FTB lost in London!!!

hethmar

He is still moving really patch - this weekend some more stuff went down - all his old uni work files - gawd knows why he still has boxes and boxes of them I think he is going to have to learn to throw stuff away as a 2 bed flat hasnt got the room for keeping years of hoarding. He didnt have to pay stamp duty as the government lifted it just before he went looking. he got nearly 50% off the peak price of the flat but as it was a repo and empty you buy as seen.

LadyIndecisive

Are you able to advise what the 'serious surprise' was re OH financial standing.....?

patch3228

My OH is not as keen keeping track of her savings, but it was very useful to find she had over £20K savings and not £15K PLUS her Salary has changed with effect from 16th Jan 09 to £23K due to recently passing Exams as part of her Grad scheme!

After doing some cautious forecasting, I think we will talk to Mortgage Advisor (MA) about setting aside £10K each as an absolute emergency fund and also as Martin suggested in the Mortgage Guide to build up 6 month's worth of repayments as a contingency.

I am assuming Martin meant build up the 6 month amount BEFORE you have bought the property, as opposed to saving this up AFTER purchase?

LadyIndecisive

That's good - I thought it was going to be a bad surprise!

hethmar

You both sound very sensible and you certainly arent reaching out beyond a comfortable outlay.

Very good luck to you.

patch3228

Hi just a quick update:

Mortgage Advisor has replied today with a Mortgage Certificate:

Please find attached your mortgage certificate from Abbey. They have agreed to lend in principle £150,000 based on a purchase price of £200,000 (75%).


Our first meeting was really to get to know each other and find out whether I am good for the money.


Next meeting will be after we have seen a few properties we like and want to discuss the specific deals on the market.

[I am thinking of going fixed over 5 years but we'll see what she suggests and I will try pester her for some deals exclusively given to MA companies, which individuals can't usually get access to ... if that's possible/ exists? ]


Very much doubt I will be borrowing anywhere close to that amount.

I have seen some flats within our price range £140K ... BUT painfully we have seen some terraced houses shoutable down to £160K (I reckon/ hope)

So I may have to be flexible as this could be a smarter investment in the LT, which is still within our Affordability criteria...


This Agreement in Principle is only valid for 60 days thow ... BUT tactically we will be waiting (patiently boo!) for atleast 6 months with a view to buying end of this year - this way our:

- Deposit increases from current £40K to £60K
- OH and I retain contingency fund of £10K each
- LTV bound to improve drastically with falling HP and rising Deposit

Althow I suspect in 2010 the Interest Rate may have made some serious leaps (hence desire to fix for 5 years)

Anyway good luck FTB's!

daveb975

I think that your approach sounds very sensible - buying somewhere within your means, and keeping a percentage of your savings back as an emergency fund.

Remember that London is very much a 'two-speed' economy' - there is banking and there is everything else. I know you feel that your job is safe (and I hope it is), but if the banking industry does continue to contract, you need to consider that most grad training positions in other industries pay more like early-£20s than mid-£30s.

There are a lot of people coming out of £80K+ jobs in banking now and finding that equivalent jobs in other industries pay more like £30k. Just make sure that you can manage on a non-banking salary if the worst does happen.

You should also consider that property prices are likely to continue falling for a little bit longer. This should not be an issue with your relatively large deposit, but if it falls as hard as some people expect then you may still be in negative equity in the short term. That said, the properties that you are looking at sound as though they have fallen a long way already, so it may not be an issue.

patch3228

All good points Dave and yeah the joint contingency fund was there in case both OH and I lose our jobs. We would be able to continue meeting payments for a further (approx.) 8-9 months in which time we would hopefully find a new career.

Althow I remain hopeful it will not come to that (but anything can happen in these turbulent times).

I have looked at the approx. possible outcomes of a non-banking salary and say we have a revised joint net income of around £2600 each month:

- £1000 (capital and interest mortgage)
- £1400 (all expenses)

That would leave £100 each every month for the ISA *yikes* - def keeping the £20K contingency fund :eek:

... who knows in a years time that £175K (2 Bed Terrace) may have dropped by 20% to our £140K Dream Target :money:

LET THE WAITING GAME BEGIN!

hethmar

Where did you see the 2 bed terrace patch?

patch3228

Hethmar it was in Beckton and I really liked the look of the property and the neighborhood seemed OK...except quite close to city airport grr

However, I will return to Beckton in a few weeks again as we only checked it out briefly.


If we were aiming for a flat (eg in West Ham) we would try stick with original criteria (near tube/ 2 bed etc), but now I have seen more and more terraced houses popping up - I am really looking at this opportunity.

There are particularly more terraced houses around Grove Park/ Catford/ Bellingham area, but I expect this to spread around other South London areas.