What can I actually afford to buy? Offers over system confusion

[Nurse16]

Hi

I’m originally from England, lived in Scotland 5 years - Glasgow for 2. I’m looking to buy in Glasgow in the next 12 months.

Due to the massive rental crisis I ended up living in an area which people tell me has a reputation but I really like - cardonald. I would like to buy in cardonald / hillington/ penilee area, which is fairly reasonable for Glasgow and I like. I have seen previous posts saying similar about areas in Glasgow which have a reputation to some but are actually really nice with very kind neighbours.

Schools and children etc aren’t a consideration. I’d be looking for a 2/3 bedroom cottage flat or terraced house with garden. There are some on the market atm but I want to do all my research. I have friends across these areas to ask about specific streets etc.

I have 60k ish in savings and earn ~40k a year (although that’s 30k main job and 10k agency so not sure it all counts).

It’s the offers over system that confuses me as I know a mortgage can only go up to the home report value. And have heard of ridiculous offers over (30% etc). However, in my area 5-15% seems more the average, with a few properties being reduced recently.

I come from a family of private landlords, mortgage advisors and solicitors (which I have not followed) but have an awkward relationship with some and all are outside of Scotland.

Very grateful for any and all advice. I really like Glasgow and my job, and would like the security of buying but am stressed at the prospect.

thanks x

I would go and see a mortgage advisor, the branch of your local bank should have one to use as a starting point. They'll be able to give you an idea of what you can borrow, then you need to work out what you can afford to pay back on a mortgage - they will often offer to lend you way more than I would be comfortable paying back! They can probably advise on legal fees etc associated with buying. Also bear in mind that interest rates are on the rise so leave yourself some headroom there on repayments.
Then once you've got an idea of how much you can afford to spend on a property you need to start browsing and investigate the state of the local markets and how much properties typically go over the "offers over". If you're a FTB with no chain then you would also be in a good position to put in a bid without it going to sealed bids, or offer on a fixed price property.
Your mortgage will only cover up to the valuation price (usually more than the offers over price) so you need to request the home reports for anything you're interested in. Anything you bid over that has to come from your cash.
Simple terms, let's say you put down £50k or your £60k as a deposit and hold the other 10k back for legal fees, DIY, furniture etc when you move....
As a rough guide a mortgage lender may offer you 3 times your annual salary (it may be more but bear in mind the points above!).
Assume the agency work doesn't count so 3 = 30 = £90k which means you have £140k to spend on a property.
If things are selling at up to 15% over the offers over price then you'd be looking at things that are on the market up to offers over £120k or maybe a bit more (120 x 1.15 = 138).

Dh has just sold his mum's house (garden cottage flat) in Cardonald (near the college). Three bedrooms, living room, tiny kitchen, decent garden, off street parking and officially dropped kerb, needing some refurbishment but essentially in walk in condition (textured plaster/Artex on the wall, grotty/old lady carpets but kitchen and bathroom in good condition --even if the disabled shower was positioned in a stupid way).

Home report was £95k and they had (iirc) 7 offers at closing and it went for £107,250

2 years previously it had "sold" for £95k but because it took so long to get confirmation for his mother's estate, they took it off the market as dh and his siblings realised the market had gone up so much.

I agree with you: Cardonald is a very friendly area and because it's not so pretty, can be overlooked.

SIL lives in Mosspark, so that's another area to consider. A friend of mine's dd has just bought her first house (garden flat) in that area.

When ds was young, he used to go guising with his cousins in Mosspark and it was a great bd friendly evening.

We’ve just bought in Scotland too 😊 our mortgage lender would only lend up to 90% of the Home Report valuation (usually different to the Offer Over figure so be careful with that one - request a home report for every property!)

Property in our area is going about 20-25% over at the moment. Ours was on at Offers Over £199k but Home Report value was £210k.
We had to go to £235k to get the property which was pretty good for our area! It wasn’t the highest offer but we were chain free and could accommodate their need to have everything completed in 5 weeks.

So we had Mortgage lender giving £189k (90% HR value) and the other £46k was put in from savings.

Good luck with the house hunt 😊

It's a good point about what the mortgage providers will lend: it's usually only c90% of the home report value, so if you're having to offer significantly above that, you need to have the funds/savings to do so.

Thanks everyone!

My neighbours flat (which I’d have offered on if I’d been looking) was up for offers over 75k. Home report 90k. Sold for 84k.

I have a specific style I want, which means I’d be better buying something that hasn’t been done to a high spec, but doesn’t require extensive renovation.

I’m going to look up to a max of offers over 110k. Thanks very much for all advice

I would still go and see a mortgage advisor as you need to work out not only what you can borrow but what you can afford to pay back each month (and I think this is even more critical on a single person’s income). If you could sort out a mortgage agreement in principle then at least you know you can afford something and be able to act on it if you see a property you like.

Hi, sorry must have omitted that I’m seeing one on Monday - definitely a good idea

Ironically, in Glasgow it's often cheaper to rent than to buy especially if you're a single person . I know that's the sums that ds has done - but as he's only just started his job after graduation, he needs a year and saving in his new job to get through his 6 month probation and build a credit rating before looking for a mortgage. That will also help him build up saving for a deposit (although we'll help him with that as much as we are able).

@Nurse16 - from what you've said, MIL's house would've been ideal for you! Try the Scottish Property Centre (whichever branch is closest to Cardonald) and talk to Paul. He seems to be a good guy (SIL was the one who dealt with him but I also have a friend who buys/sells/lets properties and she also said he's a good guy). He seems to know - and care about - both those that are buying and those that are selling.

@prettybird

Thanks - will do!

I think it depends on area, a mortgage would cost me around half of my current (which is half of the total rent) but obviously there's bills and repairs too. After 2 years of renting I am wanting to put my own touch on something and can't put a pink and cream kitchen in a rental.

From the calculations that we have done, ds could get a mortgage of just over £100k which would mean monthly payments of c£650. Even if (when ) interest rates go up, he should be able to afford them. In a year's time, he should hopefully also no long be the most junior of juniors where he works and get a pay rise (although he'll then have to factor in starting to pay back his student loan as at the moment he's still under the threshold).

Good luck

Always go to an independent financial advisor not the one in your bank. They will only sell you their own products. (Or tell you no when you could get a mortgage elsewhere).

You'll be fine getting what you want in those areas.

Just offer the HR value before a closing date is called and see how you do. But you need a MIP first.

Your big £60k savings will pay for any difference you may need between HR and purchase price.

I don't have any advice on those areas but would say start making a note of asking prices and home report values of things in areas you like (just screen shot them)

Then when the sold prices come up you can work out the percentage over.

It's hard to get this info afterwards and will give you good insight. Local property solicitors will also have a good handle on this once you are ready to make an offer.

I would also recommned d mortgage George in the west end www.mortgageadvicebrokerage.co.uk. He’s very patient and doesn’t mind the most daft questions and will break the numbers right down for you. Good luck.

Find out what the market is doing in the area, unfortunately its a bit like ebay with silent bids and if you go way over then you will need the cash to stump it up.

But it is also possible for houses to sell under the asking price so look for the ones people overlook which tends to be empty properties or those needing a bit of work. We bought in Aberdeenshire for 35k under the home report and 15k under what it was on for this way!