House buying dreamer now seriously considering it for real!

Maddie

Hi all,

Me and hubby are both 27, I've been wanting to buy since i was about 18(!) and have been steadily building up a deposit and a good career and keeping an eye on the house market, viewing one every now and then.

We found a house on sunday on my which is in an ideal location but needs a lot of work doing to it. I thought that we wouldn't be able to afford the asking price but spoke to L&C and apparently up to the asking price should be fine as it would be 85% LTV.

House is up for £170k, i have just over £27k in savings at the mo, on £34k plus bonus around £2.5k. Hubby isn't employed at the mo, and would prob looking at no more than 20k if he was working.

The house (i think - we are viewing it tomo) is structurely sound, but does need completely renovating other than already having double glazing etc. so paying the asking price would leave us with nothing to do it up with.

Apparently it has been on the market since april, then sold for £181k but it fell through due to 'personal reasons', and has been back on the market since july at £170k.

Questions;

- how much do i need to cover the costs of buying - i have been adding it up and it looks around £2.5k?

- for the mortgage fee i know they can sometimes add it onto the loan - does this mean it would be on top of the £x they might agree to lend me and would not be part of the LTV calc?

- given the £181k sale that fell through do you think they are unlikely to accept much less than the asking price OR do you think the fact they must have dropped the asking price quite a lot means they are really keen for a quick sale and would be likely to accept a low offer from a FTB keen to move quick. (btw the house is empty - it looks like its had a very old person living in there).

- could the EA be telling porkies about the £181k?

I know i would be upset if they accepted our first offer as i'd wonder how low we could go. but on the other hand i do think its a good price from what I can tell (just wonder whether we could really afford it).

Also, have just seen a post about really high BOE rates possibly heading our way etc, I *had* always dreamt of becoming a SAHM once we have kids but it doesn't look that that would be possible - especially if interest goes up ... but we are paying £625pcm rent as it is. So am i mad to think of buying, or mad to still be renting?

opinions please i am so full of questions!

Cannon_Fodder

£170k less deposit 15%, £25.5k, leaves you borderline on fees and costs.

= £144.5k mortgage. On £34k, makes a salary multiple of 4.25. Again borderline.

Unemployed hubby will count as a dependant, affecting affordability methods of considering.

If you found a 2.5% tracker (3% inc base rate), it'd be £690-ish a month. If rates changed to 6%, that would be £942. The recent headline of 8%, £1128.

I think you need to get it as cheap as possible, to stand a chance of feeling comfortable about those figures.

Maddie

Thanks Cannon Fodder! Surprising that L&C didn't say hubby would count as a dependant, but i have to admit i did think of him when she said i didn't have any!

I think she added in my bonus as part of my salary, which makes it 4x multiple, i would be a lot more comfortable with 3x!

Having said that i have fairly good prospects of a promotion in the next couple of years (i know you can never be certain), and we are both pretty low spenders, which would make me feel less worried about a high multiple.

At the moment i am thinking "whats the worst that can happen" and to be honest i think the low risk of loosing the house down the line and ending up renting again with my deposit gone would be bad but worth the risk for this house. After all if i never take the plunge i run a risk of being priced out of the market. And if we went for something cheaper we would be looking forward to moving somewhere better as soon as we moved in.

Maddie

Well we went to see the house, and I guess unsurprisingly it needs a lot more doing to it than we had thought. The whole back section of the house is basically a mess of tiny little rooms and weird windows looking into the garage. The bits we thought would be ok such as the double glazing are so poor quality and shoddily fitted that they would need replacing. But, it is in a perfect location, and does have a lot of potential.

After the viewing we stuck around taking pictures of the outside and a neighbour came out saying we could ask him anything about it. Apparently it has been on the market at least 18 months, and there hasn't been any sale which fell through in that time (and he was a bloke who seemed to know everything that was going on). Lots of people have viewed it, including a lot of builders, who have all walked away. In fact there was a family looking at the same time as us - they were in and out within 5 minutes!

Also, the lady who lived there had done equity release on the house and is now in a care home. Therefore the finance company had 'fore closed' on the house and the family had had to empty it within a week. Therefore it is the finance company who are selling it.

Although builders have walked away and we don't have any real experience of building work (call me naive!), I can't help but think that there is a price at which we should buy it. I'm hoping that there is a chance the vendors will take an incredibly low offer just to get it off their books, after all it is probably sitting with a big provision on it anyway.

So the plan is to do some more research, have another viewing, then make an offer (I'm thinking around £120k at the moment). Although I realise there is little chance of us getting it that low - at least it is more experience of the whole process. Am i mad to bother?

vaporate

Buying a house is a con anyway

blackshirtuk

Maddie wrote: »

I'm thinking around £120k at the moment

If you don't try you will never know!!

Are you sure you are willing to the work?

And if they accept you must get a full survey and what if raises issues?

Do you really need all that stress as a FTB it will pretty stressful on a new build!

I am not sure I could have handled a difficult purchase when i was a FTB. There is so much to understand, but good luck to you if you think you can and you get it for a song!!!

Maddie

Thanks blackshirtuk.

To be honest I'm not sure if I am willing to do ALL the work right now, mostly as the thought of a big mortgage is scary enough without having to add a big loan on top.

My plan would be to do the minimum amount required now, ie electrics, fit 'temporary' kitchen in the backroom for now, strip and redecorate a couple of rooms so we had enough room to live in. Then do bits as we go along for a few years, eg new windows, redecorating all rooms that we aren't planning on knocking down.

Then, once we are feeling a bit more comfortable with the mortgage and perhaps the worrys over the economy and interest rates have settled down; build an extension over the garage, and put a new kitchen in the back of the garage and utility room (garage is double length) and sort out the wierd concrete terrace thing in the garden. Also, perhaps we could get a revaluation at this point to increase the mortgage rather than having to take out a separate loan.

Yes, we would definately get a full survey, and if it showed anything unexpected we would walk away unless the sale price was reduced to reflect it.

There is a lot more to think about and discuss first though!

mcc100

One point that stands out from your opening post is where you ask whether the estate agent was telling porkies about the £181K sale that fell through.

Obviously he was telling porkies just to make you think that another buyer thought it was worth £181K.

How estate agents are allowed to get away with telling outright lies is beyond me.

Never believe what they say.

Maddie

I am learning that fast mcc100, both from my own experiences and reading posts on here.

Philkm

Your initial estimate of spending £2.5k to 'do up' worried me a little. What were you hoping to get done for this and what skills do you and your partner have for doing any works yourselves?

Running_Horse

The house is a lemon. Walk away.