Buying a house

[ciphergoth]

I've decided to buy a house. Somewhere on the southern end of the Northern line, with two double bedrooms and gas central heating.

Flood me with advice!

For "house", read "living accommodation of some sort", by the way; in Edinburgh I'd write "flat" without thinking.

I was going to rent, so that spikeylady could get out of her Wimbledon place and to make sure we can live together happily before buying. But she is now moving in with ergotia and lilithmagna, so we're in no rush; and the mortgage payments would be something I could afford by myself if need be, so in the unlikely event that we can't live together happily it won't be a disaster. And it seems wisest to get out of paying rent to someone else and start paying it to myself as soon as possible. Plus it means we can choose our own fridge and suchlike - I really enjoyed that flexibility when we lived in Mir.

To forestall some advice:

• Yes, I'll go to a FIMBRA-regulated financial adviser
• Yes, I'll get a capital-and-interest repayment mortgage, not an endowment or interest-only

Comments

[drdoug.livejournal.com]

I'd add my voice to the chorus of "you can do your own research"! Even if you do see an IFA and end up taking a product through them, you'll get a lot more value out of them if you know what you're talking about ahead of time (and you'll also be able to spot instantly if you're being ripped off badly).

I'd also add my voice to the growing chorus of "what people will lend you and what it is sensible to borrow are different figures". If you're buying from scratch on a single income in London you'll probably have to exceed the traditional three-times-salary multiple, but do do the sums on your mortgage for what happens if interest rates hit 7 or 8% - quite likely IMO - and then 10% to give yourself a real fright. Then calm yourself down again by looking at 5 or 6% which is more likely over the next year or two! Might be worth looking at very long-term fixes (25 years!) - though the ones I've seen aren't bargains and have nasty redemption penalties.

Don't forget mortgage brokers as an option. Don't let yourself get talked in to insurance you don't need. Read the small print in the insurance about what's covered and what's not. Read the small print in the mortgage offer, particularly about paying off part or all of the mortgage early. (A flexible mortgage of some sort is a great idea IMO - effectively you earn the mortgage rate as interest on your savings, which approaches the long-term expected return from equities, only completely tax free and with extremely low risk.) If they won't let you read and consider before you sign, go elsewhere. Shop around for the various components you want - you may be able to get a better deal by getting a mortgage from one place, buildings insurance from another and any life/income replacement/etc cover from a third place. Companies have been known to advertise knock-down mortgage rates tied to extortionate compulsory buildings insurance.

When you have a property in mind ... Check the Environment Agency website for flood risk and run a mile if in the remotest doubt. Check UpMyStreet.co.uk and the like for a quick overview. Visit the property and the area at different times - chucking out time can be an eye-opener. Don't be embarrassed to look round the property, again, with checklists and clipboards and the rest of it, and take hours about it - if you're spending tens or hundreds of thousands of pounds you probably want to spend more than 20 minutes deciding if it's the right one. Remember that Estate Agents are formally acting in the best interests of the seller, which can mean they tell you things that are not in your best interests to believe.

Don't be afraid to put in a low initial offer. You can always raise it if they say no. If they accept your first offer you've no way of knowing that they wouldn't have taken a lower one. This is easier to do if you're fairly relaxed about losing a property you've set your heart on, and being in no rush helps a lot as well. My rough impression is that the market in the SE is tipping towards buyers rather than sellers, but things vary widely by locale so see if you can get an idea for the area you're looking at (and remember the point about Estate Agents above!).

When it comes to a survey, get at least a homebuyer's report (more detail than the cursory simple valuation survey the mortgage company will need). Don't be freaked out if the survey identifies minor problems - most houses more than about 5 or 10 years old have something wrong with them. But do check out anything serious - off the top of my head, things like damp, subsidence, roof trouble, dry rot.

If you're buying a flat, make sure the lease has plenty of time left (well, duh!) - not just for you but for whoever you end up selling on to. Also see if you can find out from other leaseholders what the freeholder and/or management company is like. Run a mile from a flying freehold. Make sure you trust your solicitor/conveyancer (get recommendations from friends if possible), and make sure their office is somewhere you can get to fairly quickly and easily if it becomes necessary.

Don't worry too much. Most properties are fine, and with an affordable fix and a repayment mortgage, you can ride out any negative equity should a crash turn up.

And best of luck!