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Billy_111

Want To Buy But Not Sure Where To Start

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Hi All,

OK I'm sure this kind of question may already have been asked but I believe everyone's situation is different. Just registered and was hoping you guys would be able to help me with my questions.

So my story so far. I live in the UK (Rochdale), got married 8 months ago and currently living with my parents. My wife has a baby on the way (6 months left) and I'm starting to think about moving out. At the moment we don't have anything saved up, I have some debts to pay off (from the wedding!!) that will be cleared in December (same time the baby comes) so will start saving for a house in January 2014. When I do start saving I will have £1000 each month that I would be able to save...again this is when I start saving.

My question is I was just browsing for houses to look at prices etc and I'm not sure what price range I should be looking at? Is it OK for me to be thinking I would able to afford a house for £180K? I will be putting a deposit of £10-15K so if I start saving in January it won't be until January the following year (2015) before we can buy a house. My wife will most likely not be going back to work but she will be on mat leave which will cover the babies expenses for the the first year meaning I can focus on saving up for a house.

How does it work? How much will my bank lend me? I want to know what to expect when I'm ready to buy.

Many thanks,

Billy

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Depends on what your salary is mate. £180K might well be affordable if you are on £60K. Less so if you are on £30K.

Clearing your debts and starting to save seems like two sensible first steps though. Make sure you both use your ISA allowances (ideally before as well as after the April cut off date). There are no decent interest rates anywhere now - but at least it's tax free and it all helps.

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Depends on what your salary is mate. £180K might well be affordable if you are on £60K. Less so if you are on £30K.

Clearing your debts and starting to save seems like two sensible first steps though. Make sure you both use your ISA allowances (ideally before as well as after the April cut off date). There are no decent interest rates anywhere now - but at least it's tax free and it all helps.

Thanks mate,

At the moment I am on 24k however by the time I start saving for a house I will be closer to the 30k mark (as we have salary reviews every 6 months).

So the chances of buying a house for 180k are very slim unless I give a higher deposit, is that correct? Let's say I give a deposit of 30k, how would the banks look at that and would they be willing to lend me the amount of money I need?

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either you need to be earning 60k or your wife need to go back to work, although with your salary working as an indication of her income - it would make no financial sense for you to do it.

Welcome to generation rent....

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Hi All,

OK I'm sure this kind of question may already have been asked but I believe everyone's situation is different. Just registered and was hoping you guys would be able to help me with my questions.

So my story so far. I live in the UK (Rochdale), got married 8 months ago and currently living with my parents. My wife has a baby on the way (6 months left) and I'm starting to think about moving out. At the moment we don't have anything saved up, I have some debts to pay off (from the wedding!!) that will be cleared in December (same time the baby comes) so will start saving for a house in January 2014. When I do start saving I will have £1000 each month that I would be able to save...again this is when I start saving.

My question is I was just browsing for houses to look at prices etc and I'm not sure what price range I should be looking at? Is it OK for me to be thinking I would able to afford a house for £180K? I will be putting a deposit of £10-15K so if I start saving in January it won't be until January the following year (2015) before we can buy a house. My wife will most likely not be going back to work but she will be on mat leave which will cover the babies expenses for the the first year meaning I can focus on saving up for a house.

How does it work? How much will my bank lend me? I want to know what to expect when I'm ready to buy.

Many thanks,

Billy

Wouldn't be looking good if you bought literally now - you really shouldn't be looking at more than 3/4 times salary (and try to remember monthly payments on mortgages have plenty of scope to become eye-wateringly expensive in the future).

Plenty could change in the next few years though - I take it you're at least 2/3 years away from buying ?

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Thanks Guys,

It won't be until at least another year and a half before I have enough money for a decent deposit (£15k). After speaking to a few friends they mentioned that on a house for £180k, the monthly payments would be around £800 so I think it'll be better for me to go for a house slightly cheaper so I can afford to pay the mortgage each month.

Last thing I want to do is go into renting as I personally think it prevents a person from saving up money.

Can I ask what the process of buying a house is? Lets say I like a house and I want buy if - what do I do? Who do I give the deposit to, what costs are involved from my point of view, what solicitor fees are involved, and how long from the day of burying a house and actually moving in?

Again this may have already been asked so apologies in advance :)

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Thanks Guys,

It won't be until at least another year and a half before I have enough money for a decent deposit (£15k). After speaking to a few friends they mentioned that on a house for £180k, the monthly payments would be around £800 so I think it'll be better for me to go for a house slightly cheaper so I can afford to pay the mortgage each month.

Last thing I want to do is go into renting as I personally think it prevents a person from saving up money.

Can I ask what the process of buying a house is? Lets say I like a house and I want buy if - what do I do? Who do I give the deposit to, what costs are involved from my point of view, what solicitor fees are involved, and how long from the day of burying a house and actually moving in?

Again this may have already been asked so apologies in advance :)

Your proposal to borrow around £150k on a salary of £30k is absolute lunacy. Thankfully for your sake I doubt any lender will allow it.

Consider what would happen if(when) interest rates go back to historic norms of around 8%, or higher, within the term of your mortgage.

If you want to play Russian roulette with your family's financial security, your plan is a great way to do it.

Anna_1980 is on the money.

Edited by cheeznbreed

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Can I ask what the process of buying a house is? Lets say I like a house and I want buy if - what do I do? Who do I give the deposit to, what costs are involved from my point of view, what solicitor fees are involved, and how long from the day of burying a house and actually moving in?

Again this may have already been asked so apologies in advance :)

The process goes something like this.

You view a house, and then make an offer via the estate agent. Usually, the first offer is not accepted - and it is also rare to offer the full asking price (at least with the first offer). I suggest viewing lots of houses and offering low on a few. That gives you some practice with negotiation and getting wise to EA tricks. Avoid falling in love with one that you must have. Always have a couple of options if you can. You should also research the local market - property bee and mouse price are a must - to see what kind of offers are being accepted etc.

You may not be able to make an offer without an agreement in principle on how much you can borrow from the bank.

If/once an offer is accepted, you need to find a conveyancer - they will do the liaison for you re: deposits, negotiation of contract etc. Conveyancing can cost around a grand (and that will include searches). You'll also have to pay for a survey of the house. Depending on the type - that's a few hundred pounds too. The bank may also charge you arrangement fees.

Finally, moving costs eg hiring a van, getting insurance. In short, it's worth factoring in a couple of K costs to actually buy the place and move in. Bear in mind, also that about a third of sales fall through - and you'll lose some of that money (eg survey costs/search costs) if yours does.

As for how long it takes. A month would be very quick, three months perhaps more likely.

My advice - for what it's worth. If you get on with the parents, try and stay as long as you can. Renting and home buying cost a fortune in this country. And having the grandparents around could well be a big help in the first year or so of the nipper. I do feel for you. It's a perfectly normal thing to want to get married, have kids and a place of your own - and the high cost of housing makes it near impossible for the average chap nowadays.

Edited by StainlessSteelCat

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Your proposal to borrow around £150k on a salary of £30k is absolute lunacy. Thankfully for your sake I doubt any lender will allow it.

Consider what would happen if(when) interest rates go back to historic norms of around 8%, or higher, within the term of your mortgage.

If you want to play Russian roulette with your family's financial security, your plan is a great way to do it.

Anna_1980 is on the money.

Thanks! I understand what you mean and appreciate your advice. Maybe later in the future when I'm on a higher salary or have a lot more money I'll go for the bigger house. Maybe I'm being totally ignorant here but one of my dada friends is a taxi driver and he managed to buy a house for 160k with a 10% deposit meaning he went for a 150k mortgage. One thing I am certain of is taxi drivers don't declare all the money they earn and whatever they do declare isn't anyway near the 20k mark, so how has this guy managed to buy such an expensive house? Does it work differently for each individuals situation?

Also, how does the bank decide how much money they will lend? Do they go through all of a persons outgoings and then take it from there?

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The process goes something like this.

You view a house, and then make an offer via the estate agent. Usually, the first offer is not accepted - and it is also rare to offer the full asking price (at least with the first offer). I suggest viewing lots of houses and offering low on a few. That gives you some practice with negotiation and getting wise to EA tricks. Avoid falling in love with one that you must have. Always have a couple of options if you can. You should also research the local market - property bee and mouse price are a must - to see what kind of offers are being accepted etc.

You may not be able to make an offer without an agreement in principle on how much you can borrow from the bank.

If/once an offer is accepted, you need to find a conveyancer - they will do the liaison for you re: deposits, negotiation of contract etc. Conveyancing can cost around a grand (and that will include searches). You'll also have to pay for a survey of the house. Depending on the type - that's a few hundred pounds too. The bank may also charge you arrangement fees.

Finally, moving costs eg hiring a van, getting insurance. In short, it's worth factoring in a couple of K costs to actually buy the place and move in. Bear in mind, also that about a third of sales fall through - and you'll lose some of that money (eg survey costs/search costs) if yours does.

As for how long it takes. A month would be very quick, three months perhaps more likely.

My advice - for what it's worth. If you get on with the parents, try and stay as long as you can. Renting and home buying cost a fortune in this country. And having the grandparents around could well be a big help in the first year or so of the nipper. I do feel for you. It's a perfectly normal thing to want to get married, have kids and a place of your own - and the high cost of housing makes it near impossible for the average chap nowadays.

I am still living with my parents at the moment, it's actually a big house (4 bedrooms) however like you just said I am yearning for having something that I can call my own, something that I can refer to as my house! A lot of money was spent on the wedding and now it just annoys me thinking that money could have gone to better use! Sorry rant over lol :)

Ok so the bottom line is I'll need at least 15k maybe 30k depending on how expensive the house is. I'll also need a few extra K for additional costs and I'm also thinking I'll need a few more for when we're moved in to cover furniture, decorating etc.

So...just to write out loud I will start to save up from Janurary 2014, I'd say it'll take me a year to save up 10k bringing me to January 2015, meaning it won't be until at least 2016 before I can start looking for a house unless I win the lottery or get a substantial raise :)

All I need to do now is get this across to my wife lol! :)

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I am still living with my parents at the moment, it's actually a big house (4 bedrooms) however like you just said I am yearning for having something that I can call my own, something that I can refer to as my house! A lot of money was spent on the wedding and now it just annoys me thinking that money could have gone to better use! Sorry rant over lol :)

Ok so the bottom line is I'll need at least 15k maybe 30k depending on how expensive the house is. I'll also need a few extra K for additional costs and I'm also thinking I'll need a few more for when we're moved in to cover furniture, decorating etc.

So...just to write out loud I will start to save up from Janurary 2014, I'd say it'll take me a year to save up 10k bringing me to January 2015, meaning it won't be until at least 2016 before I can start looking for a house unless I win the lottery or get a substantial raise :)

All I need to do now is get this across to my wife lol! :)

Sorry I meant 15k maybe 20k!

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Thanks! I understand what you mean and appreciate your advice. Maybe later in the future when I'm on a higher salary or have a lot more money I'll go for the bigger house. Maybe I'm being totally ignorant here but one of my dada friends is a taxi driver and he managed to buy a house for 160k with a 10% deposit meaning he went for a 150k mortgage. One thing I am certain of is taxi drivers don't declare all the money they earn and whatever they do declare isn't anyway near the 20k mark, so how has this guy managed to buy such an expensive house? Does it work differently for each individuals situation?

Also, how does the bank decide how much money they will lend? Do they go through all of a persons outgoings and then take it from there?

Hmm, can't comment on the taxi driver, but if he bought a few years ago lending was much looser and he may have gone with an interest-only mortgage, but this is all speculation of course.

Banks will set their own criteria on what they think is a sensible level to offer, likely they will ask about other outgoings on credit cards etc but a person's income and credit history will be a big part of the calculation. From next year there are going to be some other affordability tests but I'm not sure what this will entail.

I'd say that if you are determined to buy, try and buy a place that will suit you in the medium to long term. I see lots of 3-bed houses for sale with evidence of a child or two in the household, offered at the same price it was bought for three or four years ago, which is now too much. These people have lost their 10% deposits, and often more besides. Plus they have the stress of trying to simultaneously live in a place which is too small, keep it presentable, wondering if anyone is going to turn up and buy it.

If you think you might need to move to a bigger place in a few years, and can't hack living at home until then, consider renting. If time is on your side you can find something which suits you, offer a multi-year tenancy for security, then once you wish to get a bigger place you can see how your finances are.

It's a crap situation overall of course, but the accepted norms in the UK regarding debt are just reckless in the main. Most of the people you will talk to from banks and brokers do not have your financial interest at heart, they just want to flog you something.

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Cost wise I recently had a look into this for a mortgage of c£200,000, this may help you a bit.

£20,000 - Deposit

£2,000 - Stamp Duty

£1,000 - Mortgage Fees (Arrangement Fee, Broker Fee, others) (1)

£1,000 - Solicitor Fee (2)

£1,000 - Survey (3)

(1) - Variable figure depending on what route you take to get the mortgage and what fees the bank requests.

(2) - We asked four solicitors and most of them came in just under £1,000 for their fees, Land Registry, Search and bank transfer fees.

(3) - Different levels of survey available from £250 to £1,000 plus!

So on this rough figure of £200,000 I was working on needing £25,000 all-in to cover the fees. In fairness I think it would come in at between £4,000-£5,000 but worked to the higher figure. Don't forget then that you're going to have extra costs for moving and buying any furniture/appliances that you may need as well. Don't also forget that you then have to pay the mortgage for the next 25 years!!

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Cost wise I recently had a look into this for a mortgage of c£200,000, this may help you a bit.

£20,000 - Deposit

£2,000 - Stamp Duty

£1,000 - Mortgage Fees (Arrangement Fee, Broker Fee, others) (1)

£1,000 - Solicitor Fee (2)

£1,000 - Survey (3)

(1) - Variable figure depending on what route you take to get the mortgage and what fees the bank requests.

(2) - We asked four solicitors and most of them came in just under £1,000 for their fees, Land Registry, Search and bank transfer fees.

(3) - Different levels of survey available from £250 to £1,000 plus!

So on this rough figure of £200,000 I was working on needing £25,000 all-in to cover the fees. In fairness I think it would come in at between £4,000-£5,000 but worked to the higher figure. Don't forget then that you're going to have extra costs for moving and buying any furniture/appliances that you may need as well. Don't also forget that you then have to pay the mortgage for the next 25 years!!

Thanks for your reply.

Something else just came into my head the other day. I was looking at houses and found people were selling land...for example this one here:

http://www.rightmove.co.uk/property-for-sale/property-26547627.html

I bet you all know what I'm about to ask :)

Would it not be cheaper for me to buy land and build a house from scratch? One of my friend did this and their house looks amazing and from what I've read it costs around 70-80k to build a 4 bedroom house? Couldn't I just borrow that sort of money and pay that back instead of a mortgage?

I might be talking total garbage here but it's good to m ow what my options are.

Thanks

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Thanks for your reply.

Something else just came into my head the other day. I was looking at houses and found people were selling land...for example this one here:

http://www.rightmove.co.uk/property-for-sale/property-26547627.html

I bet you all know what I'm about to ask :)

Would it not be cheaper for me to buy land and build a house from scratch? One of my friend did this and their house looks amazing and from what I've read it costs around 70-80k to build a 4 bedroom house? Couldn't I just borrow that sort of money and pay that back instead of a mortgage?

I might be talking total garbage here but it's good to m ow what my options are.

Thanks

Be very careful with this potential route, obtaining planning permission is the hard part. Plenty of land has no chance of being granted planning permission, but the marketing may suggest otherwise. And, as you'll know, land with planning permission is often priced such that you'd be as well buying an existing house. As you know someone that has been through the process, youd be well advised talking to them in depth about how they got the land, and how they got PP. It is a complete minefield so be very cautious, the last thing you want is to shell out on a piece of land only to discover there is no way you would ever be allowed to built on it.

If you have a piece of land in mind, you could always contact the local planning department who might be able to tell you about whether there is scope to award PP in that area.

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  • 239 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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