House buying

[Beckywood1989]

My husband and I are hoping to buy our first home in the next few months. We haven't had any official mortgage advice yet but we think we would have a budget of between £115,000 and £120,000. There's a house we like up for £129,950. It's been on the market ages and needs a fair bit of tlc. Would it be reasonable to offer considerably lower than the asking price or is there a limit to how low you can go, say 10%?

[howtorebuild]

You can ask the agent what offers have been rejected in the past.

[IvyWall]

I'd offer £110k and be prepared to come up a few thousand. But take your time (a few days) between offers

[wowfudge]

If you are not embarrassed by your first offer, it's not low enough. So they say apparently. Get your mortgage in principle, view the place, find out why it's been on the market so long and take it from there. If you can stretch to afford, but have no money to do it up, then it probably isn't going to work out. On the other hand you may be able to do a deal that means you can do the work.

[VulcanWoman]

Definitely, if you don't ask you don't get and all that. I made an offer on a house for £99,000, it was up for £110,000, needed lots of work too, got it!

[Beckywood1989]

Thanks! I think £110k sounds like a good jumping off point, I just wasn't sure if it was too low. The agent said they had an offer that was acceptable but the buyers pulled out. She didn't tell me how much the offer was and I didn't if I should ask

[VulcanWoman]

Yeah, it's this crazy bartering BS, go low, then meet halfway between the two.

[bilbodog]

Get mortgage advice and a mortgage offer in principal before you put in your offer.

[Beckywood1989]

So if I offered £110k and got it, could I still take out a £120k mortgage to do the work?

[torthecatlady]

If you got it for 110k, i don't think the bank would give you a mortgage for 120k...

I would've thought you'd need to take out a separate loan.

Also, how does your deposit figure into this? Surely your mortgage would be for 110k minus however much deposit you put down? 10% would be 11k, so the mortgage would be for 99k?

This example might help as we bought a house this year.

It was first listed at 120k, then reduced to 115k, then reduced to 110k.

We offered 95 (because I have no shame and love a bargain) and were told straight away nothing less than 100 (which was our budget do to the work needed). We offered 100 and it was accepted.

We put down a 10% deposit of 10k and took out a mortgage for the remaining 90k over 25 years.

We do not currently have the funds to "fix up" the house and would rather save up for this than borrow more money! Adamant to never be in debt (other than our mortgage!)

[Bearbehind]

So if I offered £110k and got it, could I still take out a £120k mortgage to do the work?

No you couldn't. I think you need to see a mortgage broker or financial advisor before looking at properties as you don't seem very clued up on how it works- you can't even get 100% mortgages anymore let alone mortgages in excess of the purchase price.

If you offered £110k the maximum you could borrow is 95% of that so £104,500 and even then your borrowing options are quite limited with that loan to value ratio.

That means you'll need £5,500 deposit plus fees plus the funds to do any work required, in cash.

You mention your 'budget' for a house- what's that based on? It needs to be based on a lenders affordability calculator rather than what you think you can afford- check out the big high street lenders websites if you haven't already.

[MummaGiles]

Yes. Listen to bearbehind. You need to look at how much you can borrow based on your deposit and salaries. First time buyers often need a bigger deposit so I would be surprised if you could get a 95% mortgage - I would have thought you'd need at least a 10% deposit (I.e. PS11,000 on a PS110,000 sale price and a PS99,000 mortgage).

[MummaGiles]

Why have my pound signs come out as PS? That's weird.

[notarehearsal]

19 years ago my curent house was for sale for 120,000. We offered 90,000. It was accepted. The owners had just emigrated and were in the starting process of renting it out, they clearly preferred a sale and we'd just sold ours. All the years later it's up for sale again, three viewers but no offers yet