House buying

[Durzel]

Bit of a general question this, hopefully some wise people out there will know some answers...

Recent events have caused me to think seriously about buying my own place, but I dont have any real idea about how it (mortgages) work.

Specifically - when you buy a house, is there a limit on the size of the mortgage you can get? Do you have to provide a sizeable deposit in all cases or can you get a mortgage for the entire amount?

Obviously I imagine the above varies depending on income, but should I be looking to save money up for a deposit or could I realistically expect to buy a house outright only paying a monthly mortgage repayment fee?

Sorry if the above seem like n00b questions, but I just thought I'd see if I could get some free advice.

 

[dysfunction]

The amount you can borrow depends on your Salary and of course your ability to be able to pay the mortgage payments back.

The size of your mortgage is usually around 3.5 or 4 times your salary.

Putting a deposit down is recommended as it reduces the amount you have to borrow and also the mortgage provider gives you a better interest rate.

Lenders can lend you 100% but its best to borrow 90% or less.

If you are having problems getting the deposit together then try and get a 5% deposit.

 

[whipped]

I'd also suggest that now may not be the best time to buy a house. 2 years ago I could have bought a 2 up, 2 down house for 80 grand, but decided against it. Now, for the same money, I'm lucky if I can afford a shit flat or a small cluster home

 

[dysfunction]

Unfortunately house prices always rise. There may be a few dips here and there.

The longer you leave it the less you will be able to afford what you want.

 

[raw]

Nows a bad time to buy, lots of people are suggesting that the prices are going to drop quite a bit soon, others say they are going to rise further, so who knows.

I moved out from home start of this year, i rent an appartment, its more than affordable, somehow i have more money than i did when i was at home

 

[Durzel]

Agreed.

I almost wish I'd bought some property when I left Uni and started work. A friend (who is younger than me) was paying a mortgage on a flat when I joined the company, and he sold it recently for almost twice the money he paid for it way back in the late 90's.

I suppose you don't really make any money if you sell and buy another house, since you have to pay the inflated cost for the new home anyway - but its still a sobering thought.

I guess I'm just getting tired of spending a fortune on things that depreciate massively - likes cars and computer bits.

Thanks for all the advice.

 

[Xtro]

Not a great time to buy. I've moved in with friends and am holding off for a year or two.

As said above, the minimum depost I'd put down is 5% preferably 10% but 5's ok. House prices are crazy atm. I heard prices in London and the SE were falling very slightly? No idea if this is true but here (Yorks) they are still going up. A friend bought a house here 4 weeks ago and its already worth 10k more. Mad.

I feel this bubble has to burst sometime god knows when though.

Another point is the dreaded "chain". Getting involved in a chain is a frustrating business to say the least. If you don't know what this means then here's an example:

You want to buy House A. The owners of House A agree terms with you but - they have agreed terms with the owners of House B, but the owners of House B can't vacate the property until they move into House C. House C is being renovated and until thats done no one can move.

Real pain in the arse that is.

 

[old.milou]

There are deals about (capped rates for the first two years etc - I'm not sure if there are still cashback deals) but as said above, a deposit is a good idea. If you borrowed more than 90% of the property's value, you used to have to pay a mortgage indeminity fee but that was usually added onto the mortgage. This was to cover the mortgagee in case of a repossession shortfall. Acquire some good professional advice about mortgage types etc.

As for the right time to buy, that's always difficult to decide. If you wait, the prices may drop - I think it's really dependent on the area. I know that in Southampton, there must be the demand as new flats/houses are being built all the time and they're not cheap. I have a lot of sympathy for peeps trying to buy - £165k for a new 2 bedroom flat etc etc and even ex-council houses on cacker estates are going for £100k+. The answer may be to buy and get a lodger etc?

 

[Sir Frizz]

Originally posted by old.milou


As for the right time to buy, that's always difficult to decide. If you wait, the prices may drop - I think it's really dependent on the area. I know that in Southampton, there must be the demand as new flats/houses are being built all the time and they're not cheap. I have a lot of sympathy for peeps trying to buy - £165k for a new 2 bedroom flat etc etc and even ex-council houses on cacker estates are going for £100k+. The answer may be to buy and get a lodger etc?

Aye, we've just moved into a four (soon to be five) bed house for around 200k. The house before that (3 bed) we got for about 60k. We sold it for 160k. Argh!

 

[nath]

Originally posted by Durzel
Recent events have caused me to think seriously about buying my own place, but I dont have any real idea about how it (mortgages) work

Sister caught you beating one off again?

 

[*Kornholio*]

Me & my missus have just bought a house in December... probably the best thing to do is go to an independant financial adviser (well, as independant as you can get) - they won't charge you anything and should explain all of your options to you.

We got a 100% mortgage because we were first time buyers, makes it a lot easier because there's all sorts of other expenses to bear in mind when buying a house like stamp duty / solicitors fees / moving house / any work you want or need to do on the new place... all of that on top of a 10% deposit and you're looking at £12k - £20 easily... dunno about you but there's no way I'll have that sort of dosh just lying around in my bank account.

 

[Durzel]

I'm aiming to save up about £10k this year, through salary and freelancing. My general timeframe for doing this isn't immediate, but I wanna set the ball rolling as it were.

Looks like building a deposit is the sensible path to take regardless of when/if I ultimately decide to put it down on a house.

 

[Tom]

Your mortgage should be no more than 3.5 x your annual income. Say you earn £30 000 a year, that makes you eligible for a mortgage of £105 000. I put down a 10% deposit on my house, and there was no chain involved, so it was all quite easy.

There are several online mortgage calculators. Have a play with them, and see what happens to the monthly repayments if the interest rate goes up. Try and get either a fixed rate, or a capped rate mortgage, and try and get either for 5 years. All-in-one accounts are good, if you have savings you can save significant amounts of money in mortgage interest.

If you are handy (DIY minded), then I would suggest that you buy the cheapest, poorest condition house in the area you like, and spend the extra money you save on doing it up. Significant savings can be made that way - I saved over £20 000 on the purchase price of my house doing that, the renovations will cost me about £10 000.

Try and buy an old house (ie more than 50 years old), because new houses are basically shite. Don't worry about double glazing etc, so long as the windows aren't rotten. Get your parents (my dad is very DIY skilled) to come around with you and check the houses you look at, I found his help invaluable. He basically told me that although a lot of work needed doing on my house, structuraly, it was sound. He was absolutely right.

 

[Testin da Cable]

indeed. if you have the capabilities/contacts to do some serious DIY that can save you a pretty packet and give you a whole lot of satisfaction.

only if you _can_ though. there's nothing worst than mucking about and screwing up :/

 

[Scouse]

Tell you what - there's some good stuff on this thread - but there is also a lot of speculative shite.

Go speak to an independant financial adviser and when it comes to putting an offer in get the best (i.e. probably more expensive) survey done of the house you're after - you'll save yourself money in the long run.

I wouldn't worry about housing bubbles bursting etc - it's all conjecture and if you intend to own it for 10 years or more then chances are you'll have made some money on it.


I bought my first house for £72,500 12 months ago (10% deposit) and it's worth in the region of £95-100k now (judging by a number of identical houses in my stree that have just been sold). - I never intend to sell it - I'll rent it out because it's in a solid renting area - and use the added income on this to go towards the mortgage on my next house. (I'm lucky enough to earn OK at the moment so I'm aiming to pay this one off in the next 5 years)...

 

[MYstIC G]

My only advice would be to take out the mortgage + £X amount when you go to your bank. Then you can use the £X to improve the property (decoration, fixing pre-existing problems) & cover some of your costs. And of course improving the property increases its value from day one. So factor in an amount you think you're going to have to spend as a minimum, on works to the property itself.

Don't take one of these gay "no interest paid on savings = interest saved on mortgage" because if you've got money floating around you can get better rates of return via other means.

If you do find somewhere you're interested in, be sure you at no time take anybodys "word" on anything. It's always best to get things people say in writing, that way should anything go wrong you have an actual ability to blame them.

Now having said that use of this advise is entirely at your own risk

 

[dysfunction]

Read these Stages of house buying

As well as this House Price Report

Give you some idea of what you are getting into...

Also you can Compare mortages here

Still...speak to an Independant Financial Adviser...

 

[Lester]

Not related to mortgages - Try and talk to the neighbours of the house you're gonna buy. And if they have a car up on blocks in the front yard/12 kids called Keanu/the tattooed lady living there/9 staffy bulls, then walk away my friend.

 

[Xtro]

I see you've visited Scouse's abode then Lester .

 

[Chameleon]

It's understanable that many people suggest this is a bad time to buy ..... well for first time buyers particularly. The thing is, when house prices are as high as they are, people hope they will drop, but it's not neccesarily going to be the case. I know many people who have delayed and truely wished they hadn't. Personally I don't think house prices will go down at all ... and if they do, it wont be by much. I wish they would drop by about 20% or so, but personally I dont see it happening.
The key is to get yourself onto the property ladder at a point you can sustain it, then worry about what you actually WANT later on. What I mean is, if you want a 3 bedroom house with a nice garden ..... you might be best to settle for a one bedroom house with a window box, until your a bit further down the line
As someone else mentioned, try to get yourself about a 10% deposit, to avoid indemnity fees - mortage companies dont want to take on more than 90% of the risk, unless they have to, incase you default, the house market drops and the property is worth less than the mortgage secured on it when they sell it off. God forbid
Well if it takes a year to get the deposit together, that should give you time to wait and see if property prices shift at all ... so fingers crossed

 

[dysfunction]

Have a look at this website for Residential Property Prices and their movements. (HM Land Registry)

http://www.landreg.gov.uk/ppr/interactive/


Then you can see if prices in your area are dropping or going up.

 

[Lester]

Best bit of advice I could give (and something I wish I had done) is, if you are living at home put away what would be your mortgage every month. Do that for as long as you can stand your parents. Sounds obvious really but 500 clams a month over three years will really help and is probably worth twice as much in mortgage payments what with the 11-1 interest rule thingy (?)

 

[leggy]

Originally posted by Lester
clams

Copyright Bozz and Leg.

*Sues*

 

[]SK[]

I moved into my first house less than a month ago. 14th of Feb to be exact.

Actually brought it back in October time but back then it was no more than a mud patch.

Love the idea of walking around looking at the stairs etc and thinking, there mine they are. Great feeling. Least with a mortgage im paying for my own house rather than renting where I was paying for someone elses mortgage.

 

[Durzel]

Originally posted by Lester
Best bit of advice I could give (and something I wish I had done) is, if you are living at home put away what would be your mortgage every month. Do that for as long as you can stand your parents. Sounds obvious really but 500 clams a month over three years will really help and is probably worth twice as much in mortgage payments what with the 11-1 interest rule thingy (?)

That's basically what Im intending to do.

I currently live with my Dad, and am not eager to move out (home comforts) but I figured I could at least buy a property, pay the mortgage on it and even rent it out if need be. The thinking is that I would have something which is both tangible, and which doesn't depreciate.

I could in theory put the money into a savings account, but I don't think I'd get the same return as on a property.

As has been said already, best bet is probably to speak to an independant financial adviser, once I've got some cash together.

 

[Xtro]

Originally posted by Durzel
I figured I could at least buy a property, pay the mortgage on it and even rent it out if need be.

That's another area altogether. Renting out accomodation can be lucrative but can be a royal pain in the arse.

Example: I had to pour paraffin over the floor of one bedroom and get out a box of matches to get one cretin to vacate the premises. He left.

 

[dysfunction]

If you rent the property out then you have to get a Buy-to_let mortgage in which case you need a 30% deposit.

Unless of course you are just renting out a room while you are living there as well...or you dont tell your mortgage provider

 

[~Lazarus~]

Couple of things :

1. First time buyers wont have as much lawyer fees since they are only paying for purchasing a property as opposed to buying and selling.

2. Watch what mortgage type you get (e.g. endowment Vs repayment). As i recall, repayment is the "in thing" at the moment.

3. Make sure you get the house properly surveyed - im not sure if the new law regarding the seller has to provide the survey has actually passed yet.

4. Dont overstretch the budget or you will be left with nothing to pay for the luxuries in the house(e.g. furniture, cooker, fridge etc)

5. be careful when buying a flat in a block of others - you will be liable for a percentage of overall costs (e.g. leaky roof fixing, general maintenance)

 

[GDW]

Dont buy a house, buy a garden shed ....you know it makes more sense

 

[PR.]

I want my own house, but I think my standards are so high that I couldn't afford it