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AIBU?

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Original poster

Help me decide what to do - moving house

36 replies

SecretWorrier · 02/10/2022 17:25

We have sold our place and are renting while waiting for our purchase to complete. This means we have 200k in the bank ready for our move.

In May 2021 we offered on a house and it was accepted at 400k. Barclays bank then sat on our mortgage application for a number of months despite much chasing, and eventually the purchase collapsed at Christmas.

We waited for the market to get going again in the spring and in May 2022 we found a house at 465k. Now with a national building society, we are in groundhog day. It has been with the underwriters for so long the vendors have given us a two week deadline to get an offer. (We did have a DIP)

We are seriously losing hope and losing this sale would realistically mean waiting until the spring again as the market and particularly rhe mortgage market have changed.

Today we had a mad thought and looked at some auction properties. There's one that needs to be renovated, roof is sound, but it's still in the 1970s inside. Opening bid is 200k. We are wondering if we could do it up as a project to reduce the amount of mortgage we need.

What would you do? We have no idea if this mortgage will come through, and no idea of we would even win the bids.

We do have some experience of fixing up.
Yanbu- auction
Yabu - wait for spring and carry on original plan

OP posts:
JudgeRindersMinder · 02/10/2022 17:26

As long as your eyes are open to the cost of renovations. We’re doing a 60s build Reno just now which we had hoped to do for £50k, but we won’t see change out of £100k.

OhhhhhhhhBiscuits · 02/10/2022 17:30

Highly likely the auction property will go for more than 200k and then you will have all the legal fees and no time to get a mortgage on it for the work needing doing.

Keep looking is my advice.

CollyWibbleWobbles · 02/10/2022 17:34

I don't think they'd be keen to lend on an aution property. I'd keep looking too

Original poster
SecretWorrier · 02/10/2022 17:37

We wouldn't need a mortgage with the auction one.

OP posts:
MilkToastHoney · 02/10/2022 17:38

Just be aware if you win the auction, you usually have a short period to complete (can be as short as 28 days, sometimes 60 days but still doesn’t give you long).

You agree to paying a percentage at the time of winning the auction which is lost if you don’t complete in time. You need a REALLY good solicitor who you can reply on. I wouldn’t reply on mortgage funds, only cash you have available. If the mortgage funds don’t come through on time (realistically this could very easily happen) you risk losing thousands that you’ve put as a deposit.

If you’re experienced at renovating and have the cash plus a good solicitor, auction can be a great option but only bid money you actually have, don’t rely on mortgage.

Actions can be a fantastic investment but it can take experience of looking at properties to know what will need spending, if any structural or other hidden issues, if you need to get someone else in to look before bidding, knowing if it’s just a case of updating decor or if you need to fix any problems first etc.

Also, are you are planning to stay in rented while you renovate? This is hard as you will need to spend a massive amount of time at the renovation property. Can you take time off work to project mange, get quotes, go to buy things, supervise builders when needed, clean up after constantly etc.
Living in the renovation property is also hard as you need to adapt the order in which you work, manage without a kitchen, live in constant dust!

Electric1Driver2lessVehicle3 · 02/10/2022 17:40

If you buy at auction

You have 1 month to pay in full, plus the auction fees & solicitor fees (read the auction company exact T&Cs)
If you pay late, the auction company will charge you a daily late payment fee.

Normally it is cash buyers only at auction

MistyBean · 02/10/2022 17:41

I'm wondering why your mortgage is taking so long to confirm, both times I'm moved they were confirmed very quickly. Understanding what aspects are taking time might help you decide how to move forward?

MilkToastHoney · 02/10/2022 17:42

We wouldn't need a mortgage with the auction one.

If you’ve got 200K in savings and opening bid is 200K, it’s likely it will go over 200K at final bid. Plus you’ll need solicitors fees, auction fee, cost to renovate?

Original poster
SecretWorrier · 02/10/2022 17:43

Well we are self employed, which I don't think they like very much. It's the only explanation I have.

We have the cash in the bank for the auction property. It's a bit over 200 that we have. We would be able to complete on it, without a mortgage, in time.

OP posts:
Aprilx · 02/10/2022 17:53

SecretWorrier · 02/10/2022 17:37

We wouldn't need a mortgage with the auction one.

But you don’t know the price of the auction one.

I would stick with the one you have, the vendors will soon realise the market is turning and growing less favourable for them.

TheOpenRoad · 02/10/2022 17:53

As others have pointed out, auction completion times are very short but importantly, there are often additional charges and fees which can be as much as 40% of the final sale price. I was looking at an auction today where the fees added up to 36%.

Please make sure you understand all costs.

MilkToastHoney · 02/10/2022 17:57

Well we are self employed, which I don't think they like very much. It's the only explanation I have.
**
We have the cash in the bank for the auction property. It's a bit over 200 that we have. We would be able to complete on it, without a mortgage, in time.

Yes, they hate self employed-it can be a nightmare!

If auction is starting at 200K though, it’s likely to go a fair bit over. Plus the action fees, solicitors fees, renovation costs. I’d say you’d need over 300K cash for an auction with a starting bid of 200K. That’s assuming it doesn’t go massively over the starting bid.

Have you got experience with your solicitor? The difference between individual solicitors can be huge and I’d only trust one I’d used several times to guarantee completion for an auction.

Original poster
SecretWorrier · 02/10/2022 17:59

Aprilx · 02/10/2022 17:53

But you don’t know the price of the auction one.

I would stick with the one you have, the vendors will soon realise the market is turning and growing less favourable for them.

Show quote history

Thank you, however we don't have one. We've been trying to move for a number of years and it's looking like we cannot get a mortgage to be able to get a house that doesn't need work.

OP posts:
Original poster
SecretWorrier · 02/10/2022 18:01

MilkToastHoney · 02/10/2022 17:57

Well we are self employed, which I don't think they like very much. It's the only explanation I have.
**
We have the cash in the bank for the auction property. It's a bit over 200 that we have. We would be able to complete on it, without a mortgage, in time.

Yes, they hate self employed-it can be a nightmare!

If auction is starting at 200K though, it’s likely to go a fair bit over. Plus the action fees, solicitors fees, renovation costs. I’d say you’d need over 300K cash for an auction with a starting bid of 200K. That’s assuming it doesn’t go massively over the starting bid.

Have you got experience with your solicitor? The difference between individual solicitors can be huge and I’d only trust one I’d used several times to guarantee completion for an auction.

Thank you. I expect we would go with a solicitor recommended by the auctioneer. The one we used for our sale was dreadful.

OP posts:
MilkToastHoney · 02/10/2022 18:21

Thank you. I expect we would go with a solicitor recommended by the auctioneer. The one we used for our sale was dreadful.

Yes, some can be awful.
I don’t want to sound negative but I’d be incredibly wary of using a solicitor for auction you’ve no personal experience of.
Estate agents, auction houses very often recommend solicitors who are rubbish!
You are risking thousands if solicitor turns out to be like your other one.

Realistically, you also need to be very familiar with the conveyancing process.
It can take a lot of work and chasing on your part to push through for the auction time frame. 4 weeks isn’t long at all and you have to be completely on the ball to chase solicitor, estate agents, auction house, make sure you get the correct paperwork completed and back in time, no errors on your part that can delay things (then solicitor blames you), proof of funds all spot on.

CollyWibbleWobbles · 02/10/2022 18:30

I agree with @MilkToastHoney , be very careful

DoingJustFine · 02/10/2022 18:43

I love the idea, and your resilience! But it'll never sell for just £200k if it has potential.

Have you read the information pack? You'd want a survey done before you bought it, which will be £££, and possibly wasted if you get outbid.

What money are you expecting to use for the renovation? Are you thinking you'd mortgage the house after you bought it?

Original poster
SecretWorrier · 02/10/2022 19:00

Thank you for replies. It seems the voters think I should go to auction but the commenters do not.

What would you do in terms of not be able to get a mortgage? I asked a friend who is also self employed how she'd gotten a mortgage - it was a rhetorical question really - and she said she had worked her butt off to get a deposit. Well we have a 50% deposit and we are still struggling. No personal debt, impeccable credit scores and over 5 years books.

OP posts:
DoingJustFine · 02/10/2022 19:11

I'm self employed and used a mortgage broker to do my mortgage. (They're free as the mortgage companies pay them.)

I needed 3 years of SA302 (if I remember right) forms from HMRC. Do you have those? And loads of bank statements.

I know the 4th SEISS grant has stopped lots of people getting a mortgage. Did you get that?

FruitPastilleNut · 02/10/2022 19:12

If the auction property goes for the opening price - or anywhere close to it - there's something very wrong with it. Opening prices are usually set very low ime and it's not unusual for a house to go for 50% more.

Original poster
SecretWorrier · 02/10/2022 19:14

DoingJustFine · 02/10/2022 19:11

I'm self employed and used a mortgage broker to do my mortgage. (They're free as the mortgage companies pay them.)

I needed 3 years of SA302 (if I remember right) forms from HMRC. Do you have those? And loads of bank statements.

I know the 4th SEISS grant has stopped lots of people getting a mortgage. Did you get that?

Yep. We did. No idea at the time that it would be a problem.

OP posts:
DoingJustFine · 02/10/2022 19:27

Yep. We did. No idea at the time that it would be a problem.

Same! I even paid mine back when I found out it would affect future mortgage applications, but it's still on my file. I need to see if HMRC will remove it from my records.

Have the mortgage companies mentioned it being a problem?

DoingJustFine · 02/10/2022 19:29

Worst case - you just wait 2-3 years and it will no longer be an issue. Some mortgage companies only need 2 years of accounts, the others need 3.

Have you used a broker? Mine was fantastic.

MilkToastHoney · 02/10/2022 19:38

In terms of going for the auction, how are you funding renovation, paying fees if your capital is not much over the auction starting bid?

MilkToastHoney · 02/10/2022 19:40

SE - you can still get a mortgage, it’s just often harder. You may need to reduce the amount you want to borrow or look for a smaller bank that lends on circumstances rather than ‘computer says no’.
Has your lender actually declined you?

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