Prose from a Poshboy

[arbboy]

If it's possible to buy, would defo be worth doing.

If you rent a place, eg £600 per month, £72,000 over 10 years, not factoring in increases, it's a lot of "dead" money.

Owning your house - on a mortgage - over those 10 years you are building up equity in the house.

Ideal if you could just say there is x amount as a deposit (get a good loan to value), and take a mortgage for the difference.

Would be really interesting to hear if you can get a mortgage. Most providers might have issues with "poker income".

Good luck with it!

Pretty sure a poker player can get a mortgage if bank of mum and dad will guarantee it  

couple of years ago i was putting down a 60% deposit down with my dad as a guarantor (prison officer 30+ years) and the underwriters knocked it back.

The system is bonkers to even need a guarantor in that spot.  It is more risk free for the bank than arbing for the bank yet banks don't like risk free interest and knock you back.  If i was a shareholder of that bank i would want to know why the bank is knocking back this risk free business and the reason why.

It's like being a bookmaker and having punter 1 on the phone 'can i have £60k to win £50k on player A' and punter 2 on the phone saying 'can i have £60k to win £50k on player B' in a tennis match and the bookie saying 'feck me that's far too risk free to take £120k of bets on this match and gtd to make £10k with zero risk whichever player wins let's phone the underwriter and see what he thinks'.  Bonkers.

[Kmac84]

If it's possible to buy, would defo be worth doing.

If you rent a place, eg £600 per month, £72,000 over 10 years, not factoring in increases, it's a lot of "dead" money.

Owning your house - on a mortgage - over those 10 years you are building up equity in the house.

Ideal if you could just say there is x amount as a deposit (get a good loan to value), and take a mortgage for the difference.

Would be really interesting to hear if you can get a mortgage. Most providers might have issues with "poker income".

Good luck with it!

Pretty sure a poker player can get a mortgage if bank of mum and dad will guarantee it  

couple of years ago i was putting down a 60% deposit down with my dad as a guarantor (prison officer 30+ years) and the underwriters knocked it back.

The system is bonkers to even need a guarantor in that spot.  It is more risk free for the bank than arbing for the bank yet banks don't like risk free interest and knock you back.  If i was a shareholder of that bank i would want to know why the bank is knocking back this risk free business and the reason why.

It's like being a bookmaker and having punter 1 on the phone 'can i have £60k to win £50k on player A' and punter 2 on the phone saying 'can i have £60k to win £50k on player B' in a tennis match and the bookie saying 'feck me that's far too risk free to take £120k of bets on this match and gtd to make £10k with zero risk whichever player wins let's phone the underwriter and see what he thinks'.  Bonkers.

The system is not bonkers and it works for the majority of people.   I understand totally what you say but underwriters don't look at every case, on occasion we will take a view on something say for example a young professional sportsman who wants a 500k mortgage with a 15% deposit, but wants it over a 20 year term we need to assess his earning potential, his current contract, the level he plays at the moment, will he be likely to move up levels, what are his plans for when his career comes to an end, is there an insurance/indemnity policy in place. 

In order to get a mortgage you need to satisfy the lender that you are capable of making regular monthly payments over the term of your Mortgage.  The Loan to value does come into play when determining our risk.  I have declined many cases with an LTV of 20% because I am not happy with how current finances are conducted, by ts nature a professional poker player/gambler is a much higher risk. 

If I were a pro poker player I would set up a shell company and get a god accountant so that I was making minimum payments to tax and N.I.  you can then draw down on a salary that you pay yourself each year.  Its not going to get you the big loan but it gets you past the gatekeeper. 

Its not just poker players/gamblers that face problems like this.  There are strict rules in place for temp workers, fixed term contract, people borrowing against pension/state benefits.  But there can be no doubt that lending to someone who relies on a lot of luck to make a living is high risk and its not just the case with mortgage lenders its the same with insurance companies.  There are many companies that won't insure gamblers/on course books etc.  For a number of different risk factors. 

[arbboy]

Kmac i didn't realise you worked in this area.  You are totally not understanding what i am saying btw.  I understand people who rely on luck/have no fixed income etc etc are more high risk to lend to/insurance.   However that is not the point here.

The key part of this is my 50% CASH deposit (£150k in cash to purchase a £300k house with you lending me the other £150k which is secured on the said house) which I am putting up insures the bank totally against any risk of loss UNLESS you, as a lender, think the £300k house i am buying is going to worth £150k or less in the future so when i don't keep up my repayments you simply evict me sell the house for anywhere between £150k and current market value and deduct any expenses from the proceeds to cover all your overheads.  You then collect your £150k which you as a bank are owed then i take 100% of the loss out of my deposit.   The bank risks/loses nothing at all at any stage in this situation.  The punter risks his £150k.  Can you explain to me why, irrespective of how risky the punter's income streams/lifestyle/luck involved in making a living, this is anything other than a 100% risk free loan to the bank unless you predict there is any chance property prices can halve in the future.  If this did happen then i would suggest the banking system would collaspe anyway.  It is massively in my interest to keep making my payments otherwise i lose up to £150k of my own money in this situation.  The bank cannot lose.

Why do the banks deem this a high risk loan when there is no risk to them at all of losing their money?  I appreciate people like this are more likely to potentially default on their loans/they don't have smooth income streams and be evicted in order for the banks to receive what is owed to them but given the lumpy deposit put down in cash that still means the banks are operating at zero risk of losing their money which is surely what banks and their shareholders should only ever care about?  If i want to choose to 'punt' £150k of my cash on keeping up repayments on a house loan as a grown adult why would you as a bank ever want to stop me when you can't lose?

 

[david3103]

Arbboy
You're using an extreme example of a 50% deposit, but if that's ok it's a only a short jump to saying that 45% or 40% is ok. Then we start to see the price levels of properties being manipulated as they were in the past and the lender now has an exposure of 70-75% of the true value.
After that we leap forward a few years and suddenly we're back in the ever repeating cycle and heading for the next crisis.

The whole sub-prime mortgage market was based on the idea that you could lend money to people that didn't have an income stream to support the payments because the security would always bail the lender out.
That worked out well for us all.

All that needs to happen is that the industry discards the people who lived through the aftermath of Northern Rock et al and the incomers will, inevitably, repeat the errors of the past.

[simonnatur]

Perhaps banks have some social responsibility and prefer to operate in an environment where repossession is a last resort, rather than an integral part of the business plan.

[AlunB]

Also presumably because what the banks actually wants is someone paying points on a loan and not an asset that is a huge pain in the arse to realise the value from (legal proceedings, auctions etc).

[SuuPRlim]

I mean this is true, and I assume Alex isn't going to say "Right I asked 15 people on blonde what to do and 9 of them said buy a house so I'm buying a house" It's a forum, you got accountants, bricklayers, sportsbetters and lawyers all rolfing around ITT and everyone's opinion is there's.

There are two long term proffessional gamblers ITT and one of them said he should 100% buy a house if he is able, and the other said don't buy a house until you can do so without massively damaging your liquid net worth, does blonde give you solid, reasoned porffessional advice - NO, what it gives you is a range of opinions from a range of characters/backgrounds.

You always manage to make a lot of sense of things and tie up conversations succinctly.  I still think there are a few people saying, what you need to do/would defo be worth doing.  Not possible to gauge any of that without asking quite a lot of questions first.  Point taken from you though Dave.

no absolutely, the point you make is defo spot on no disputing that.

Perhaps banks have some social responsibility and prefer to operate in an environment where repossession is a last resort, rather than an integral part of the business plan.

a couple of yrs ago I tried similar thing as JP had 50% deposit and i had more than the balance on my balance sheet of my business which i offered as security but they weren't interested and I said the same thing I don't get it they've got half thr equity in my house if i dont pay they just take it back and they are GTD to get their money back. Apparently its so expensive and messy repo that it becomes barely worth the time, they don't want security as in "we can take X if you don't pay" they want security as in "this guy has to pay, or his life's totally f**ked" so you feel the pain more than them - poker players, or people who's livlihood use cash as a commodity don't really offer security like this hence why, so I was told, they tend to steer clear.

[Kmac84]

Kmac i didn't realise you worked in this area.  You are totally not understanding what i am saying btw.  I understand people who rely on luck/have no fixed income etc etc are more high risk to lend to/insurance.   However that is not the point here.

The key part of this is my 50% CASH deposit (£150k in cash to purchase a £300k house with you lending me the other £150k which is secured on the said house) which I am putting up insures the bank totally against any risk of loss UNLESS you, as a lender, think the £300k house i am buying is going to worth £150k or less in the future so when i don't keep up my repayments you simply evict me sell the house for anywhere between £150k and current market value and deduct any expenses from the proceeds to cover all your overheads.  You then collect your £150k which you as a bank are owed then i take 100% of the loss out of my deposit.   The bank risks/loses nothing at all at any stage in this situation.  The punter risks his £150k.  Can you explain to me why, irrespective of how risky the punter's income streams/lifestyle/luck involved in making a living, this is anything other than a 100% risk free loan to the bank unless you predict there is any chance property prices can halve in the future.  If this did happen then i would suggest the banking system would collaspe anyway.  It is massively in my interest to keep making my payments otherwise i lose up to £150k of my own money in this situation.  The bank cannot lose.

Why do the banks deem this a high risk loan when there is no risk to them at all of losing their money?  I appreciate people like this are more likely to potentially default on their loans/they don't have smooth income streams and be evicted in order for the banks to receive what is owed to them but given the lumpy deposit put down in cash that still means the banks are operating at zero risk of losing their money which is surely what banks and their shareholders should only ever care about?  If i want to choose to 'punt' £150k of my cash on keeping up repayments on a house loan as a grown adult why would you as a bank ever want to stop me when you can't lose?

 

Your then moving into different area that raise different flags ie 50% cash deposit how do we paper trail that money, are we looking at money laundering, proceeds of crime etc?  Utimately the lenders are governed by the regulators who put much of the barries in the way, the FSA were so bad at regulating though thats partly how we ended up in the financial mess we were in. 

I also appreciate to the outsider looking in it must seem weird but much of getting a mortgage now is more about dotting the i's and crossing the t's.

I'll give you an example of a situation which I find baffling given I work in the industry.  My Mrs who has never had any credit in her life barring a mobile phone couldn't get a mortgage despite the fact that she has saved by her own means a 15% deposit, she has a steady income been with the same employer for 5 years, very low risk job will ever go if it did for what she earns and her transferable skills she would walk into another job earning similar wages.  She has regular overtime/bonus.  But because there is no credit and because she has saved for everything she has (parents are old school and instilled this in her) she was unable to get on the ladder.   To me that is incred stupid, if that risk is presented to me to look at I am happy to take the business on but because of no previous credit she fails the credit scoring.  Those are straight up declines and can't be appealed.  In order to get round this I got her to take out a storecard she paid for Christmas on it last year made monthly payments from her "Christmas Budget" over a 6 month period and voila mortgage was approvedin June. 

You need to play the game.  And most of my days I scratch my head at things I don't agre with but even as an underwriter I have rules that I need to follow.  I can't go all gung-ho. Obviously we have senior underwriters and the unit has managers who have more muscle than me and the can flex that but most of the time nobody wants to step outside policy for fear of causing a loss.   Brokers often think underwriters wield all the power when in truth we don't we're only a small part in it.  Many decisions are made by a computer before things even get to an underwriter.  Each individual underwriter has there own level of delegated authority, the guys within the company you need to get to are the folk in risk/compliance who generally come from an accountancy background and they are so risk adverse it makes my eyes bleed sometimes. 

[arbboy]

Kmac i didn't realise you worked in this area.  You are totally not understanding what i am saying btw.  I understand people who rely on luck/have no fixed income etc etc are more high risk to lend to/insurance.   However that is not the point here.

The key part of this is my 50% CASH deposit (£150k in cash to purchase a £300k house with you lending me the other £150k which is secured on the said house) which I am putting up insures the bank totally against any risk of loss UNLESS you, as a lender, think the £300k house i am buying is going to worth £150k or less in the future so when i don't keep up my repayments you simply evict me sell the house for anywhere between £150k and current market value and deduct any expenses from the proceeds to cover all your overheads.  You then collect your £150k which you as a bank are owed then i take 100% of the loss out of my deposit.   The bank risks/loses nothing at all at any stage in this situation.  The punter risks his £150k.  Can you explain to me why, irrespective of how risky the punter's income streams/lifestyle/luck involved in making a living, this is anything other than a 100% risk free loan to the bank unless you predict there is any chance property prices can halve in the future.  If this did happen then i would suggest the banking system would collaspe anyway.  It is massively in my interest to keep making my payments otherwise i lose up to £150k of my own money in this situation.  The bank cannot lose.

Why do the banks deem this a high risk loan when there is no risk to them at all of losing their money?  I appreciate people like this are more likely to potentially default on their loans/they don't have smooth income streams and be evicted in order for the banks to receive what is owed to them but given the lumpy deposit put down in cash that still means the banks are operating at zero risk of losing their money which is surely what banks and their shareholders should only ever care about?  If i want to choose to 'punt' £150k of my cash on keeping up repayments on a house loan as a grown adult why would you as a bank ever want to stop me when you can't lose?

 

Your then moving into different area that raise different flags ie 50% cash deposit how do we paper trail that money, are we looking at money laundering, proceeds of crime etc?  Utimately the lenders are governed by the regulators who put much of the barries in the way, the FSA were so bad at regulating though thats partly how we ended up in the financial mess we were in.  

I also appreciate to the outsider looking in it must seem weird but much of getting a mortgage now is more about dotting the i's and crossing the t's.

I'll give you an example of a situation which I find baffling given I work in the industry.  My Mrs who has never had any credit in her life barring a mobile phone couldn't get a mortgage despite the fact that she has saved by her own means a 15% deposit, she has a steady income been with the same employer for 5 years, very low risk job will ever go if it did for what she earns and her transferable skills she would walk into another job earning similar wages.  She has regular overtime/bonus.  But because there is no credit and because she has saved for everything she has (parents are old school and instilled this in her) she was unable to get on the ladder.   To me that is incred stupid, if that risk is presented to me to look at I am happy to take the business on but because of no previous credit she fails the credit scoring.  Those are straight up declines and can't be appealed.  In order to get round this I got her to take out a storecard she paid for Christmas on it last year made monthly payments from her "Christmas Budget" over a 6 month period and voila mortgage was approvedin June.  

You need to play the game.  And most of my days I scratch my head at things I don't agre with but even as an underwriter I have rules that I need to follow.  I can't go all gung-ho. Obviously we have senior underwriters and the unit has managers who have more muscle than me and the can flex that but most of the time nobody wants to step outside policy for fear of causing a loss.   Brokers often think underwriters wield all the power when in truth we don't we're only a small part in it.  Many decisions are made by a computer before things even get to an underwriter.  Each individual underwriter has there own level of delegated authority, the guys within the company you need to get to are the folk in risk/compliance who generally come from an accountancy background and they are so risk adverse it makes my eyes bleed sometimes.  

By cash deposit i meant cash in my bank account from betfair withdrawls etc which is easily audited.

As for the rest of your reply it kinda sums up why the finances of this country are so fucked because you are actively encouraged/forced to take on debt by bank (which they obviously profit from) for no reason other than to prove you can pay it back.  If someone has never had any debt, worked all their life and saved a big deposit on their own it's pretty likely they don't possess much of a credit risk.  Hats off to the computer though they know best.

[BorntoBubble]

I agree on playing the system, depending on how good you are with your finances its very "savvy" to get store cards, credit cards,  balance transfers etc if your managing it well. When I worked at Experian a lot of the staff were so familier with the "system" they were effectively making 3-4% on borrowed money (yes its only £300-£500 a year etc) but it helped them get mortgages as they had more debt and were seen as good debters. They were always moving money around to get better deals and in the long run create a better credit history for when they came to get a mortagage.

As a poker player I would advise having a credit card only if you have the funds to clear it in full every month though. This will help build you a credit history. Starting a business and drawing a salary as well may help with the whole mortgage situation as well which was another good idea posted.

Massive thread derail for alex, lots of interesting view points and discussions though!

[DungBeetle]

"If I were a pro poker player I would set up a shell company and get a god accountant so that I was making minimum payments to tax and N.I.  you can then draw down on a salary that you pay yourself each year. "

I'm sorry - but this is surely the worst advice you can give anyone.  Take a source of income that is tax free and free from red tape, and turn it into a taxable income with the need to file tax returns and annual accounts.

[DungBeetle]

"The whole sub-prime mortgage market was based on the idea that you could lend money to people that didn't have an income stream to support the payments because the security would always bail the lender out.  That worked out well for us all. "

Completely different situation.  Sub prime mortgage holders never had 50% deposits.  Arbboy is correct.  A 50% deposit is to all intents and purposes risk free for a mortgage provider.  Any rejection is simply down to box ticking dogma or regulatory over zealousness.

[DungBeetle]

"Your then moving into different area that raise different flags ie 50% cash deposit how do we paper trail that money, are we looking at money laundering, proceeds of crime etc? "

The money would be sitting in Arbboy's UK bank account.  It's already had money laundering checks.  Feels like these flags are just going back to box ticking or jumping through hoops for the regulator and nothing to do with the actual risk to the lender.

[DungBeetle]

"Apparently its so expensive and messy repo that it becomes barely worth the time, they don't want security as in "we can take X if you don't pay" they want security as in "this guy has to pay, or his life's totally f**ked" so you feel the pain more than them"

This is a good point  If they just can't be bothered with this type of customer to the extent that they would rather decline business then fair enough.  But lets not pretend their mystical risk model has decided that someone paying a 50% deposit is high risk. 

[EvilPie]

I think we've failed to get to the real point of this thread derailment.....

How do you like your steaks?