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Looking to buy my first house

Discussion in 'Personal' started by impulce, Oct 4, 2010.

  1. As some of you will have read ive discussed money issues on here in the
    past, and asked for advice on my finances. My OH and I have just managed
    to pay off one of our overdrafts in full, which is one weight off our
    mind and less interest to pay, and are now working on the other one (we
    both left Uni with large overdrafts that we are now paying interest on).

    Both of my grandparents sadly passed away earlier in the year and we have
    just managed to sell their bungalow, so I will soon be receiving my
    inheritance of £11,000. My parents have also said they will give us
    £4000 as a pre-inheritance gift of their own. My mum at first said she wanted us to spend their gift on the
    holiday of a lifetime, as she wants to see us enjoy their money before they die and it is given through grief. I am incredibly grateful to both my parents and my grandparents and realise I am very lucky to be in this position. It would be a long time before I could afford the deposit on my first house otherwise.
    My question is this: I will have a total of £15,000 in a few weeks. My mum does want me to have a holiday but knows how desperate I am to buy a house and supports us in the decision to probably do a cheaper holiday and use the majority of it for a deposit.
    In the areas that im looking, I would be looking at a house around £130,000 on a 90% mortgage (£13,000 deposit, a couple of grand for fees etc). I have had a look around mortgages online and the nottingham bank are currently doing 95% mortgages so Im hopeful id be able to get a 90% mortgage with some hunting. Between us my partner and I earn £42,000 a year so a mortgage of £117,000 should be doable. Repayments on the interest rates ive seen seem to be about £700 a month - we currently pay £500 but our car loan ends in a couple of years and I am on M3 so still have increments to make.
    The reason I am posting is to ask whether or not those calculations seem to make logical sense. Have I missed anything glaringly obvious? Are there any massive fees I have failed to calculate? I am eager to get going but If I cannot afford it then I will simply have to stay put for a few more years and keep saving.
    Any advice/tips/pointers would be greatly appreciated from those who have recently been first time buyers, or infact anybody who has more knowledge of mortgages than me (which will be approximately...most of you!!!)
    Thanks :)
     
  2. i can't think of many holidays which would beat being in your first house. looking at the bbc calculator over 25 years that looks good. there will always be lots of hidden extras, though, and companies vary greatly in what their fees are. for example you might have to pay arrangement/setup fees in return for a very slightly lower interest rate.
    are you married - i am wondering how you o/h will contribute, will they benefit from this or will the house be in your name only. sorry computer is bust i do know i am missing caps.
     
  3. Im not married but am with a long term partner that ive been living with for a while. He would be paying half of the rent as we literally share everything from one joint account. I know some people would say it is risky to use my inheritance to buy a joint house but I know he would do the same for me if it were his inheritance, and I have never dreamt of anything else from the money other than a happy family home.
     
  4. dogcat

    dogcat New commenter

    Hiya, Do you already have furniture and all your white goods etc? Also you'll need buildings and contents insurance, but don't think that's a lot. I'm also trying to save for my deposit, hoping for a 95% mortgage and I don't want a house more than 90,000. My situation is different to yours tho as I would be buying on my own, as my bf has restarted at uni. Also the extra £200 you'd be paying is still £200, you want to make sure that you can easily afford mortgage, council tax, bills, insurance and still have spare cash to put away for a rainy day just in case. If anything went wrong, boiler etc then you'll want a fund to dip into.
    With it being spilt between you tho you should be fine. If you are on M3 and between you you earn £42,00 am I right in thinking that your other half is earning about 17k? If so that means everything will not be split down the middle, and you will be footing the lion's share of the bills, are you happy with that, if so then go for it.
    If I had £15,000 I'd definatley use it for a house and wait for the holiday!
     
  5. Hello Impulce,
    Just something to consider if you are putting in all the deposit. You can get your solicitor to make up a 'declaration of trust'. This will state that you have paid the deposit. If you split up (I know it's not nice to think about but it does happen sometimes) then you have a document which shows the money you paid.This cost me around £150 last year.
    It is a big commitment and worth talking about how you will split bills if you earn more/less.
    Good luck.
     
  6. Thanks for the reply :)
    Yes we rent an unfurnished house so all furniture and whitegoods are ours, which is good!
    I have always earnt more than OH - he is in a secure job that he is not 100% happy with and in the future we hope to save some money for him to be able to do a course and follow a career he would love. Unfortunately his place of work is a small company who dont seem to 'do' payrises!
    I have no problem with being the main source of income. I love him and we are a partnership. Im lucky in that a teaching job is a fairly secure career to be in. Out of interest though, how much is that insurance you can get on a mortgage that covers your mortgage payments incase of redundancy etc?

    Have made the mistake of having a look on rightmove etc and have seen some nice looking places for around £120000 so might be able to do it cheaper than I thought.
     
  7. Insurance costs vary wildly. Depends on your job, age etc. Roghly between £5-20 per month each. it can cover different scenarios too eg redundancy,sickness etc.We used ours 2 months after taking it out when my OH got hurt at work and had to have an op, so I am all for it!
     
  8. jubilee

    jubilee Lead commenter

    Always put in a lower offer for a property. You can always increase it if it is rejected.
    Remember the arrangement fee for your mortgage (they seem to range from £99 to £1499!).
    How would you manage if the interest rates increased? When I bought my first house over 30 years ago, the rate went from 8% to almost 15% in a short time! Would you be better on a higher fixed rate that you could afford now and later?
    Ask a solicitor how much they'd charge to represent you? Does their fee include all the Search fees and other disbursements.
    You will need to spend on a property survey. The cheapest one is just to reassure the lender that the house is worth what you are borrowing, not what you are paying for the property. A mid-range survey will give you more information on the condition of the property.
    If you will have a spare room, remember that you can take up to £4250 per year rom a lodger and not be liable for income tax on the rent received.It's usefule to know for if things get tough financially, such as if your partner becomes a student as you mentioned.
    Will the council tax be more than you are currently paying?
    Will you have anything spare to cover essential maintenance?


     
  9. Thankyou for all that food for thought Jubilee :)
    The mortgage I looked at with the nottingham was fixed for a few years and was something like 6.14%. Can you then move to another mortgage after the fixed term ends? I would like it fixed even if its a little higher as I would like the stability.
    I knew about the property survey and arrangement fee but wasnt sure of the costs.I would definately want the insurance against job loss etc. I also have time to save from now until then.
    The lodger is definately something to consider if OH does do a course. The council tax shouldnt be too much more - I currently rent a 3 bed and would be looking to move into a 2 bed, though in a slightly nicer area.

     
  10. I would say it sounds 'doable'. I bought on my own when on M5 whilst making car payments. My mortgage is lightly less as I didn't borrow as much.I have insurances etc (critical illness and life), yes some months have been a bit tighter than I would have liked and I would love to go out on a silly shopping spree like I used to be able to do. However I have learnt to budget and there is nothing like getting the keys or coming home to your own place.
    Good Luck!
     
  11. I could save a few thousand more and wait a few more years, but would LOVE the stability of my own house If we can manage it. Have just found a few more that are not much over £100,000 and still look nice :)
     
  12. When making an offer you could always ask the vendor to pay 5 or 10% deposit for you. It may mean that you pay full (or close to) price but it makes a huge difference to the interest charged on mortgage (the higher the deposit the lower the apr%)

     
  13. Is there a general rule of thumb about how much you can knock off asking price when making an offer?
    Is the first step applying for a mortgage, or looking for a house and putting in an offer?
     
  14. lurk_much

    lurk_much Occasional commenter

    look round loads first, watch a few sell, you will get to know what things are worth. People generally put their houses on the market in the spring. Don't
    even think about buying before then. The choice will be wider and I
    think it will be a buyers market.
    Do not rush it. Now is a good time to buy with cash you can afford to lose but if the cuts lead to a double dip recession then borrowed money may leave you trapped. Do consider leaving it a year or so. If interest rates rise and recession bites again we could see another ten percent drop in prices over the next two years.
    If you know you are going to stay put for ten years none of the above really matters but still I think you should leave it until the spring. Get your eye in now and go round somewhere every other weekend for the next five months.
    Always try and buy something that a young family could use, a small terrace with a garden is a good choice. Flats are much harder to shift.

     
  15. I wouldn't consider a flat - I want at least 2 bedrooms with a nice bit of garden, in a fairly quiet cul-de-sac type area for the cats :)
    Thanks for the advice on the market and the economy though!
     
  16. lurk_much

    lurk_much Occasional commenter

    we always approach estate agents with the number one demand being the place must be cat friendly.
     
  17. Im glad im not the only one that bonkers!!
     
  18. jubilee

    jubilee Lead commenter

    I'd steer clear of leasehold properties. I have always bought freehold.
    You could register with ZOOPLA or similar. You input a given postcode (or several) and you get regular updates on the actual selling prices in those areas (rom the Land Registry records where sales/new ownership are logged). That will help you to pitch any offers at the going rate.
    You can remortgage a property whenever you choose, assuming you are not in negative equity. Your fixed rate mortgage may have early closure penalties that make re-mortgaging inadvisable until the minimum term has been served.
    I remortgaged from a variable rate to a tracker mortgage 2 years ago and initially saved about £60 per month. Rates kept dropping with the recession and I'm now over £200 pcm better off and am currently paying just 1.39% interest!
     
  19. lurk_much

    lurk_much Occasional commenter

    Grr I am paying 1.99%. They don't offer the decent deals to high percentage loans though so it isn't possible for impulce.
     
  20. jubilee

    jubilee Lead commenter

    I wish I'd borrowed more as I re-mortgaged my home in order to redeem my more expensive Buy-To-let mortgage. I could have invested the surplus and earned more than I'm being charged for the loan!
    I get tax relief on all the interest that I pay as I have the paper trail to prove that it is connected to my rental property.
     

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