I watched BBC2 property watch last night and the term came up with:

 

Irresponsible lending

 

And it got me thinking.  There are 4 types of lending:

 

Responsible lending to responsible people

This is what we are currently seeing now.  People with good credit getting low LTV mortgages on good properties.  Lenders are licking their wounds so at best this is all that is on offer.  Currently these sort of loans are on offer.

 

Responsible lending to irresponsible people

This is small loans (max £750) to people with not so great credit.  Loans such as payday loans, doorstep loans, log book loans etc.  no large amounts of money being changed hands here so no possibility of anyone getting hurt.  Currently these sort of loans are on offer.

 

Irresponsible lending to responsible people

This is loans such as 100% LTV residential mortgages and 85% LTV buy to let mortgages to people with good credit.  These were the sort of loans you could get from 2000 to 2007.  this is where many millionaires were made.  Responsible people took ADVANTAGE of lenders and were able to take on eye watering debt from many organisations. 

 

Irresponsible lending to irresponsible people

This is loans such as 100%+ residential loans and adverse buy to let loans.  Large loans being granted to people who cannot pay it back.  Miscalculated default rates resulted in lenders losing large amounts of CAPITAL and thus spoiling it for all of us as lenders simply run out of loan money!

 

So I got my pen and paper out and created this diagram:

 

 

So currently we have the first 2 situations:

 

Responsible lending to responsible people and

Responsible lending to irresponsible people

 

All we need to do is wait for the irresponsible lending to responsible people and we will back to people becoming millionaires very quickly.

 

I cannot wait for it to come back.  It will come back.  The reason for this is human nature.  Once the banks start competing greed sets in.  They have to out do each other and standards slip.  This is where you should come in big time!

 

I made my big fortunes during 2000 and 2007.  I got a mortgage with EVERY single lender to the maximum amount.  You name them I?ve got them!  Currently i cannot get mortgages with the likes of Birmingham Midshires, Northern Rock etc as they do not like portfolio landlords too much.  However they love you if you have less than 10 properties.

 

This is my advice to you:

 

Get as much as you can now and in the future.

 

So keep an eye out for irresponsible lending as this is the green light to you to say go out there and get RICH!

 

If you want to learn more consider getting my full package.

 

Ajay

Posted on: 14th May 2009