Some Developers, are devising new ways, for Buyers to purchase expensive apartments.
With the reluctance of the Banks to lend 7 times earnings, to borrowers, to purchase apartments, any longer and instead simply lending up to 5 times earnings, the shortfall in purchasing power, will be made up by the Developers, lending the balance required, of up to 30% of the purchase price, @0% interest for seven years, by such time the builders, say they confidently envisage, the property value, will exceed the total price, enabling the buyer to remortgage, for the outstanding sum, or to trade the property.
Am I the only one who hears the alarm bells.
1) Who would pay more for a property than a bank would lend against it?
2) Do the Builders not need a Banking licence to do this since they would hold a second charge on the property?
3) Should Builders be allowed to lend in this fashion?
Are there fool's out there who would buy such properties as opposed to waiting for the fire sale that must come?
If you cant afford to pay the interest on the total cost of the property you can't afford the property.
Is it really just a device, ( using smoke and mirrors) to allow banks to lend 100% funding to purchasers who can't afford to buy?