50-year mortgages? Are they kidding?!?

[Thomas Veil]

50-year mortgage hits the market
Lenders have begun offering a half-century home loan as incentive in face of record-high home prices, rising interest rates, report says.
May 10, 2006: 11:05 AM EDT

NEW YORK (CNNMoney.com) - As home prices and interest rates keep rising, lenders have figured out a way to keep the dream alive for millions of people who want to own their own home. It's called the 50-year mortgage.

According to a report Wednesday in USA Today, a handful of small lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the current economic environment.

Most banks already offer 40-year mortgages, which account for about 5 percent of all home loans, the report said.

"One of the biggest things in California is the high costs of homes. With rates going up, there's demand from customers (for) longer loans," Alex Diaz Jr., with Statewide Bancorp in Rancho Cucamonga, Calif., was quoted in the report as saying.

Statewide, which introduced its 50-year loan in March, has already received about 220 applications, Diaz said, according to the report.

The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders, the newspaper said.

"Mortgage lenders are getting craftier to get the attention of consumers," Anthony Hsieh, CEO of LendingTree, told the newspaper.

But he added that consumers first need to understand the product.

Two issues to keep in mind: A borrower with the 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, a borrower's monthly payments could rise, the report said.

Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed, the report said.Link (http://money.cnn.com/2006/05/10/news/economy/economy_mortgage/index.htm?cnn=yes)

Excuse me for stating the obvious, but this sounds like crap. Hell, you could die before the mortgage is up, and if your kids couldn't finish paying it off, the bank could seize the house and return only the invested equity to the kids.

And the rate is fixed for only the first five years? Please!

This is a really dumb idea. To me it's just another manifestation of the weakened buying power of the average American.

Though people have less savings and lower wages relative to their cost of living nowadays, I'm sure there have got to be better answers than this. And those answers have to do not with creating bigger and better debts for homebuyers, but with helping grow (not shrink) the middle class, and with bursting the real estate bubble.

[mactastic]

Not at all... I'd consider one if I was planning on buying a crappy house (in a nice neighborhood of course), fixing it up real nice, then selling within 5 years. Which I am.

It might be the only way I get my foot in the housing market around here.

[zimv20]

the bit that surprised me was that it's adjustable. they can't do a 50 year fixed?

i recently learned that when a friend of mine bought his condo, he did so with an all-interest mortgage. now that i think is stupid.

[emw]

Excuse me for stating the obvious, but this sounds like crap. Hell, you could die before the mortgage is up, and if your kids couldn't finish paying it off, the bank could seize the house and return only the invested equity to the kids.Same thing goes for a "standard" 30-year mortgage as well. Besides, the kids, who hopefully live in their own place, would probably just sell the house and take the equity anyway.

I agree that interest-only loans are moronic. You're renting you're house, but are still responsible for maintenance and taxes. I can't comprehend that deal.

And what about the "reverse" mortgages for seniors, where they eventually exhaust all equity in their home? That seems like a reasonable retirement idea I guess, but I don't know enough about the details.

[miloblithe]

It depends on the market. If the value of the house doubles in three years, you can make lots of money (plus have a place to live) despite an interest-only mortgage.

Personally, I'd avoid it if at all possible, but they can make sense if you plan on turning around and selling the house.

[UKnjb]

These things have been around in the UK for some time now - and I think I'm right when i say we have a higher proportion of owner/occupiers than USA? They came about as a result of increased house prices, high mortgage rates and there was a high probability that new-comers would not be able to afford the costs of entering the house-buying market. The only way out was to introduce the 50-year mortgage, accepting that, if nobody sold and moved on, then the children would at least inherit something. But sure, it was always regarded as rent under another name. They are no longer common, even though the house prices here keep rising and the fears of entering the market remain. 30 year mortgages are much more common and interest-only ones have always had a substantial share of the market. I think it is all swings and roundabouts, as house prices go up, houses get sold, equity gets released, home-owners die and kids inherit.

[yellow]

i recently learned that when a friend of mine bought his condo, he did so with an all-interest mortgage. now that i think is stupid.


Unless your friend plans on flipping it.. or reselling it in a few years. While the all-interest mortgage is not the smartest idea, it's generally a lower monthly payment and a better interest rate (for the short haul).. And remember that all the interest you pay for your mortgage is a deductable on your taxes, so it's a good offset if you're having trouble tax-wise.

[zimv20]

I agree that interest-only loans are moronic. You're renting you're house, but are still responsible for maintenance and taxes. I can't comprehend that deal.
you're betting that the property will appreciate at such a rate that it beats renting. with rents in chicago now what they were 10 years ago, and rampant rumors of a housing bubble about to burst, it doesn't seem a very good bet to me.

Unless your friend plans on flipping it.. or reselling it in a few years.
afaik, he's not.

[yellow]

Hmm.. as silly as it may seem, even a crappy interest-only loan can end up being better for you than renting. Especially if you can hope to hold onto it long enough to "appreciate" 20% (5-7 years?) when you can refi into a real loan. You just better hope it appreciates enough before your arm/balloon comes due. :)

Ultimately it's a step int he right direction to owning rather than renting, particularly in expensive situations like major metro areas (not including the Bay area.. that **** is just ****ing crazy).

50 year mortgages however.. that's a suckers bet. I'd like to see the amoritization schedule on THAT one! Woo! Imagine if you actually paid ONLY your mortgage payment every month for 50 years... you'd end up paying like 7x the price of the house! Then imagine living in the same damn house for 50 years. <shudder>

[Deepdale]

If the value of the house doubles in three years, you can make lots of money (plus have a place to live) despite an interest-only mortgage.

Value doubling in 3 years ... what in the world has seeped into the nation's water supply?

[yellow]

Value doubling in 3 years ... what in the world has seeped into the nation's water supply?

Don't know.. but in some places that (and more) has happened. It's crazy..

My wife's boss purchased 45 acres in the eastern part of the county (which is pretty depressed), and that has suddenly become THE hotspot for condos and townhomes (same dif?) (because it was depressed). Well, the price he paid for 45 acres.. he was offered 6x the price, just 2 years later.

All that is about to end, however.. the bubble WILL burst (if it hasn't already in your (general plural) area).

[miloblithe]

Value doubling in 3 years ... what in the world has seeped into the nation's water supply?

Check out Washington, DC....

It happens.

[Deepdale]

Don't know.. but in some places that (and more) has happened. It's crazy..

The sheer madness is evident, but there is a notable difference between the value of acreage purchased in a depressed area vs. what the point of the OP seemed to be -- namely, the value of a standing house. The situation is still nauseating no matter how it is viewed.

[zimv20]

fwiw, if my friend had timed the market for the area in which he bought, he would have bought some 10 years ago.

in related news, at the end of the month i'll have been in my house 10 years. in that time, i've seen > 3x increase in the value of my home (which i rehabbed, but most of the increase is tied to the land).

[floriflee]

Check out Washington, DC....

It happens.

That's depressing actually. I've worked hard a good six years to try and save up enough to put down 10-20% on a house (I had a couple hundred still saved after finishing college so basically started from nothing). After moving out here that savings will end up being more like 5-10% for what we are looking to buy. That's just sick!

[Doctor Q]

Perhaps the way to look at a 50-year mortgage is that it's more like renting. You pay off the loan so slowly that you don't build much equity, so it's not an investment device. For the most part, you're simply paying by the month but getting a house instead of an apartment.

Low-rate mortgages with huge balloon payments after 5 years are another type of loan that shouldn't be taken too seriously. Rather than paying a huge one-time amount, the homeowner is more likely to refinance after that time period, so the loan as written doesn't match the real plan. It's just a way to let buyers qualify for a mortgage and get started.

[IJ Reilly]

Check out Washington, DC....

It happens.

Sure, but I think the point is, it's dangerous to assume it will. The more people climb out onto limbs and into the leafy twigs of the housing market, the more likely it will come crashing down if interest rates take a jump upwards, or a significant recession comes along. That's what happened during the early 1990s here in California. Prices doubled and then some during the late '80s, people began to assume that they'd continue to go up like that forever. By the early '90s were were looking at negative equity, and foreclosures on every block, and values falling 30-50% for everyone.

[miloblithe]

Sure, but I think the point is, it's dangerous to assume it will. The more people climb out onto limbs and into the leafy twigs of the housing market, the more likely it will come crashing down if interest rates take a jump upwards, or a significant recession comes along. That's what happened during the early 1990s here in California. Prices doubled and then some during the late '80s, people began to assume that they'd continue to go up like that forever. By the early '90s were were looking at negative equity, and foreclosures on every block, and values falling 30-50% for everyone.

I do not at all disagree.

[leekohler]

you're betting that the property will appreciate at such a rate that it beats renting. with rents in chicago now what they were 10 years ago, and rampant rumors of a housing bubble about to burst, it doesn't seem a very good bet to me.


The bubble is about to burst. My neighbors have been trying to sell for months- no takers. They even have a "price reduced" sign on the place. They still can't sell. I've been waiting for the bubble to pop for a while. No way am I paying what they want for a condo in this town right now. And apparently from all the empty new buildings I've been seeing in the neighborhood, no one else is either.

[tristan]

50 yrs is basically interest only for the first decade or two. I haven't run an amortization program, but my guess is that after 10 years you'd pay down less than 5% of your principal. Why bother.

Interest only is fine if you're investing your money in other places. Paying down your mortgage principal is generally a bad idea because you can get usually better returns somewhere else, and you're reducing your mortgage deduction. Interest only is only dumb if your living paycheck to paycheck, saving nothing, and crossing your fingers that house prices won't fall - which in this market is delusional.

[mactastic]

50 yrs is basically interest only for the first decade or two. I haven't run an amortization program, but my guess is that after 10 years you'd pay down less than 5% of your principal. Why bother.
Because you don't keep the place for more than 5 years! Why is this so hard to understand? These 50-year mortgages aren't for someone who is looking to buy and hold for the length of the mortgage. They are for those looking for entry into the market. What's the average length of stay in a homebuyer's first home? Not long.

[IJ Reilly]

Because you don't keep the place for more than 5 years! Why is this so hard to understand? These 50-year mortgages aren't for someone who is looking to buy and hold for the length of the mortgage. They are for those looking for entry into the market. What's the average length of stay in a homebuyer's first home? Not long.

If the property doesn't appreciate during that time, you've done no better than a renter, except for the mortgage interest deduction. If the value goes down, you're looking at negative equity.

[mactastic]

If the property doesn't appreciate during that time, you've done no better than a renter, except for the mortgage interest deduction. If the value goes down, you're looking at negative equity.
No disputing that point. However, at least in this area, I don't see prices actually falling anytime soon. Not increasing as fast, sure. But actual price declines?

There's a lot of room between 20% annual growth and negative growth.

[Daveway]

So is this a way for people with modest incomes to somehow own million dollar homes?

[mactastic]

So is this a way for people with modest incomes to somehow own million dollar homes?
I suppose it could be. But considering that the median house price countywide here is above $500,000, and citywide above $600,000, I'd say it's more likely that people will be using these mortgages as I've described above - as a way to get their foot in the door so that they can make some money and get a better mortgage on their next house.

[Jschultz]

The bubble is about to burst. My neighbors have been trying to sell for months- no takers. They even have a "price reduced" sign on the place. They still can't sell. I've been waiting for the bubble to pop for a while. No way am I paying what they want for a condo in this town right now. And apparently from all the empty new buildings I've been seeing in the neighborhood, no one else is either.

If you don't mind me asking, which of the neighborhoods are you in?

[IJ Reilly]

No disputing that point. However, at least in this area, I don't see prices actually falling anytime soon. Not increasing as fast, sure. But actual price declines?

There's a lot of room between 20% annual growth and negative growth.

That's exactly what most people were saying in the summer '89, the peak. The end of 10-20% annual rates of appreciation came so abruptly that lots of people ended up deeply under water in a matter of a year or two. By '91-92, I could look at several foreclosed houses from my front porch. It's pretty scary, seeing 30% or more of your property value vanish practically overnight, even assuming you could sell. We didn't see the values come back to '89 levels in our area until the mid-'90s. Five or six years -- that's longer than some people can wait.

I'm not saying not to throw the dice, only to be aware that they can come up snake-eyes.

[mactastic]

That's exactly what most people were saying in the summer '89, the peak. The end of 10-20% annual rates of appreciation came so abruptly that lots of people ended up deeply under water in a matter of a year or two. By '91-92, I could look at several foreclosed houses from my front porch. It's pretty scary, seeing 30% or more of your property value vanish practically overnight, even assuming you could sell. We didn't see the values come back to '89 levels in our area until the mid-'90s. Five or six years -- that's longer than some people can wait.

I'm not saying not to throw the dice, only to be aware that they can come up snake-eyes.
You're right, but the economic outlook in '91-92 was quite different than it is today. Besides, even staying evenin value puts me ahead of where I am now since I'll easily save a couple thousand a year in taxes.

[IJ Reilly]

You're right, but the economic outlook in '91-92 was quite different than it is today. Besides, even staying evenin value puts me ahead of where I am now since I'll easily save a couple thousand a year in taxes.

If only we knew how bad it was going to get... the worst economic conditions in California since the Great Depression. I don't recall anyone forecasting it.

The key to getting into housing market today (short of hitting the lotto), is building equity. Without paying down a mortgage, about the best you can hope to do is stay even, unless you can add some sweat equity. Sounds like that's what you have in mind.

[zimv20]

mortgage term aside, when i was shopping in 1996, the rule of thumb was: "you can afford 2.5x your annual salary", and it seemed to me that mortgage companies were more or less following that.

has that changed?

[mactastic]

If only we knew how bad it was going to get... the worst economic conditions in California since the Great Depression. I don't recall anyone forecasting it.

The key to getting into housing market today (short of hitting the lotto), is building equity. Without paying down a mortgage, about the best you can hope to do is stay even, unless you can add some sweat equity. Sounds like that's what you have in mind.
Exactly. If I can take a $400K house and turn it into a $600K house for less than $75K, then turn around and sell it, I'm not too worried if housing prices stay flat.

I wouldn't recommend that approach to anyone not familiar with the building trades, or anyone not willing to work like a dog to make their own house liveable, but for me it's a very good option.

[skunk]

I wouldn't recommend that approach to anyone not familiar with the building trades, or anyone not willing to work like a dog to make their own house liveable, but for me it's a very good option.Works for me.:)

[Doctor Q]

mortgage term aside, when i was shopping in 1996, the rule of thumb was: "you can afford 2.5x your annual salary", and it seemed to me that mortgage companies were more or less following that.

has that changed?I think they are much more lenient now, because housing prices have leaped in so many areas that there wouldn't be nearly as many potential buyers if they stuck to the same rules for qualifying. Brokers want those commissions and lenders want those fees, so they let people stretch themselves much more precariously, which leads to more mortgage defaults down the road as people get in over their heads.

[skunk]

I think they are much more lenient now, because housing prices have leaped in so many areas that there wouldn't be nearly as many potential buyers if they stuck to the same rules for qualifying. Brokers want those commissions and lenders want those fees, so they let people stretch themselves much more precariously, which leads to more mortgage defaults down the road as people get in over their heads.In the UK it's up to 4.5x.

[zimv20]

In the UK it's up to 4.5x.
but our extra 2x is tied up in healthcare :-)

[miloblithe]

According to the calculators at my bank, my wife and I could afford up to about 4x our salary + whatever we could muster for a down payment.

[gekko513]

I don't think the kids care that much about the house. The kids are usually 50 when the parents die and have a nice house of their own.

If the kids are still teenagers when the parents die, the parents should be young enought to have life insurance.

[zimv20]

the issue isn't if the kids want the house, it's what's owed vs. what it's worth. i wouldn't want to inherit a house that's upside-down on its mortgage, that'd be money out of my pocket.

[gekko513]

It wouldn't be upside down in mortgage would it? It would just be paid off 2/3 of the way instead of all the way.

[zimv20]

It wouldn't be upside down in mortgage would it? It would just be paid off 2/3 of the way instead of all the way.
that's not the important bit. what's important is the difference between what's owed and what it's worth.

e.g. a house sells for $500k, the buyer mortgages $450k. after 10 years, he's got $420k left on his mortgage. but the housing market collapses and the property is now worth $300k. he dies, and his kids are looking at a net loss of $120k if they sell the house at market value.

the problem isn't how little was paid off, it's that the market adjusted below the mortgage balance. as time goes on, yes, the risk is reduced, but there's always that danger.

[Hoef]

You could offset the risk with an insurance..... So if the buyer dies, insurance pay mortgage

[zimv20]

You could offset the risk with an insurance..... So if the buyer dies, insurance pay mortgage
not only is PMI (private mortgage insurance) available, it's sometimes mandatory. i did a 5% down payment and PMI was part of the deal. iirc, it cost me $60/mo.

i got rid of it only when i refinanced and my equity had exceeded 10%. just another way to squeeze money.

[FFTT]

Even some of the more well to do buyers are suddenly facing affordability issues.

Until this year many made small fortunes flipping property bought at pre-construction prices, but now with interest rates and tax assessments way up,
the affordability for new buyers has taken a major blow.

If the investors who purchased these units start having trouble selling or renting them, the prices will fall.

This in turn, will flood the local markets with available units that were stand in line only, bidding war properties this time last year.

As back in 1991, those who dig in and hold out will be fine, those who freak out or must sell, will be in for a rude awakening.

Townhouses and condos are going to take big hits because there will be so many to choose from.

Million dollar and above homes that "must sell", will also take heavy hits due to changes in affordablility ratios.

I can't imagine anyone ever staying in one place over the life of a 50 year note, but it will help move high end properties to those who can handle the stress.

When the rates dropped to 5.3% I re-financed with a 15 year note and set it up as a bi-weekly auto debit. It has been very tight making ends meet, but I've saved a fortune in interest and knocked nearly $40K off my principle in just a few years.

Using this plan a 15 year note will be paid off in about 12.75 years.

[zimv20]

I can't imagine anyone ever staying in one place over the life of a 50 year note
fwiw:
- i've been in my house 10 years
- my mom has been in hers since 1972
- my grandma has been in hers since the end of wwII


When the rates dropped to 5.3% I re-financed with a 15 year note
how much different would it have been if you'd done a 30 year but doubled the principal every month?

[FFTT]

The payment would have been less than $200 lower per month and

I wanted the payments to be as painless as possible and fully automatic.

The equity accelerator program has made a huge difference for me.

The program is saving me roughly $46,000 in interest over the life of the loan.

Before this, I had most of my monthly payment in one check, but had to wait 2 more weeks before I had the balance, so
there were many times when I ended up with a late fee.

Once I paid up a month in advance, each payment is drafted the day following each of my paychecks and I've not been late in years.

The bi-weekly payment saves you so much because you are only borrowing
in roughly 15 day intervals vs. the norm of 30 days between payments.

It's automatic and painless and really helps manage your cashflow from paycheck to paycheck.

You can also have them manage your car payments or any other installment loans on the same schedule.

[zimv20]

The bi-weekly payment saves you so much because you are only borrowing
in roughly 15 day intervals vs. the norm of 30 days between payments.
just to be clear -- you're paying 1/2 your monthly mortgage each time? and then you end up making 26 (half) payments instead of 24, so you're sneaking in an extra month each year?

[Thomas Veil]

just to be clear -- you're paying 1/2 your monthly mortgage each time? and then you end up making 26 (half) payments instead of 24, so you're sneaking in an extra month each year?I think that's the idea behind that plan. I've heard of it before.

[FFTT]

Yup!

Remember when you go to settlement, they figure part of your closing costs based on how many days of interest
have passed, so you pay much more holding that payment over 30 days than you do for each 15 days.

It's bankers math but since you're ahead of schedule by one month, it greatly reduces the interest you owe
and the extra payment helps knock down the principle much faster.

If things are going well, you can simply call them and ask them to increase your monthly payment
without any hassle or new closing costs, so it's really the smart way to borrow money.

[LethalWolfe]

Speaking of housing costs...

Rent in LA is insane, and my gf and I would rather drop that monthly chunk of change into owning a condo as opposed to renting, but I just now as soon as we do the bottom is going to fall out of the market and we are gonna get hosed. rock/hard place. :(


Lethal

[FFTT]

Condos are great for people with no time or desire for maintenance, but those damn condo fees can be insane.

You're much better off buying fee simple, even if it means buying a fixer upper.

You can always negotiate enough money to replace all the carpeting, appliances and have the place re-painted before you move in.

Or do it yourself and build sweat equity.

Even if the market goes flat for a few years, these things generally occur
in 7 year cycles, so once things pick up again, you're in great shape.

I sold my first home under pressure during the last real estate correction in 1991 for $191,000. I had no choice back then and lost nearly $80,000
in equity because I HAD to sell.

Last year, that house sold for $549,000.

[tristan]

"Inherit an upside-down house"

That's funny on so many levels.

[pseudobrit]

just to be clear -- you're paying 1/2 your monthly mortgage each time? and then you end up making 26 (half) payments instead of 24, so you're sneaking in an extra month each year?

I do this with my car loan. They calculate $391/mo and I send them $250 every two weeks. I double up my school loans' payment and do them bi-weekly also.

I'm kicking the holy living **** out of my debt. It pinches me now but it sure will feel good to start off 2007 free and clear.

[FoxyKaye]

Not at all... I'd consider one if I was planning on buying a crappy house (in a nice neighborhood of course), fixing it up real nice, then selling within 5 years. Which I am.

It might be the only way I get my foot in the housing market around here.
Try NACA: www.naca.com - although their Web site is terrible to navigate and has so many bright colors it looks like a late-night TV scam, it's a really excellent program. We're house hunting in Oakland right now through them.

But, yeah, I was surprised to hear about 50-year mortgages too. Although the American economy is financed on debt, as is our particular brand of capitalism, so coming up with new ways to push debt forward while getting cash now doesn't surprise me at all.

[solvs]

Rent in LA is insane
No kidding. Just moved back here from WA State, and my new apartment is almost twice as much even though it's half as big. I just had to move back. :rolleyes: It's alright though, and at least I finally found a place. I've been looking for awhile, it's been pretty tough to find something (anything) good. Buying is completely out for obvious reasons. I'm sure you're right about the similarity to the bubble bursting in the 90's IJ. Interest rates are climbing, housing costs have increased as much as gas prices :eek: and yet wages don't seem to be going up anywhere near as much. I don't see how anyone could afford a new house here unless they're selling their old one with a ridiculously high profit as my parents did.

Oddly enough, my Grandparents (who are both in their late 80's) just refinanced their house in Vegas. My Mom is hoping it's worth what they owe on it when they go because the estate will have to make up the difference. Bet they wish they'd waited to sell their house in Santa Barbara. Yeah, I know, they sold their huge house there to buy a manufactured one in LV. Doesn't make sense to me either.

[IJ Reilly]

Santa Barbara? Good grief -- I believe the average price of a single family home on the south coast of Santa Barbara County is over a million now. It's getting close to that here in Ventura County, where a lot of people who work in but can't afford to live in Santa Barbara County now buy. Something has to give. Debt levels can't continue to rise indefinitely.

[mactastic]

Santa Barbara? Good grief -- I believe the average price of a single family home on the south coast of Santa Barbara County is over a million now. It's getting close to that here in Ventura County, where a lot of people who work in but can't afford to live in Santa Barbara County now buy. Something has to give. Debt levels can't continue to rise indefinitely.
Hey people are buying here in Santa Maria and commuting to SB. Insanity.

[IJ Reilly]

Hey people are buying here in Santa Maria and commuting to SB. Insanity.

Yup, that's nuts alright. I can't imagine climbing the Gaviota or San Marcos pass every day. Santa Maria... did you move?

[mactastic]

Yup, that's nuts alright. I can't imagine climbing the Gaviota or San Marcos pass every day. Santa Maria... did you move?
Nope... I just work here now.

[IJ Reilly]

Nope... I just work here now.

Ah, another healthy commute. ;)

[mactastic]

Ah, another healthy commute. ;)
Less than I was doing before. Plus I was going up the Cuesta Grade every morning then.

[tristan]

"Smart way to borrow"? That's financial doubletalk. Making any principal payment is just an investment and needs to be compared to your other investment alternatives. You're probably better off paying down your credit card balance or fully funding your 401k and Roth before paying down principal, but it all depends upon your own financial situation.

[FFTT]

Well the original goal was to be debt free, then retire, but then there's the unavoidable commitment of 2 college educations starting this fall, so I'm pretty much doomed to live in debt until it's time for that eternal dirt nap.

[Nickygoat]

In the UK it's up to 4.5x.
Some lenders, notably HBOS, will lend up to 8x salary. They base it on affordability. Rents in London are high, sometimes eyewateringly, so they figure if you can afford the rent then you can pay off a more expensive mortgage. They don't like to advertise these but they do exist. Of course they also screw you on a higher interest rate but for some people it's worthwhile.
HBOS again, are also leaders in "self-certification" mortgages. You tell them how much you earn and they accept it on principle with very little checking.
Wouldn't touch these with a bargepole but for people with guaranteed earnings increases - think doctors, lawyers etc who start on relatively low salaries but can increase to extremely high ones, they're an option.
Sweat equity is the way to go though.

[solvs]

Hey people are buying here in Santa Maria and commuting to SB.
With gas prices as high as they are (and are going), people won't be able to afford to do that either for much longer.