Advice wanted - buying in London

[Nolongerteaching]

MN seem knowledgeable so I’d like to pick your brains if I may🙂

i’m thinking of buying (low end of market, a London studio/flat, zone 3/4, circa £120-150

This is all I can afford and I will have a 5% deposit. I’d like to take advantage of Sunak’s government mortgage scheme that runs out this December. It guarantees 20% towards your deposit so you get favourable LTV rates.

To me, all this talk of interest rates rising/houses going down in value has to be balanced by what I can achieve. I currently rent at £810 a month ex bills.

I think it is better to try and buy before this scheme runs out to try and lock in a really good 5/10 year rate then wait for them to go down more and lose the chance to use the scheme.

Am I making sense or just panicking? What are your thoughts? Thank you and all advice appreciated

Check out the sold prices of nearby properties.... it obviously needs modernising but no way will that go for less than £300k sorry.

I don’t think you can get mortgages on auction properties (certainly not standard ones).

It will be grabbed up. Lots of potential.

And not too far from the station.

Oh well😖

@Violettaa

There are some options but high risk. Not sure I could do it tbh.

This is £5k over budget but the closest I could see to your requirements. There's service charge on top too.

www.rightmove.co.uk/properties/85813461#/?channel=RES_BUY

That has developers feeding frenzy written all over it. It needs a hunk of money spent on it so unless you have a bunch of good friendly and available builders on speed dial I think it is out of your league.

Absolutely disgusting unless you have the money to totally gut it and about £80k on cash to do it up - I would rather rent forever if I'm honest or move a lot further out

@newyeardelurker

thanks. That’s an interesting one🧐 I think I would rather the renovation as it has potential than something so narrow and effectively just one room.

but I appreciate you looking. I have been keeping an eye on Plumstead and some of the garden flats there.

@Crikeyalmighty

i wouldn’t live in it in that condition🤣🤣🤣 it would be with a view to do up

@viques

I think you are right. Something similar was on offer in Sydenham a couple of months back and cash buyers were down from the north to look at it (it was much better condition)

OP

In your situation I would invest in a property on the far flung commuter zone well outside of London. If you're finding 800 a month for rent, that translates as a 200K mortgage for someone with a 100K deposit ( I know this as my friend has just purchased a 300K flat and pays around 800 for their mortgage.)

I'm not rubbing it in, just showing that continuing paying rent isn't the answer.

Find a decent broker and tell him/her your looking to commute to your job ( I assume you're working and living in London?)

I'd rather live in a spacious 1 bed flat with a long lease, easy to sell on, in a nice part of Hastings or St Leonards than a tiny studio in a grim part of London.

True you're out of London, but with a 5% deposit and help to buy adding 15%, (the scheme is max at 20%) your mortgage payments on a 150K flat will be hundreds of pounds lower (at the current rates!) than your rent- which could cover your commuting costs into London. In other words you won't be worse off.

You'll probably have to go that far out to find good space for your money, but you could try other directions, deep Essex, west or north.

For example Slough, 30 mins on the new Elizabeth line to centre of London.https://www.zoopla.co.uk/for-sale/details/57976195/?search_identifier=6d66f71245c4381c7d9a9851837b0008

Its bang in the town centre, and be easy to rent /sell in the future as it's a few mins to the train station.

If you're travelling into central London the trains around erith are extremely slow.
Areas like Medway towns you'd get something ok for your money and high speed rail

Guide prices for auction properties are always way lower than the real value, to attract lots of interest. The ones I've seen all went for nearly double. And there are fees on top of that.

Thank you everyone for your thoughts.

@Babalugats yes, I think this makes most sense and once I get my head around moving out of London, I think St Leonard’s, etc would suit.

It’s grim, isn’t it? I thought I had done everything right and then became disabled in my 30s and missed the period when I could have got on the ladder in London. 😖😥

@Nolongerteaching You know, when you get your head out of an only London mindset (and I like London) it is refreshing and you realise it's better to have a decent place somewhere like st Leonard's! London is great in the nicer areas and with a good budget but at the lower end unless you go part buy the options are severely limited

I’m amused at the prospect of Berlin being cheaper - was that a serious consideration?

@susan12345678

no, not serious - I remember it being cheap years ago but it’s gone up steadily since then

@Crikeyalmighty

London is great in the nicer areas and with a good budget but at the lower end unless you go part buy the options are severely limited

i grew up in a zone 3 area but near somewhere very nice and I agree - a lot of London is travelling and always feeling as though the fun and action is elsewhere. I studied in a smaller Northern city and loved the sense of it all being so easily accessible.

Unfortunately, I am a Londoner though and the world starts and ends there for us. 😉

St Leonard’s looks nice - and affordable. It might be a bit sedate and full of retirees though?

Margate?

@titchy yes, might be a bit livelier? Easier for a single person to break into a scene?

Don't beat yourself up @Nolongerteaching I know a fair few people - illness or disability disrupting saving for a deposit, who never had help from wealthy parents, didn't manage to save for a big enough deposit, were single so never had that joint buying advantage, loads of reasons they 'missed out' on the London property boom.

The good thing is you're not trapped in your situation. If you really can't face leaving London, then I wouldn't rule out renting through a housing association, yes, it can take a few years, but I've know people to get some lovely places with reasonable rents and secure contracts.

And I think a day out to places like Hove, St Leonards, Hastings will really change your mind if you haven't been recently, loads of 'London refugees' especially since Covid, so you certainly will find others like you.

good luck whatever you choose.

@Babalugats

thank you, baba. I appreciate that as I do beat myself up thinking how stupid I was to leave myself this financially insecure when, from a young age, I was very focused on university, career, pensions, financial security, etc

but they say life is what happens when you are making other plans and that is certainly true for me

😖

What government scheme are you talking about OP? If you mean Help to Buy then that is only available for new builds and you won’t find one in your budget.

I do think you should look seriously at shared ownership. Most flats - especially cheaper ones - will be leasehold anyway, and you can avoid developments with really high service charges.

@Bodgejobvendors its a scheme were the gov guarantee 15% of the purchase price, effectively helping those with only 5% deposit get property, its available for any property,

I’m worried about the monthly maintenance/services charges. I think they seem a bit of a law unto themselves and can creep up in price.

The scheme I meant was Sunak’s mortgage deposit thing. My thinking was that it guarantees a 20% deposit to add to your own 5% so that the bank view you as customer looking for a LTV of 75/25 instead of 95/5 and you get more favourable terms. I thought it was worth locking in whatever is on offer now with that scheme (which finishes this December).