Sunday, 21 August 2016

Everything I learnt through buying a house | The Small Desk

Firstly, I want to say that I am very fortunate and was able to put down a deposit on a house because of inheritance money that was gifted to me. I am also very lucky to have been able to have had a good education and be in a job where I am able to afford mortgage repayments. Finally, I am again incredibly lucky to have an amazing fiancé who is also able to pay the mortgage repayments. I know that I am in a very privileged position, and for that I am very thankful.

This blog post is intended to help those who are in the process of buying, about to buy, or thinking about buying and want to know what it's like. I found that there was a lot of general information out there but there was a lot that I didn't know and that I wish someone had told me.

Let's start with the first step... establishing your budget
The difference it makes between having a 10% deposit to a 15% deposit to your monthly payments is very significant. If at all possible, it is much better to have a 15% deposit than a 10%. That said it is better to be putting your money towards a mortgage than rent whatever you can afford. I had no idea the difference it makes going from 10% to 15%. I wish someone had told me that earlier.

Finding a mortgage advisor
Many people think that all mortgage advisors will charge you. This is not true. You have to have clarity as to what the benefits are for the mortgage advisor if they are not charging you, but generally it is that the bank will pay them a bonus instead. This is more likely to happen with big mortgage providers. I used London and Country and was lucky to get a very good mortgage advisor there who helped us get a really good deal. He also guided us through the entire process, set us up with a solicitor, insurance and surveys.

Looking for a property
This sounds like the fun bit, but I can tell you it quickly gets very tiring and quite depressing. We started looking in August 2015 and didn't end up getting an offer accepted on a property until March 2016. In this time the house prices grew steadily and the market became incredibly competitive. It was also during this time that the stamp duty tax was going to change for those owning two properties. We were unsure of how much difference this was going to make to the price of property, but this is one thing you have to accept: there is no guaranteed good time to buy a property. You never know when the property market is going to fall or rise. Therefore you have to buy a house that you want to live in for a long time, and can see yourself in for many years, as there are no guarantees you will be able to afford the cost of moving or have made enough money on your property to move in a couple of years time.

We started by looking in the area we were renting in, which we quickly realised was unaffordable. We could have bought a studio flat but it is not ideal. In five years time myself and my fiancĂ© will be 33, and we may want to start a family by then, so that would be really impractical. (Side note – starting a family terrifies me, I'm just thinking I might not be quite so terrified aged 33... maybe...)

So we broadened our search to other areas of London. We couldn't see anything that we would be happy living in for the next five to ten years. Also, a really important point that no-one tells you is: it is so common for a property in London to go over the asking price by tens of thousands of pounds. An example of how competitive the market: my friends wanted to book a viewing for a property and in one day the estate agents had already booked 100 viewings, and wouldn't take any more viewing appointments...

Eventually, by December we had decided to look outside of London and into Surrey. We both work in London and need to commute every day so we still needed to look for properties close to a train station, but by looking out of London we were able to find properties that were far more affordable and you got a lot more for your money.

The train prices are more expensive, but what you get for your money in terms of property makes it worth it. You also have to decide what is important to you. Is it the house or the proximity to work? We both decided that we actually quite like long train journeys as you can get a lot done. I've been reading more and listening to podcasts. Also, the commute is a lot less busy and less stressful. I was finding the London commute incredibly tiring and depressing.

You also have to think – will I be happy here at the weekends and in my spare time? I'm really looking forward to going on long country walks at the weekend and even rowing in the river nearby.

Other things you need to think about are your neighbours. How much does it matter to you if you have thin walls or are sharing a front door with someone else?

Finally, when looking for a property – if it looks too good to be true it probably is. If someone is super keen to sell up at a very low price – ask why?

What you only find out once you start trying to get a mortgage
  • Some mortgage lenders won't lend to properties above commercial properties. Only two mortgage lenders will lend to properties made of concrete, not brick.
  • Some mortgage lenders won't offer you a mortgage unless you've been in your job for more than six months.
  • Don't gamble in your overdraft.
  • Make sure your bank balances look great three months before you apply for a mortgage because the bank will go through them with a fine tooth comb.
  • Don't have any loans. Got a loan for a bike? Pay it off. It will affect how much you can borrow.
  • Factor in your travel costs, the mortgage company will!
  • Be prepared to answer a lot of questions.
  • Some mortgage lenders will only lend if you get out building insurance.

Making your offer
If you want somewhere desperately and you know it is a 'blind bid' situation then make sure you offer over the asking price. It is surprising how much some properties will go over the asking price. We were outbid on multiple properties. Once we were outbid by £30k! That wasn't even in London!

Equally if you see that somewhere has been on the market for a month or more, don't be afraid to make a cheeky offer. We got our house for £15k under the asking price. People will try and push estate agents to put their house on the market for more than it is worth.

Even once you've made an offer it can still all fall through. You can really only celebrate once you have the keys.

Surveys
There are so many surveys to be done! There is the building survey, where there are a few different options, then there is the mortgage survey where they check that they think your house is worth the price you are paying for it, and then there are the surveys carried out by the solicitor.

I advise you to read all 30 odd pages of a building survey very carefully and ask questions if you don't understand anything.

Regarding the mortgage survey – I had no idea they even did this, but when I think about it it makes total sense. There is no way a mortgage company should give you a mortgage for a house that is massively over valued. Say, for example, you are paying £250k for a house and you need a £220k mortgage, if the mortgage survey values it at £220k, then you have a problem. However, you can always contest it or find another mortgage company.

Legal stuff and searches
We were quoted around £1,100 for fees but in total it ended up being more like £1,700. You must keep an eye on what solicitors are charging you – we accidentally got charged an extra £175 for something, but we spotted it on the bill and challenged it. You have to be so careful!

Try and find a solicitor who uses an online portal. A lot of scamming can go on via email and post is very slow! The house buying process is slow enough as it is!

Insurance
For most mortgages you will need to take out building insurance. Your mortgage advisor can often help with finding you insurance.

You will also probably be advised to take out income protection insurance and/or life insurance.

Exchanging
If you're buying with someone else make sure they are around to confirm that they are happy to exchange. You both have to answer some security questions over the phone in order to exchange. I had not realised this and had to get my partner dragged away from a company-wide meeting by telling his work it was an emergency! We ended up having a very tight turnaround from having to leave our rented flat and move in. We literally had no spare days, it was crazy tight. I thought I was stressed before but oh my... that exchange process was RIDICULOUS. Basically if you want it easy then live somewhere where you don't need to give notice, i.e. at a family member's or friend's house!

Completion
You get the keys from any time on the day up until the estate agents closes. Make sure all your money is with the solicitors before completion so that it all goes smoothly.

Moving
Whatever you do – try and hire professionals. Even if people say they're happy to help you move they will regret it. Everyone gets very tired, it will be a physically and emotionally draining experience for you and there will no doubt be arguments. Professionals take the hassle out of it and ensure that everyone has an easier life!

Post completion
After completion a few weeks later your solicitor should be in contact to tell you that everything is now sorted with the land registry and that your property is registered under your name.

Also – top tip – make sure you have as much savings as you can before you move in as even if you think nothing looks wrong you never know! We just found out we need a new boiler... that's about £2,500...

All in all I must say that our experience was relatively smooth and easy, and I don't have experience of things going drastically wrong. I must also say that I am not a trained professional, or qualified in any way when it comes to house buying so please don't treat any of what I have said here as gospel.

If you are buying soon, good luck!




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