First time buyer wanting advice....(24 Posts)
I am 28 and desperate to buy a house. I am so sick of renting and living in the same crap conditions / uncertainty as I did when I was a student. I have dealt with rats, dodgy repairs and damp for 10 years now. Whilst paying out the teeth for it.
I'm hoping to get a house in the region of 120-170k, which i know is quite a big gap but its more to do with wanting somewhere at the lower end and seeing the odd bargain appear on Zoopla whilst wanting to remain realistic.
I'm not bothered about having somewhere big, I just want a bit more stability in life and the ability to own a cat, ha.I would go for a flat but where I live most of them are new build so are actually similar prices to 3 bed terrace houses and I worry about the ability to sell it in 10 years if I want somewhere larger. I would eventually like a garden as well and I worry that a flat would just feel temporary and I would want to move again within 5 years.
I am in the unusual situation (I think?) of having a large amount of cash available as deposit but quite low wage and being single income, no kids. 19k income , 60k deposit. I am hoping to get a payrise in Feb to be closer to 25k. I expect my wage to rise quite a bit after this as I'm in a training role but with the way the economy is...
My mother is able to help me with the deposit which would add another 15k and my Grandpa will help me cover costs like furniture (Im thinking like £2000?)
I am aware there are solicitors fees and I assume fees to setup a mortgage etc and maybe stamp duty if I buy at the higher end of my budget, but i'm not sure realistically how much these are , and how much I should leave aside for this.
I am also unsure about how is best to get a mortgage, do I just go to my bank or should I go through an advisor? my sister did but she is earning a lot more than me (50k+ with 2 incomes) and was buying in a much more exspensive market. I think it cost her £800.
I would like to borrow as little as possible within reason, which I guess is a common theme. I am OK with the idea of buying somewhere that needs a bit of TLC, but I have no DIY knowledge and I don't know really what to look for as a "AVOID AT ALL COSTS " repair or "this is exspensive but a one off cost and totally fixable" (like needing a new boiler for example). I feel quite lost in this, I feel like my peers have parents or sibling support to come view the house with them and advise, whereas I don't. My mother isn't able to help as she is quite frail and lives a few hours away. My sister is also several hours away and is a bit fustrating to talk about with this , for reasons i wont go into.
I think I've rambled a bit here so incase its not clear what I'm asking for:
What things to desperately avoid in a house that needs TLC
What services /fees should I account for that I might not of thought of?
I would add the cost of a homebuyers survey into that. If you can try and get a surveyor that comes via personal recommendation, same with solicitor. I think fees for these things can differ by area but I would imagine something in the region of £500 for survey £500? Solicitor. You will have to pay for searches on top of that (maybe £200/300ish paid to solicitor)
Your surveyor should be willing to talk you through the survey results in laymans terms and can often give you a guesstimate on cost to make good and let you know what actually needs to be done and what is just something they have to flag. I.e. We were told that our stair banister was outside of current standards and that it should be changed if small children or elderly were to be living in the house. In reality the spindles were spaced a cm wider than the current recommendation.
Surveys always look scary when you first read them.
Do you need to pay for a removals company or even if you need to hire a van. Add that cost in.
I would definitely make sure that you keep money in reserve for fixing things you discover once you move in (the surveyor may not catch everything)
I would personally go to a broker (one that doesn't charge a fee) and speak to them first. Once you've done that you can shop around yourself and then find the most appropriate deal whether it's something you find or through the broker. I've not used one before but I think they can be quite helpful in guiding you on paperwork and also chasing up your application.
As a mortgage adviser I see this a lot. First bit of advice. Don't bite off more than you can chew. Also don't buy a flat. More difficult to sell, extra expense.
Don't go direct to your bank, see a reputable whole of market broker. They will go through all fees, the house buying process, and will hold your hand a bit through the process which can save you time and stress.
It depends where you live: in London and several hotspot areas, flats are a completely normal first-time purchase due to prices but, if you have the chance to buy a small house, that is a better long-term investment as they are virtually always freehold and you don't end up paying out ludicrous/dubious service fees.
As pulling said, it's much better to speak to a mortgage broker who will compare mortgages across the market for someone in your circumstances (I've used London & Country in the past and they take commission from the mortgage provider so their service is free to users, I found them pretty helpful). A great deal of mortgage fees can be added to your mortgage which helps with upfront costs although, of course, is more expensive over the mortgage term.
In terms of a house that needs TLC, be realistic. I read a lot of people on MN saying that they are buying a property that hasn't had anything done to it for decades and think that it will be merely redecoration - if the paintwork/flooring/light fittings are old and knackered, you can absolutely guarantee that the wiring/plumbing/heating and possibly windows and roof will need work (bear in mind that if you do buy a flat, you will not have any control over the common areas or things like windows etc usually). Although it isn't a foolproof method, you can have a look at the socket plates, light switches and consumer unit (fusebox) and, if they look in reasonable nick/modern, it indicates the wiring is probably ok. Likewise newish boiler and radiator is a good sign. Look out for damp patches especially in ceilings with flat roofs above them or around windows.
I'm in London and it is certainly a buyers' market here at the moment so, if that is the same in your area, I would just take my time seeing as many places as you can that are within your range - or possibly slightly over - and not let yourself be pressured. You will build up knowledge and a feel for what you want as you progress. Good luck.
Thank you all for the advice
ilikedogs: what's the searches fee for?
pullingmyhairout: Thanks, for reaffirming my worries about flats. I can't afford to mega fussy given I'm expecting to only be able to get a 100k based on my income mortgage so I was wondering if I was restricting myself ot much by not wanting a flat. Can you explain to me what a market broker is? Is it the same thing as a mortgage broker? Will they not charge me? I thought that was how my sister got hers and she paid £800 in fees, have I just misunderstood her? I will take your advice though, I am a bit scared of doing this 'wrong' given I dont really have any family who can hold my hand through the process.
Lalalonglegs: My impression of the market here isn't great. The house price I stated is on the low end of whats doable round here. I am probably going to have to move out the area that I rent in, but I am mindful that Idon't want to move somewhere that'll make me miserable/scared. I am looking at moving to an 'up and coming' area nearby and am part of a few facebook groups to do with the area and people talk about having 'open house' days to sell and getting 30 sets of people through the door! I live somewhere with lots and lots of graduates staying after university so I imagine lots of first time buyers... also would have thought you'd guess I'm not london due to my house price range ;) some great tips there!
We saw a couple of brokers free of charge (they take their fee from the lenders) and both suggested our current bank/lender are best. So we went to the bank who offered us an even better deal than advertised as we're existing customers.
Search fees are paid up front and obligatory. They cost £300 ish here. They have to do searches to check the property and location history. Takes 3 weeks ish but will reveal works done, environmental concerns, drainage stuff, weird covenants about pigs and similar.
We're selling and buying and have stamp duty to pay. Our legal fees are 6k in total.
It takes around 12 weeks on average from offer to completion and is stressful. We've just managed to do it in 4 weeks and I've aged 10 years and spent hours chasing solicitors and agents.
A survey will condemn the house. Talk to the surveyor. Insufficient sealant on a bath edge for example is listed as "urgent" in red and underlined. It's a £10 job and a mooch round B&Q but the survey makes it sound like the bathroom is a money pit. You might find it lists vermin in the loft (common and easily fixed), damp (impossible to avoid in properties of a certain age), electrics and heating which are old and unchecked but in reality, serviced and functional. Basically, don't panic. Ask.
The searches are done by the solicitor and as far as my experience goes paid for on top of their conveyancing fee. These are examples of what the searches look for copied from another website.
Local search – to obtain a variety of information from the local council, such as whether the property is affected by plans for a new by-pass or a planning enforcement notice
Drainage and water search – does the property have mains water and drainage? The local water company will also provide other useful information, such as the position of pipes
Environmental search – is the property affected by contamination which could involve costly removal?
Planning search – find out whether the neighbours have got planning consent for a large extension, or a planning application has just been lodged for a new superstore down the road.
Flood risk report – check whether the property is at risk from flooding
Coal Mining, brine pumping, and other mining searches – to find out if the property could be affected by old mine workings, or a new opencast mine
Land registry search – make sure that the seller still owns the property on completion
Another recommendation for London and Country mortgage brokers. You can call on freephone including in evenings, they charge the mortgage providers not you and will be able to give a clear picture of what you can borrow / options.
I would start there and then have a look at the other posts here / online for rough estimates of other fees, then head to Rightmove / Zoopla and see what you can afford.
Good luck - it's exciting!
Another big thumbs up from me for London and Country (L&C). They are free, but you will pay a mortage arranagement fee to the lender - maybe up to £1000. You can get no fee mortgages, but they're usually not such good APRs. L&C will offer you different products. You can get an idea of the products available now.
Solicitors actual conveyancing fees vary, the cheapest from various online companies is about £500. You also pay the solicitor for searches, bank transfers, stamp duty - these will be the same whatever solicitor you use. You can ask for quotes now based on a purchase price of £x.
All mortgage lenders will insist on a survey of the property, but most are very basic. Budget £500 for a more detailed one, £1000 if youre going to buy a doer upper and need more checking. Surveyors can also estimate costs for any work, or take a builder round on a second viewing.
As for what to avoid - subsidence, properties that have flooded in the recent past, listed buildings (as a novice).
Things like new boilers, damp, new bathroom, kitchens, double glazing, roof repairs all obviously have a cost and time implications, but presumably youre not doing it yourself, so arent a huge deal.
I know it all sounds daunting and to do it on your own is scarey - but do one thing at a time. L&C first to know what you can afford, a few solicitors quotes to work out what cash you need to keep aside, then just get out and view loads of properties until you feel comfortable and know what you like/dont like.
A 100k mortgage on a salary of 19k? That's very high. I could be wrong (and hope I am) but I wouldn't have though a bank would loan you more than 5 times your salary. You need to speak to a broker or bank and make sure you have a realistic sense of what you can borrow. I hope it works out for you
Puffedsleevedress: Yeah I think £100k is a bit ambitious, its probably going to be closer to £80k if I went tomorrow. I said £100k without really thinking because I have been telling myself I may as well wait till I get told if / how much my pay rise will be in Feb and I'm guessing (hoping?) wage will go up to about £25k and I've been told normal is 4x salary. Its pretty normal for people in my industry to be earning £35k once they are fully qualified (2 more years for me if everything goes well), I'm just not sure how it scales. I'm also not sure if would be able to borrow more on the basis that excluding illness my earnings should increase a lot more in a couple of years. I don't know if banks take that into account? I've heard of med students being able to get large bank loans on the basis that they will be earning a lot in future. I'm not aiming to just get the highest mortgage I can blindly, its just there aren't many places in my city for less than £140k, and those are mostly fixer-uppers. Which is also why I wanted to learn about other costs because like anyone I'd like to keep some emergency money back and not put every penny I have as a deposit....
MoneySavingExpert do a first time buyers guide that will help you get an idea of how to find a mortgage and what kind of fees you will have to pay.
In terms of advice on repairs, I would recommend finding a good local surveyor who will be willing to talk you through the survey findings and what potential costs may be.
Most places now look at affordability instead of multiples of salary. So they do a breakdown of current living costs and work out what you can afford to repay each month. Then they extrapolate out to find a maximum loan. We were offered 5.5x salary as a top end. Needless to say, we didn't take that much but that was our maximum loan.
I would caution against getting something that needs anything other than a lick of paint and maybe new (cheap) carpets.
You won't have the spare cash or the know-how to sort. Or the time and support (you said you're in a trainee role which I'm guess will be quite busy, no nearby family).
Ps I took 5.5x income multiple a few months ago and am finding that amount of debt is too high to maintain my previous living standard on. Luckily have just had a significant pay rise so I'm technically back to 4.8x and those feels much more comfortable.
Do you have any friends who will come house viewing with you? Me and a friend teemed up and she looked with me and I've been looking with her.
This is all really good advice, I am shamelessly taking notes
We are FTBs although DH has bought & sold his property in the past.
Would dearly love to avoid buying a flat but here in S/SE London there is very little choice in terms of what we can afford!
Flats are expensive- ground rent, service charge etc- it all adds up, plus in most cases you don't get any private outdoor space, a balcony doesn't really count, especially not with young children and although communal gardens can be nice, you are paying for all this through service charge etc.
I'm a frustrated FTB!
Mortgage Broker is the same but some brokers are restricted to a few lenders and a whole of market will have a larger number of lenders represensitive of the whole of the lending market.
A good broker will take into account all of your circumstances and discuss all options to your individual circumstances.
Open a Help to Buy ISA – even if you’re planning on buying soon you could benefit from the Government bonus. You can save up to £1,200 in your first month, then up to £200 a month after that. You can earn interest tax-free (varies depending on who the ISA is with) and then the state will add 25% free cash on top of what you save. Basically for every £200 you save, they’ll add £50.
It can be used for any property costing under £250,000 (£450,000 in London) and any mortgage.
You need to get your solicitor to apply for the bonus cash when you buy a home and the bonus can only be obtained at completion.
your broker will tell you what max amount you can borrow - will vary with different lenders - and how much per month that is and how much youll need cash upfront (deposit, fees etc) for the mortgage.
You really need to speak with a broker first, or you're just wasting time on somethng that may not even be possible. btw I dont think youll get anything more based on possible future earnings and youll probably need to have earned your current salary for 6 months.
Ihearthoumous: thats one I actually have already thought off! I opened one about 4 months ago and have put the max in I can so far
And Sunnyshores, it will be possible, its just a case of it being now, or in a while or if I have to consider moving further away to somewhere I'm not keen on and commuting. I'd be shocked if I couldnt get ANY mortgage.
That 6 months thing is good to know though. Although it wouldn't be the end of the world to calculate monthly repayments based on my current salary if I get a payrise as it means if something goes wrong I'll have already factored in breathing space for my finances
Yellowdraw yeah I'm mad busy at the moment ... I take exams so it comes in peaks and troughs, its going to be difficult and maybe not possible to time things during the troughs ( though a trough is still a 45 hour work week). But I just wanted to dip my toe in , see what I can afford etc and maybe start making plans. I have a friend who is going to start looking soon so I will try and team up with him, though arranging times when we're both to go would be trickier part. He will have similar "wants" as ido though so it may get a bit competitive if we find somewhere we both like haha.
user1480157310 are you doing your ACA? A fixer-upper will be tough if so as you'll need weekends and evenings for revision not dealing with building work.
ACCA, so close! I work in industry not audit so its taking me a bit longer as I do 2 exams per 6 months on average. After next week I'm halfway there. Yeah I think you're right really, though I wish you weren't. I mean I've lived in a lot of rented dumps (mice, rats that reached my bedroom, damp so bad my clothes went mouldy, broken boilers, TWO toilets that cracked and flooded the house, floor collapsed to flat below, getting electrocuted - and these are all problems in 5 different houses over the years! ) . So I'd be OK living somewhere a bit dumpy and then investing in fixing it up when I've finished studying. I know things like roof repairs and plumbing are a no-no. But I could cope with things that are just cosmetically really ugly or say, cold but livable and could insulate / double glaze when I have time and funds. But I think I'm going to listen to whoever it was that said that if the decor is really old then it suggests there will be underlying issues and tread very carefully for anywhere that doesn't look well kept.
Well good luck with your ACCA and finding something to buy :-)
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