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

[winterthing.livejournal.com]

You're in Tooting right now? There are some nice places around there. My sister got a two double bedroom terrace, with a garden and a kitchn/dining room for 190k. It's absolutely gorgeous and only 5 min walk from the tube station.

Li'l Sis and I did a quick look around the Tooting estate agents a couple of weeks ago as I'm wanting to buy as soon as I have something permanent (I don't like renting at all) and there does seem to be an absolute load of really quite nice places out there.

[purplerabbits.livejournal.com]

1. Don't assume that just because you've bought before you aren't eligable for a 'first time buyers' deal. Some places will give them to you if you don't have a current mortgage.
2. Sit down now and learn all the differences between the English and Scottish systems
3. Resign yourself now to many many comments about London house prices.

[some-fox.livejournal.com]

Hmm. I'll be interested to see what happens when babysimon reads this. Have you heard his don't-buy-now speech?
It'll be great for spikeylady and you I'm sure. Here's hoping G gets this job and we get to be neighbours :-)

[booklectica]

This search suggests that there are some good value places around to buy. Don't forget my offer to help find somewhere!

[atommickbrane.livejournal.com]

Oh man, I had an anxiety dream about not getting on the property ladder last night, this is the worst timed post EVER! I will only be of moral support I'm afraid, my ph34rs0m3 knowing lots of rubbish information skills haven't been applied to mortgages as well! Best of luck though.

[babysimon]

I bought my flat in 2000 for 75k. I bought it from a woman who paid 65k for it in 1988. Bearing in mind the effects of inflation, she made a net loss. After twelve years, and after the JLE had been built within 200m of the front door.

During the early nineties that flat would have sold for around 30-40k. She couldn't have moved anywhere. And small flats are a bugger to sell at all when first time buyers can afford small houses.

Buying at the top of the market can hurt you financially for a *very* long time. And I believe we're at the top of the market now. I have a long rant on the subject, which I won't burden LJ with, but will happily tell you all about at the BU.

Rent for a year. Even if prices stay static it won't hurt you that much; if prices drop it could be the best decision you ever make.

[lovingboth]

Someone left the money section of the Sunday Times in the noodle bar we were in on Sunday lunchtime.

Apparently around a quarter of mortgages being taken out are for 'buy to let' properties.

So, yes, it's quite possible it will pay to rent until the landlords go 'eeek' at supply being greater than demand and trying to sell.

But we could be wrong and you'll end up having to pay £50k more, as well as having paid rent for a year. I do suspect the current insane London property values won't crash unless interest rates rise dramatically. If they do, the crash will be very severe.

And when you do... sod the adviser, do the research yourself online, decide what level of risk you want to take (long-term fixed rate or short-term cheap deal, switching every couple of years) and save a small fortune in commission.

[ajva.livejournal.com]

I'm with babysimon on this one, but have not leapt in putting my case (and will not, don't worry) because it's a big debate and if you are committed to buying a house for personal reasons then being advised not to might seem a bit unhelpful. (Besides, I'm sure Simon will make the case very eloquently in any case later on this evening. :o) )

I would agree with lovingboth about doing your own research, though. You're more than capable of that, and it should save you a good bit of cash.

[cryx]

on the money side of things, i thoroughly recommend www.fool.co.uk very good advice to be found there.

Aah, for the day i can afford to buy in london....

[lilitufire.livejournal.com]

Actually, if you're reasonable witb money, I'd suggest a current account mortgage. I have a Virgin One account and it's brill. :)

Ask the advisor about em, anyway, since you're going.

[evil-c.livejournal.com]

1. What you think you can afford for a mortgage and what a mortgage company thinks you can afford are two totally different figures, by some hundreds per month on many account and even thousands.

2. Getting a reference from an old landlord of a rented accommodation to say you managed rent of X amount if it is more than they claim your mortgage potential is can be of great help and can make them re-think what they will give you.

3. Bristol & West seem to give mortgages based on your earnings not what the books claim your mortgage potential can be which generally ends up more. They ask for 6 months wage slips as proof of potential.

4. Most mortgages come with a clause in the small-print saying you can not rent out the property or part of the property without their written consent or even at all. Some say you can have 1 lodger but no more. Check that carefully if you are ever possibly even slightly likely to rent a room or the entire property.

5. Bank accounts which off-set your mortgage are BIG problem causers if you sell the house before teh mortgage is paid off or if you redeem your mortgage before the final payment is contracted to be due.

6. Mortgages which you can take a break from are great, but check if they will charge you for taking a break, charge more per month to make up for it after or just extend the time you have to pay it by the amount of time taken as holiday.

7. Check what happens if they discontinue the produce, ie would you have to take out another mortgage or just run the course of your own. If you have to change it then you can be liable for a charge of up to £5,000 I have seen plus solicitors fees for the new mortgage arranged.

8. Fixed Rate is good provided you can live with your decision should the rate drop and you have missed out on that, you will tend to find all mortgage interest rates drop in election year and the year after but go up after by somewhat. Ask for 5 year fixed interest rate.

9. Shop around. They are at the moment fighting to give people mortgages and will tend to beat any quote given by another company.

10. Conveyancers (solicitors) tend to cost less outside London but have to deal with London all the time. Horsham has many. A conveyancer costs less than a solicitor as a rule but are specialised on conveyancing so wont leave your work because a more exciting divorce case comes in. I can recommend a conveyancer in Horsham (who I never worked for but always thought I should!) and a solicitor just outside Horsham who very much has her eye on the ball so to speak and knows how to charm her way into any solicitor's good books to get them to deal with her case first.

11. Conveyancers do not spend their time in meetings. If you call twice and are told theya re in meetings they are avoiding your call. Conveyancers spend their time in the office and on the golf course, *very* rarely anywhere else.

12. Make sure your solicitor/copnveyancer asks for the mortgage monies to be transferred to them by the mortgage company the day BEFORE you are due to complete. This makes things run smoother and a hell of a lot quicker on completion day. It solves a LOT of problems and worry and gives the solicitor time to chase up the mortgage monies, mortgage companies are well known for messing up completion monies which can end up in YOU having to pay your seller compensation.

I spent a few years working in conveyancing. If you want any advice on that respect give me a shout.

Good luck!

C.

[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!