FTB, making an offer on new build tomorrow - advice needed please!

mrs_deadline

They will probably jump at your offer but it's a bad idea to rush into this. Without a lot of research in your local market, you can have no idea whether the asking price is reasonable (unlikely) or whether they've ramped it up artificially to give you the illusion of bargaining them down, this is a major pitfall with a newbuild that makes it worse value than an older house. Do much more research I would suggest [edited part about snagging as you work for an architect].

poppysarah

mortgage DIP of around £134,000, plus a FTBI equity loan of around £62,000

kerching! That's not a FTB budget for the sane.
How do you pay it all back? 500 years mortgage term?

_Andy_

pete96 wrote: »

i should also mention we have seen an IFA, and given the same facts as i have here, and he didnt seem to think the would be any issues in asusming a £196,000 budget and with £1000 savings. Has this 'professional' financial advisor been mis-informing my partner and I then?

Since he appears to have suggested an interest-only mortgage, what was his suggestion (or your plans) for how you plan to repay the capital?

pete96

hethmar wrote: »

Pete, if you are in an architects practice - why not ask the opinion of the people there?

Barratts dont have a good name generally - they tend to build the ticky tacky type of estates.

Re the shopping centre - any development to improve the area would in theory increase popularity/hence prices.

But Im concerned you have rushed into this a bit quick. Do you have relatives to help guide you? Definitely ask the people at work.

And if you still want the place, do go in with a cheeky price because at the moment people arent buying and they will want to get shot of the place quickly.

Thanks for your reply.

I have asked a few people in the office, bit generally the opinion is limited because when they last brought property things were somwhat defferent. Also on a forum there is some feel of confindentiality. I wouldn't feel comfortable given all the info i have here to a collegue TBH.

Regarding Barrett, the fact they may not be the best homes in the world i feel isn't important, as this home serves a purpose to get us onto the property ladder early, not for years of homely living. We plan to buy with more serious intentions in 2-3 years.

Yes it was a bit spontaneous. The plan was to wait untill next year after we had a bit more savings and i had finished uni. But after speaking to someone at work, the same sort of age using the same government loan scheme, has just bought a 2 bed flat for around £150K with a friend, and they only needed about £500 each of their own money. So i thought if he could do it then why cant i!

Whats your thought on the offer outline in my first post then... too high?

penguine

pete96 wrote: »

The the advise i'm after is on the offer i should make tomorrow. Obviously i want the best possible offer for us, but i'm also eager to have to first offer i make accepted - i know it wouldn't be the end of the world if it wasn't, and i'm fully expecting that it wont, but it would be the most ideal senario if it was.

If your first offer is accepted, then it means you probably could have gone lower.

Overall, this doesn't sound like a good idea. House prices have fallen 11.5% in the past year -- with new builds particularly badly affected (because they were likely to have been overpriced to begin with). In the 3 previous house price crashes since the 1970s, prices fell for several years before remaining stable for several further years. Have you fully considered what it would mean to you to be in negative equity, and how this would affect the choices you could make with your life?

If the rest of the estate doesn't get completed, due to changing economic factors, would you be happy to live there if it's only half-built / deserted after dark?

You have nothing to lose by waiting to buy, and everything to gain. DON'T RUSH INTO A DECISION. Slow down -- talk to everyone you know, especially if they have lived through/been affected by previous house price crashes, and read everything you can on the current state of the housing market and the economy in general. Talk it over very carefully with your girlfriend. This is one of the biggest financial decisions you'll ever make in your life. Make sure you know what you're doing.

pete96

_Andy_ wrote: »

Borrowing (the mortgage and loan) over 5x joint income, plus putting the mortgage on interest only, buying a new build that will probably be in negative equity within six months = not a good idea at all!

where have i said interest only?? its based on a repayment mortgage...

nixinix

I personally think in your situation you might be more sensible waiting...but it is all your choice. As the stamp duty threshold has recently changed to £175k then this wouldbe my starting offer..you want to ask them for the stanp duty anyway so this would make sense to them and you.... good luck

_Andy_

pete96 wrote: »

where have i said interest only?? its based on a repayment mortgage...

Fair point - guessing it's a fairly long term then.

penguine

pete96 wrote: »

Regarding Barrett, the fact they may not be the best homes in the world i feel isn't important, as this home serves a purpose to get us onto the property ladder early, not for years of homely living. We plan to buy with more serious intentions in 2-3 years.

This is really a very bad idea. The market is falling faster than at any previous time since records started. If you buy this house you should be prepared to live there for the long term. There is absolutely no advantage to getting onto the property ladder early when prices are falling. Wait another year, or two, save up a bigger deposit, then have another look at the state of the housing market.

ginvzt

pete96 wrote: »

Regarding Barrett, the fact they may not be the best homes in the world i feel isn't important, as this home serves a purpose to get us onto the property ladder early, not for years of homely living. We plan to buy with more serious intentions in 2-3 years.

No one know what will happen with house prices, but they are still dropping and expected to do so for a fair few more months. Especially new builds. If you are planning to sell this house in 2-3 years time, and taking interest only mortgage, I think you will struggle. Are you expecting some sort of windfall to cover the difference between the future sale price and the price you pay, were the house prices to drop another 15-20%?

Sorry, just noticed that it is a repayment mortgage you are talking about. Are you taking it over 40 years? One thing to test - can you still afford the mortgage payments if the interest rates where to double? You never know what is going to happen!!!! You do know, that you will be actually repaying at a rate of something like £70 initially your mortgage? So, in 2-3 years time, when you come to sell your house you would have only repaid £1600-£2500!!!!!