How do we know our maximum we can offer?

[NotJustACigar]

A house we love is on the market at £289,000 and we are going to view it today. It's been on the market for six months and has dropped in price from £299,00 recently. The EA has told us the owners are motivated because they've found a place they want to buy. However they also say another couple is booked in for a second viewing today. Of course we don't know whether there is any truth behind the second viewing couple or if its just a tactic to make us rush?!

We will offer £250k fully expecting it to be rejected. If/when it is, we will consider going slightly above the stamp duty threshold. We only have £30k down payment due to losing money on our last house sale. But we have a good income (70k combined and I have a review panel in May where I am very likely to be promoted raising out income to £80k combined). We have a mortgage agreed in principle for £250,000. We also have a relocation package from work that will pay for the survey, solicitors, moving costs etc but not the stamp duty.

I'm thinking the highest we can possibly go is £272,000 and get the stamp duty added to the mortgage. Does that sound like a crazy plan? We don't have any DCs and our car is paid for. We have overdraft facilities of 5k in case of emergencies. And we absolutely love the house.

[HaveToWearHeels]

well done OP, I have just read your thread and would have been another one advising to buy the best house you can. We have really stretched ourselves every time we have purchased and are now in our forever home which is worth at substantial amount at 41 and 44. We have both lived through dips in the market and I have got through interest rates at 15%. Enjoy your home.

[Wormshuffler]

That's yey, not yet....

[Wormshuffler]

Yet! I love it when a plan comes together!

[NotJustACigar]

No fraid not. £270k and managed to scrape together enough for stamp duty. We will have to live with the hideous carpets and unfortunate paint colours etc for a while as no money left to redecorate but it will be worth it in the end. Thanks for the congrats .

[roslet]

Congratulations! Did you get it for 250 in the end? That would be amazing!

[NotJustACigar]

Just thought I'd update to say ... we got the house .

[cunningplan101]

Legal fees are quite a small cost in the scale of things - so I wouldn't let that sway your decision too much. You can get fixed price conveyancing, or even mortgage deals which include the conveyancing fees (although I'm not sure how good the service would be, and it usually comes with a higher interest rate.

House prices are going up, but the saving in interest % for a better LTV is definitely worth considering. It can make a big difference to monthly payments and, over the lifetime of the mortgage, ends up being A LOT of cash.

Or, if you want to take the plunge now, I'd try and get a flexible mortgage with no early repayment charges. That way you can overpay a lot each month, get down to a better LTV soon, and then remortgage on a better rate.

Rather than asking the vendors to pay for half your stamp duty, you could always offer them £250,000 (so pay 1% stamp duty) and then offer them money towards fixtures and fittings, but that can also be tricky tax-wise (see forums.moneysavingexpert.com/showthread.php?t=245199)

[NotJustACigar]

It went well, whine, thanks for asking. We're still considering what to do and we have a viewing for another house tomorrow and another on Thursday. Then will decide.

NoArmani yes DH was unemployed as he moved for my work. It would be much more concerning if I lost my job though considering I am the higher earner.

[NoArmaniNoPunani]

You said earlier in the thread that part of the problem was your DH being unemployed for a year. That type of thing could happen again (as it could to most of us)

[whineaholic]

How did the viewing go Notjust?

[NotJustACigar]

Holey, no, considering one of the main ones was DHs divorce before we met! That plus the house we lost money on was abroad and we will never buy there again. Anyway even if the market went down and I terest rates went up on this one it wouldn't matter as we would be planning to stay at least 20 years in the house barring health stuff.

[ihategeorgeosborne]

You never know, George Osborne might remove the cliff edge for stamp duty on houses just over 250k in the March budget. I doubt it, but you never know!

[HoleyGhost]

Whatever the reasons you have for not having much of a deposit, are any likely to recur?

[KarenBrockman]

I would go for a house that needs work at £250k personally in your position.

[Anniegoestotown]

Stamp duty rises to 3 % on purchases over £250k not at £250k.

At £250000 your stamp duty would still only be £2500.

If you purchased a house at £250001 then the stamp duty would be £7500.03.

Please don't offer £250000 it would just get the owners back up and would be embarassing. It would also close you off from any further bids because you would not be taken seriously. Personally I would go in with just under what you can afford and explain it is your full and final i.e. £270k also explaining the position you are in, that you are able to move quickly, have your mortgage in principal etc. Then if the answer is a no then you can always add the xtra £2k on and then walk away if it is not accepted.
Don't forget the couple who are coming for a second viewing might not be in the same position as you.

[HarderToKidnap]

I think rather than offer x and ask them to pay half the stamp, offer 4k less. It just looks better to them. I would also factor in that even the quickest house move takes around 2 months from offer to completion and you could quietly stretch that to 3, as well as use overdrafts and shirt term loans from family.

I also think there is nothing wring with stretching yourself. Buy the best house you can afford. You have tonnes of flex in your budget so can cope with interest rises, which aren't happening yet anyway.

So, I would take the whole 30 as a deposit and rely that I could save or borrow the stamp duty. So top budget 280 which leaves you 2k agetr completion, and save the other 5 during the buying process.

Xx

[MrsFlorrick]

Don't get too hung up on a house. There are always always always other houses!!!!

Honestly if you can save another £5k in two months, do it!
It's a world of difference in your particular budget/situation.

You won't regret NOT buying a particular house however you could easily regret buying a particular house.

Unless your search area is extremely rural and its rare that property comes to the market, then hold your fire.

It also seems that house is slightly out of budget just now. But if you saved up for 3 months then it wouldn't be.

So save all you can for 3 months and get back into the market.

If you feel very strongly that you absolutely must have this house, then go in with a offer you can afford. Ie £260k or similar (not £270k as I think you're short the stamp duty money).

The vendor has already reduced. So that means either he is v keen to sell ASAP or he is already at the very bottom of what he can accept. The only way to find out is to make an offer.

Also. You love a house that's outside your budget. This is very common. It's the old, "if only we had another 10%". You probably love this out of budget house because it is better than other you've seen because it IS out of budget.

Your tactics currently is a reduced offer and cross your fingers for a desperate vendor in a hurry or back off and reassess what you can afford and save like a maniac for a couple of months.

[NotJustACigar]

I definitely understand the appeal of sticking at £250. The thing is the difference in quality of the house between £250 and say £270 is quite extraordinary due to this stamp duty threshold. It seems more sensible to us to try for a forever home we would love than to settle for something we aren't wild about just to save a small fraction of the total price. Therefor I think we will try waiting a few months to save more.

Thank you very much everyone who has responded.

[KarenBrockman]

Interest rates are going to rise, stick to a house you can buy under the £250k 3% stamp duty level.

[NotJustACigar]

Also wine we are in the northwest if it matters. Prices are rising but much more slowly than down south.

[NotJustACigar]

NoArmani yes as I have said MrsF's posts and sums make a lot of sense to me. I knew it was a real stretch as £270 and she confirmed that but that isn't the same as us only having £250 to spend total.

[NotJustACigar]

Wine a lot of what you say makes sense. Thanks. Though I don't really see a problem with asking for advice on this from strangers on the Internet - think that's kinda the point of mumsnet. And we aren't all born being house buying geniuses. I have only done it once before in a different country.

Holey yes we should have more deposit at our ages. I've been through a few of the reasons why we don't but there are more.

[NoArmaniNoPunani]

And please read the thread, we don't have just £250 to spend.

Did you read MrsFlorrick's post above with the sums? Even 270 will be a stretch and that's 19k under the asking price.

[whineaholic]

In such a rising market you can try offering 270 on a 290 house but I can't see them biting. Houses are selling very quickly at the moment for near asking or asking.

[Knackeredmum13]

Despite estate agents adverts to the contrary it's actually not allowed for the vendor to pay your stamp duty.