Buying a new house

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Looking for advice really. House prices are fairly cheap where we live, so take that into account when reading this.

Live in a three bed terrace house currently mortgage free. This is perhaps worth about £100-110K nowadays. I love it here, but have been open minded about moving for a while. We have one daughter and we are expecting another in Sept, roomwise I think we'd be ok, but it may be getting a bit of a squeeze with extra toys etc.

Have just come across an absolute bargain of a house. It's £120K for a 5 bed, 3 reception, 2 bathroom with two attic rooms. Similar type of location to what we are used to (close to town, fairly oldish type neighbours, close to the pleasant walks we like to take etc). It's got a tiny garden but backs onto a park. On the same street as the school our DD is due to attend.

Have some savings, so if we did buy it we'd need a mortgage of about £45K. Is this about £250 a month currently?

Have yet to see it, so it may be an absolute sh!thole inside.

If we did want to buy it quickly, we'd probably keep our current house and rent it out. Looking at rental prices, we'd probably get about £400-450pcm for it.

I'm thinking of making an appointment to see it.

Sort of scared about moving and out of my comfort zone...what do you think?

What kind of things would I have to consider if renting out my current house?

Thanks.

You need landlord insurance.

You need a gas safety certificate for the house and electrics etc must be up to date.

There are various options on letting agents etc, but its easy enough to do yourself. Finding and vetting tenants is the hardest thing (and you can use an agent for just this if you want). Saying that I just stick a sign in the window and have got mine that way.

You would start on a 6 month assured shorthold tenancy, and then either keep on that or switch to a longer one if you wish.

Pitfalls - you have to have money readily available. Anything that goes wrong must be put right quick smart, so if the boiler goes you need £1500 at hand etc. I let unfurnished (so I am responsible for less things).

If/when the house is unlet you still have insurance and council tax to pay (you get a few months free at the start).

I would go for it in your shoes, a £45k mortgage is very small, and the rental income will cover it most of the time, just make sure you can afford it if the other house is unlet.

I think £45k might be more than £250 a month, I have just under £30k and pay just over £200 pm.

Halifax have a mortgage calculator on their website that will let you play about with figures so you have an idea.

You will also need about 10% deposit, so £4500 cash to put down (speaking to a broker would be advisable as they can tell you if you will be able to use the equity in your current home inplace of a cash deposit).

Thank you oreocrumbs, that was really useful.

The other thing I was considering would be an offset mortgage, so we could have access to the money if we needed it. I guess I'm nervous about giving up the 'safety net' of our own house and some back up savings, but I'm thinking it may make more long term sense to take a few risks.

Well, I suggest you see a broker or a bank and see what options are available to you, and then you have a start point - I'm not very up to date with whats happening with mortgages at the moment so no help there!

I always err on the side of caution, but to be honest I think you should jump on this. I'd take your hand off if I was in your position.

I would also look at how the odds stack up if you were to get a £50k morgage and keep £5k to sit on. However, savings are earning you nothing at the moment and a mortgage will cost you money so I would borrow as little as possible.

You would still have alot of security - you own your rental house so worst case you end up back there. There will be lots of equity in the new house, I really don't think a 5 bed will drop that low in value, so again worst case and you have to sell you would still be able to clear the mortgage and walk away debt free.

Thanks oreo, that all makes sense.

We've been here 12 years, we'd planned to move after 5 years or so, but then house prices went crazy so we stayed put. Have got a bit too comfortable and risk averse.

Think this house is a good deal, if everything is ok inside. There's some pros and cons compared to our present house - busier but still relatively quiet road, tiny garden, parking permits etc but loads of pros.

Will have to make an appointment and see it I think.

The one thing I am wary about is that it currently belongs to an ex-drug addict/ criminal turned good (think he's been clean for 20 odd years). He does some amazing work in the community with addicts and is well known locally, but worried that his contacts may know where he lives. My husband knew just from looking at the house on the internet that this man lived there as he had seen him leaving one day. Would that put anyone off? The area/street itself is very respectable and elderly.

I wouldn't have thought it would be a problem. His contacts are likely to be people coming to him for help and guidance and will know when he has gone. I don't think you need to worry on that account.

You can find out what the crimes etc are on that street online (I'm not sure where but I shall google), and that should give you a good idea.

I would be more interested in the park behind the house, I'd be checking that out to see if there are groups of kids hanging around at night.

I shall see if I can find a website with this kind of info on!

Thanks orea - I'll have a look, I think I've played on that website before.

Found it - no crime on that street in the past few months. Think it must be pretty normal.

You only get 6 months without paying council tax if you've no tenant if you're letting unfurnished (presumably you'll be taking all your furniture with you).

Unfurnished would still usually include white goods, which you'd be responsible for repairing or replacing.

Letting agents charge about 10% plus vat to manage a property. If you're going to live near your old house you could try managing it yourself, but that's not for the faint-hearted.

Personally I wouldn't wipe out all my savings. As oreocrumbs suggested you could get a slightly larger mortgage in case you need to repair anything at the new house too.

Well done, I got distracted from my search by the kettle and the chocolate fingers .

I think you should look into it all, and then you have some real details and an idea of how things could pan out.

If this house isn't for you, then look at what is available, there are bargains to be had, and you are in a sound position should you want to buy a second house.

Just be careful to do your sums. Look at what would happen if you lost your jobs etc. Also make sure you are leaving yourselves some money free each month to put aside, there will be interest rate rises at some point. Again I wouldn't worry too much on a small mortgage, but you know your income so just make sure it all adds up.

It is daunting to take a step up but also in the long term very rewarding.

Thanks cokefan.

Perhaps I'll have to play about with the figures and work out the best savings to mortgage ratio for us.

New House is £120K.
We've got nearly £75K in savings.

Old house - owned outright (worth about £100K ish, maybe £400ish rental income a month if we rented it out).

I'll ring the estate agent tommorow and make an appointment. If anything at least it will give me an idea of whether it's worth pursuing or not. We may hate it.

Thanks oreo, I think that's what I'm worrying about with all this recession news. I'm a SAHM at present, my DH has been in his job for about 15 years and earns about £40K, so it would be affordable. I just worry about job loss and that if it happened to us in our current house, yes it would be absolutely gutting but we'd have some breathing space to sort ourselves out.

I think you can still take out those payment protection plans the ones everyone was miss sold and are claiming back, just check you are elgible.

You would also have the back up of the rental income to pay your mortgage in the event of a job loss so you have a back up plan. Of course neither is fail safe, but you would be fairly low risk. The people facing problems are those with too high a mortgage than they can afford and negative equity.

I should think even with a mortgage payment there would be money left from your DH's wage to start saving again. You are clearly good with money to be in the position you are now!

Thanks oreo,

We'd try and clear the mortgage asap again as both of us are a bit scared of debt. It was pretty easy in this house as bills were relatively small, so we could put away fairly big percentages of income away each month if we set our mind to it. Not sure how much the bills would be if we moved, guess that's something to consider. It's a similar style house in terms of period and features, just almost double the size. Maybe that means double the heating/ electric/ maintenance!

All things to think about, but don't be afraid of at least exploring all the avenues. You are clearly very savvy and not rushing blindly into something.

And you would remain in a very strong financial position.

Best of luck, do let us know what you think of the house when you see it!

Will let you know! Will prob ask to see it on the weekend. There's no pics of the inside online, so not expecting much! Will be open to it though, so long as it's sound and has decent natural light etc. Can always change the decor!

Thanls for your help!

Thanks for all your help last night, went to see the agent today and booked an appointment for Saturday. Found some pics online with another agent and it definitely needs cosmetic work but I think if we did it up slowly it could be stunning in an old house way.

Oooh it sounds just my cup of tea. I love old houses that you can dig around in and unearth the hidden treasures!

Don't let some work put you off. As long as you can live in it (safe electrics/plumbing etc), then you can really mould yourself a family home. You would probably want to wait untill you have your baby up a bit before hand though!

Even some major work doesn't always mean its too much to do, if you think it might need something structural doing take a builder with you for a second viewing and he can tell you what would be needed and cost.

I looked at an end terrace a few years ago and was put off because the outside wall bowed - I was wary of how much work and money that would be, looking back I wish I had priced the job and researched it as I still think about that house it was lovely.

Hi oreo, went to see it today. I'm confused.

It's a repossession and someone has offered £80K for it, which is likely to get rejected. The estate agent told us to call on Monday to see what is likely to be accepted after she speaks to the bank.

There was lots of cosmetic work as we already knew - e.g. plastering of ugly interior walls/ ceilings, carpets, flooring. I saw some cracks and some damp peeling wallpaper and some of the floor upstairs was lopsided (not terribly so, but enough to notice). Seemed to have new boiler, radiators and electrics. Kitchen was ugly but livable with and fairly recent, same with the bathroom (but this was a small one compared to the size of the house.). Windows would maybe need replacing as some were not shutting properly

It could be lovely though as all the period features were still there (doors, dado rails, picure rails, staricase) and it was quite light and airy.

Not sure now!

Well cosmetics aside, you need to look at the cracks and damp. Cracks in old houses are common - especially ones that havn't been plastered for years - all houses move. I think the test is if you can put a coin in a crack then it is a problem. Next the damp - you need to see where it is. Is it near a bay window or a down pipe that might be leaking, hows the roof - have a look on google earth for an ariel view, by no means a proper check but will give you an idea if it is dreadfull or not.

Ring a local builder - tell them that you are looking to buy a house that needs work and ask him to come with you and advise on stages of work and prices. First stage to make house sound (treat damp, roof, if the cracks are a problem do the walls need to be tied), then price for knocking things around, making a second bathroom, wc that sort of thing.

You will then have an idea of what you will have to spend and when. Cosmetic side, well you can get a professional cleaner in to clean the carpets/kitchen etc and then do as you go. You will be able to re carpet and decorate your bedrooms for not too much (and again can do as and when), the kitchen can be improved by buying new doors if the carcasses are sound and if the bathroom is grotty then you can pick up a basic white suite from B&Q for a few hundred pounds.

When you are fully informed you can make a judgement. It will take time but could be an amazing family home, over time you can unearth the hidden treasures and mould it to your needs. On the flip side you are going to have 2 young children, and even decorating is a pain never mind renovating when you have them to juggle!!

Nothing ventured nothing gained, but you really have to think about your sanity over the next few years too!

Did it excite you when you were there? Could you see past it all to when its a lovely home and your DC are running around or did its problems overwhelm you?

Was the garden and parking an issue too?

Also if the current offer is 80k, you could get the house for 100k and have 25k to get initial works done and basic decoration while you stay in your current home and have your baby and get settled before you move.

Lots to think about but most definitly worth a second viewing with a builder

You do need a professional opinion before you put an offer in though because the sloping floor, cracks and windows not shutting can be either a mixture of fairly minor problems or subsidence which is a biggie (not insurmountable but that is major and expensive work) so you need to know what you are getting into. (And if you decide to, offer accoringly)

Thank you oreo, you are very knowledgable! I've been thinking about it overnight and I'm still tempted. I don't think my husband is though!

I went out with some friends last night and one of them is a plumber who'd gone to this house a few months ago. Apparently the people living there said that the whole side of the house needed the render taken off and redone - I think because of damp from bad guttering. Looking at the roof tiles, they looked ok from the ground up - that's a good idea about google maps, will try that thanks.

Garden was small - like an U-shape going around the length of the house with a decent sized patio area at the bottom of the U shape. We're not keen gardeners anyway and the park is not far. I guess there would be enough space for a few outdoor toys so it wouldn't be so bad.

Parking, I think we'd need to get parking permits as it's quite close to the town centre, there seemed to be plenty of space there though. The road seemed fairly quiet as we sat there waiting for the estate agent for almost 1/2 hour. Mind you that is on a Saturday so it may be different at different times of the day/ week!

I've just been on right move and cannot see anything on there for a similar size/ location under £170K and then I am not fussed on those locations as they are on main roads into town and I'd rather a quieter spot.

I do think it could be lovely after all the work as there's lots of rooms and they are all pretty big (mostly 4+m squared at least except for a few). Plus the light was good for a house of that size. I could see us living there if everything was done!

Thanks for all your help - I really appreciate it. I'm going to try and work on my husband to at least get a builder to come and see it with us to give us an idea on the costs.

I love houses, and my Dad was a property devlolper (and many other things) and I did a lot with him from being very young! I'm no expert but I've seen alot of things and the main thing I've learned is that alot of jobs are not as bad you fear, its always worth doing your homework properly before you discount something.

If you do decide to buy the house get a very detailed survey done (the most expensive obviously) because there are red flags in that house that must be checked before you commit!

Re rendering while not the cheapest of things is not anything to worry about, and if the damp is from the guttering then (depending on the extent) again its not too big a job. Just keep the maths in line and go into anything with your eyes open!

If the nearest similar houses are 170 then be prepared that the house is priced that low because there is at least that much to spend on it to bring it up to scratch. What you need to find out is how much is urgent and how much you can do over time.

Good luck whatever you decide!

Thanks Oreo, I've been thinking all day and I think we've decided against it.

I've been on right move and sort of seeing what we could get if we decided to pool everything together plus a mortgage of about £75K and we could get some beautiful houses for around £250K.

I'd be a bit wary of putting all our eggs in one basket (which is why I liked the idea of two houses to spread the risk out), but I think the reward would be worth it.

So I think we are going to tidy our house up a bit in the next few months (we need to do this before the baby anyway - plaster the back bedroom and put down new flooring downstairs), so when it comes to selling it should go fairly quick if we are realistic about pricing and also try and save some more in the meantime.

Thanks for all your input. x