1/2 million measured in USD. Just a fluke. I've had the opposite happen on other occasions over the decades. But... Currency changes mean absolutely nothing if you're in that country. The example from (2) was only relevant because we happened to be moving in and out of Aus. My various Australian friends didn't even notice that their dollar went from .5 to 1 in terms of USD (how could it matter to them?) All sorts of things drastically affect the general economy of a given country. (Indeed, note that a falling currency is often seen as a very good thing for a given nation's economy: conspiracy theorists in the states are forever complaining that ) Nobody has the slightest clue if ""Brexit"" will be good bad or indifferent for the UK. Anything could happen. It could be the beginning of an incredible period of growth for the UK (after all, why does Brussels not want your country to leave - goodwill?) and your house could triple in value in a year. Or, your house price could tumble to half in a year. Nobody has the slightest clue, whatsoever about the effects on the ""economy"" of a country going forward, of various inputs." The City of London economy is entirely dependent on total, unhindered access to the EU. Any blockages and it's over. No deal, no matter how good is going to replicate the City of London being in the EU. It may be a substantial financial centre for a few years after Brexit but that will very quickly evaporate. Libor would have been something keeping banks there, but with that now gone there is nothing else. "This is a hard question to answer.  Government debt and mortgages are loosely related.  Banks typically use yields on government bonds to determine mortgage interest rates.  The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is ""Who does not get their money?"".  In other words, who does the government decide not to pay.  This is the important part.  The government will have some money so they could pay some bond holders.  They must decide who to shaft. For example, let's look at who holds Greek government debt.  Around 70% of Greek government debt is held outside Greece.  See table below.  The Greek government could decide to default only on the debt to foreign holders.  In that case the banks in France and Switzerland would take the loss on their bonds.  This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets.  Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults.  Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks.  This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically.  If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward.  If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults.  During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related." "Watching all the news about the Euro, I ""feel"" that maybe the British made the right choice about staying away. I would feel annoyed if I was in one of the other countries (e.g. Ireland) and the deal had been rammed through and imposed on me.  The interesting thing for me - In Ireland's case they need to have a refurendum. I wonder if they will accept this?  I am not an expert on european fiscal union or anything, but this new treaty has been a surprise to me - almost bolting the door after the horse has bolted" When I bought my own place, mortgage lenders worked on 3 x salary basis.  Admittedly that was joint salary - eg you and spouse could sum your salaries.   Relaxing this ratio is one of the reasons we are in the mess we are now. You are shrewd (my view) to realise that buying is better than renting.  But you also should consider the short term likely movement in house prices.  I think this could be down.  If prices continue to fall, buying gets easier the longer you wait. When house prices do hit rock bottom, and you are sure they have, then you can afford to take a gamble.  Lets face it, if prices are moving up, even if you lose your job and cannot pay, you can sell and you have potentially gained the increase in the period when it went up. Also remember that getting the mortgage is the easy bit.  Paying in the longer term is the really hard part of the deal. One thing I like to do every once in a while is look at the day's market movers. It's a list of symbols that had huge movement. There tend to be a couple of 50+% movers every time I look. In fact today I see ATV moved up 414.48%:  So there it is—doubling your investment in one day and then some is technically possible. The problem is that the market movers chart also has an equal number of symbols that had major movements in the other direction. Today's winner is:  SPCB  lost 40% in one day, and thats the problem. If you invest in anything that can double your investment in one year, it can also halve your investment in one year. Or do better. Or do worse. You really don't know because the volatility is so high.