Mortgage And The First Time Buyer

[dave5282]

Hi guys,

Yep, its a scary thing but me and em (the Girlfriend) are toying with the idea of looking for a house some time this year (in an advantageous position of having of time on our side and therfore there is no immediate rush!!). Its admitedly a tad scary and not something we want to rush into.

I was just hoping you guys and gals may have some advice for first time buyers, whos good to deal with mortage wise and whos not, more importantly hints and tips etc.

Cheers guys

[Fidgits]

Hi Dave,

I am in a similar position, looking for my first house.. eeek!!! scary stuff..

Hints and tips i have picked up so far:

The market is at the peak at the moment, (i dont know about near you though), so keep an eye on prices, if they are still rising, fine, if they are steady, wait to see if they drop..

Deposit: if you have less than a 10% deposit, then look to have to pay an extra couple of grand security, you can add this to the morgage, but if you can find the 10% then it will work out better.

Stamp duty and fees, these will cost about 2-3 grand (2500 on a 100K house)

Talk to some estate agents, they can offer services where all fees are in one lump sum, they will also organise the surveyor, solicitor etc for you, and give you an up-front fee for all this, a good way of approaching it, so at least all costs are known

Look at LOTS of houses, even if they arnt exactly what your looking for, go view them, the more you see, the better idea you will have (similar to shopping for cars)

When a estate agent asks how much you are willing to spend, ALWAYS give them 10k under your top price, they will always try to get you to spend the max amount you are willing.

NEVER go for a self-cert morgage, yes you can get a bigger morgage, but if you lie on the form about your income, this is illegal, and these morgages cost more too!

[Fidgits]

Figure out the house you want (e.g. 3-bedroom? semi? etc..) do the math yourself on the max morgage you can get (3.5 times your salary + 1 times your partners).

Look around at what you can get for your money, and what areas.

Dont be tempted by an ex-council house, sure they are cheaper, but the area and stigma attached may make re-sale difficult (same goes for 'dodgy' areas).

If a house is wallpapered throughout, wrap your knuckles on the walls, wallpaper can hide uneven/damp/crumbling walls.

Check the roof, if it is sagging, bad sign.

Also check for cracks, could be a sign of subsidence.

Always check what fixtures and fittings are included with the house, ensure these are on the contract before signing

[dave5282]

Cheers fidge, you sound like you've been doing you homework too.

The bit that worries me is the structural side, I work in a surveyors office, so any structural problems would also be a bit embarrasing, but im in the right place to ask!!

[Fidgits]

yeah deffo in the right place Dave.

As with anything with me, I spend months (if not years) researching before I ever buy anything, and considering a house is the biggest investment anyone ever makes, then I wanted to make damn sure i knew exactly what i was doing. I've been researching houses for nearly 2 years now!!! in which time the prices round here have gone up nearly 50%!!

As for the structual stuff, the survey should pick up anything major, and all Sale agreements are pending the survey (its a get out of deal free clause)

[Fidgits]

A hint for you mate.

Once you have an idea of how much you can afford, go onto a few web-sites, rightmove, fish4homes etc.. and print off the details of EVERY house/flat you can afford.

Sit with the missues, and put them into 3 piles: YES, MAYBE and NO.

Then you can sit and look through the YES pile, and see the standard of home you can expect (average it out).

You can also work out what you can get for your money then.

[pizza boy]

I bought a house 2 years ago strictly to rent out..just pays off for itself and i make a good bit on top. It cost me peanuts as it was a private deal with my dads mate who was going to live abroad. No middle man and I saved loads.

The bugger was the building society were not very confident in me paying for the mortgage+bein a landlord and first time buyer+student in part time job with 0 credit history(id never touch credit cards back then...oh how things have changed) and I was 22

So I agreed to pay a 25% deposit in order to display my 'seriousness' as the mortgage advisor put it bah!. Was worth it tho as it was too good an oppertunity to pass up. The dude sellin it just wanted rid of it to go abroad asap and sold it to me at a mega knock down price.

[Fidgits]

I have loads more advice/tips...

If you want them, just let me know.

[dave5282]

I have loads more advice/tips...

If you want them, just let me know.

Cheers chief, i'll bear that in mind!!

(just got to prioritise my spending, meaning the car's proably gonna be a bit more standard come JAE than I 'originally' planned)

[Nicola]

Dave, will you be jointly buying the house?

Will you both be putting forward a deposit?

It might be worth signing an agreement regarding sale of house.

If things go wrong and you split up (I know I am looking at the darkest side), you want to get your fair share back from the house, so profit would be split in relation to money first invested.

This will be useful if you are putting forward more funds than your g/f.

(I sadly had to go through the process a few years ago).

Risks of buying now:

1.You get a high mortgage, then interests rates go up (especially as they are currently at such a low level) and you then cannot afford the repayments.

2.Buy now and decide to sell in 5 years time..property prices may have dropped by a considerable amount and you are trapped in negative equity (danger of buying when prices are near peak).

But on the bright side, best of luck :)

[supragal]

*This is all my personal opinion BTW*

I have to say, honestly that I wouldn't right now.

I'm no expert but have been wanting to buy for a while so have studied the economies trends etc and we are due for a sizeable drop. Of course it may not work like that in the end but personally I'm waiting to see- mind you, if you're planning to hold onto the property for a long long time eventually it'll be worth more (although just an equivalent if you follow)

Pricces have to drop eventually- first time buyers can't get on the ladder :(

Nicolas right about the splitting up thing, pesimistic as it may sound...

Fidgits- some of us would HAVE to go for a self cert being contractors etc :(

Plus I'm about to pay off my credit cards and they are soley supporting this countries economy so who knows what'll happen when I do :P

[dave5282]

Nicola, Its a good point that you raise, we have been together for ( hope i get this right) 5 years in May! so Id say we are steady....but hey I had never looked at it like you say and nothing in life is certain, so its definatelly a point to bear strongly in mind!

Supragal, Living were I do, in the depths of cumbria house price tends seem to run a little behind evrywhere else in the country and are still rising fast, its a difficult one to call, and at the end of a day its a costly gamble, whenevr we go for it!

Cheers guys

[jaxx]

dave i have to agree with supragal

i wouldnt bother just for now just try and bear it and give it a while

i was thinkin of gettin my own gaff a year or so back but with the house prices just going mental it put me off altogether so id rather bide my time and see what happens in the near future

[Nicola]

Dave,

you could be like me and rent for the time being (until the prices are more in our favour).

You just have to ignore everyone telling you about 'dead money'

[Fidgits]

Yeah Dave, I agree with the girls.

I'm not going to buy at the moment, even though prices might still be climbing where you are, the moment interest rates rise, alot of people are going to be in houses they cant afford.

So, they will sell them, and look for something cheaper.. (some will be re-possed too), and the market will be flooded with houses, and prices will drop because availability will outstrip demand.

I guessing this will begin happening this year (due to the goverments 10b shortfall, they are going to have to do something), sometime around summer they should begin to drop, by xmas next year, prices will be in the region of 25%-40% lower than at the moment.

So me, i'm playing a waiting game, because i dont fancy spending 150k on a house thats going to be worth 100k in a years time, some serious negative equitiy there, and no-where close to the 7 grand a year rent costs...

[Dom]

I've just bought my first house. My advice - buy new. You can often find deals where the builders offer 5% deposit paid which leaves you with the cash you've already saved to either extend the deposit, or spend on furniture etc.

If you buy before the show home is built (ok, you have to use your imagination what it's gonna be like but a cheap home designer software thing should help) you should find you'll get a good deal as well.

I reserved mine in december last year, moved in in July this year and have made a tidy 17k profit so far, which is satisfying to know that there's equity there.

Of course, there are the downsides, like living on a building site in the short term if it's a larger development, and there being no carpets etc (although some offer them).

Upside is it's a blank canvas to decorate how you want.

Hope that helps,

Dom

[SMW]

On the mortgage side I currently have a Virgin One Account and find it very good. You can borrow up to your mortgage account level at any time. If you borrow £120 000 and in 5 years time you only owe £100 000 you can spend £20 000 on anything you like at the mortgage rate. Obviously the whole amount does have to be repaid eventually but you can decide how much capital you with to pay each month. The interest is take automatically of course.

As well as on line control there rate is 4.95% which makes my payments less than £600 per month on £98 000. Mind you I only borrowed 40 % of the house value. Rates are higher for a higher loan to value.

BTW - if you do go with Virgin let me know - we'd both get £125 recommendation fee.

[dave5282]

Cheers guys. we were reading this last night, theres a lot of proper good (thought provoking) advice!!!

PS to all those who are looking and thinking of looking Good luck, and happy hunting!!

PPS smw, cheers for the offer!!!

[dj_davo]

the one account is a good one. lots of companies offer this kind of product now, and i would be tempted to look at 1 of those.

i may be switching to yorkshire banks' version of this account soon.

effectively you are say in a -£50,000 overdraft situation, and any money you can leave in your account lowers this overdraft amount. interest is calculated daily. if you can arrange all your direct debits to come out, say, at the end of the month, just before your wages go in again, and try not to spend much in your account - (maybe use a credit card thru the month (i dont own one however, but have been advised to get one, if i remortgage this way)), then the interest will work in your favour.

lets say after a year your account stands at -£45,000 then you can draw £5,000 again taking your overdraft back to -£50,000. you could spend this on anything you want.

although of course, you are back at square 1 with your mortgage payments.

clever use of an account this way can potentially save you tens of £1000s and loadsa years on the life of your mortgage.

good luck