Procrastinating no more!

Procrastinator333

chewmylegoff wrote: »

at that sort of price differential, you may as well just buy the cheaper one and go private. or wait until the first kid is 1 year away from school, buy the £400,000 house, take the stamp duty hit in the face, live in it until the first kid is in school and then immediately move to the £250,000 one. nuts!

Or buying outside the catchment and then renting a second house within it and living there for 12 months to get them in. Might actually give this idea some thought!

Procrastinator333

chewmylegoff wrote: »

i don't find this particularly surprising, in fact i am quite surprised that they take a discretionary bonus it into account at all. given i am thinking about buying myself in the next year, this is actually welcome news as i have got 3 years of bonus history. the bad news is that it will only allow me to borrow about an extra six quid.



i can see where they are coming from on this to be honest.

It was HSBC, not sure if any or all use different criteria....

In terms of the shares, I just don't think it is consistent. The only way they will be worth zero is if the company goes under. And if it goes under then my salary will be zero anyway. Maybe it only makes a difference to a relatively small number of applicants, so not worth their time. But didn't actually change anything for us as we were not after a high multiple.

Procrastinator333

julieq wrote: »

Out of interest, what are they doing about using affordability information (other debts, outgoings and so on?) in the multiples you're being offered?

Also it still may be worth trying a mortgage broker (London and County are the usual one people seem to use if they're still going), you do get a good picture of the spread of what's available.

I'm making some assumptions based on the call, but I take their procedure as follows:

Start point - 3.5 X joint gross salary. That is their max to a couple.

During the chat there was a question early on about what I thought we could afford. There were also questions about any other financial commitments (debts, loans etc), our net pay (after student loan, pension contributions etc). Questions about our current expenditure on council tax, elec, water, insurance. But nothing about our discretionary spending, I guess that comes later on with the detailed application. They obviously do some number crunching based on your net pay, less basic monthly outgoings, compared to the mortgage cost. They also compare the mortgage cost to the amount you state as what you think you can afford.

I'm sure it all gets tightened up later on, but as we have no debt and our bills are not particularly high, they were willing to lend the full 3.5 Joint income subject to full applicaiton process.

Other point they made is that under no circumstance is any kind of vendor gifted deposit acceptable and they will withdraw any offer if one is part of the sale.

Thanks for the suggestion on a broker, we will give it a try closer to the time, but I'm pretty set on getting a BOE tracker. At 20% deposit, that will start be 2.49% plus base. I will try a few brokers, but I'm really only interested if that can beat BOE + 2.49%.

chewmylegoff

Procrastinator333 wrote: »

Or buying outside the catchment and then renting a second house within it and living there for 12 months to get them in. Might actually give this idea some thought!

well, if you're only talking about starting a family in the next couple of years, and the present system is that you don't need to be in the catchment area until the year before the kid goes to school (i don't know if that is the system, i am just guessing) then presumably you are looking at about 6-7 years before you actually need to be in the catchment area so may be some merit in buying outside now and moving in later, although obviously carries risks (the most obvious being that the differential in price becomes worse).

chewmylegoff

Procrastinator333 wrote: »

In terms of the shares, I just don't think it is consistent. The only way they will be worth zero is if the company goes under. And if it goes under then my salary will be zero anyway. Maybe it only makes a difference to a relatively small number of applicants, so not worth their time. But didn't actually change anything for us as we were not after a high multiple.

well not necessarily, there are instances of shares becoming worthless without the company going under and all the staff being made redundant - e.g. northern rock...railtrack...marconi. also, shares can permanently reduce in value, whilst you can just get another job somewhere else.

there are other considerations though. you may receive your shares free of restriction, i don't know, but many companies issue shares with lock-in restrictions. if you can't sell your shares for five years, you can't use them to pay your mortgage (and you can't raise finance against them either). similarly, your employer can block sales through the PA dealing policy, so you cannot guarantee that you can sell on demand.

typically if someone does lend you any money against shares, they will only lend a percentage of value of the shares (i.e. margin), and then hold the shares in custody as collateral, and have the right to sell them themselves if the value drops and you cannot give them more cash to bring the percentage back in line.

julieq

Schools are a nightmare, really, I ended up going private for secondary school though we moved to a slightly cheaper location outside Brighton. It's generally less important to get a "good" primary school than a secondary school though, but you're on your own essentially and in competition with some very very aggressive competing parents (it's amazing how quickly liberal ideas on the social benefits of state education evaporate when you're faced with a sink school for your own children). Good luck anyway.

It's much more important you get a nice house that isn't falling down and where you'll have decent neighbours than anything else anyway. That's really more important long term to quality of life, all other problems can be worked round one way or another.

Procrastinator333

chewmylegoff wrote: »

well not necessarily, there are instances of shares becoming worthless without the company going under and all the staff being made redundant - e.g. northern rock...railtrack...marconi. also, shares can permanently reduce in value, whilst you can just get another job somewhere else.

there are other considerations though. you may receive your shares free of restriction, i don't know, but many companies issue shares with lock-in restrictions. if you can't sell your shares for five years, you can't use them to pay your mortgage (and you can't raise finance against them either). similarly, your employer can block sales through the PA dealing policy, so you cannot guarantee that you can sell on demand.

typically if someone does lend you any money against shares, they will only lend a percentage of value of the shares (i.e. margin), and then hold the shares in custody as collateral, and have the right to sell them themselves if the value drops and you cannot give them more cash to bring the percentage back in line.

It is probably this complexity and the low numbers it affects that mean they don't bother. In my case none of that is really applicable. I get a share grant every year. They vest on X date. On that date I can do what I like with them. The only criteria for receiving the shares is that I'm still employed. It doesn't really matter now anyway as they are still happy to offer us more than we want.

Perhaps my surprise at this is more just the fact I have never applied for a mortgage before and did not have an appreciation for some of the more detailed points.

michaels

Interest on 150k at a typical 3.5% (currently is £5250pa - I am no expert but I suspect you wouldn't get much private education for that. Plus if you live in the 400k house your kids will be 'hangin' (or more likely not hangin' at all) with other nice middle class kids whose parents have prioritised their education rather than with kids whose parents are less interested. I'm not saying it is right to base decisions on this but it is the case that people do.

chewmylegoff wrote: »

at that sort of price differential, you may as well just buy the cheaper one and go private. or wait until the first kid is 1 year away from school, buy the £400,000 house, take the stamp duty hit in the face, live in it until the first kid is in school and then immediately move to the £250,000 one. nuts!

Really2

There is one risk renting in the area and buying outside, school placement fraud, this has been cracked down on quiet a bit in recent years.

My Ex teaching uncle and his wife made the best ever point to me. It only takes the head of a state school to move or retire to make a good school a mediocre one (and vise a versa).

You may as well buy a cheaper house and go private than bank on an area still having good schools in the future.

But the more sensible is chose an area then re-evaluate it when it comes towards secondary school choice time.

michaels

Should have multi-quoted before. This is very common locally, similarly claiming child lives at grandparents or other relatives address that is in catchment area, I think there was a case where someone had rented a property but weren't living their just to use the address and the council were trying to disqualify the child from the catchment.

the council check that the

Procrastinator333 wrote: »

Or buying outside the catchment and then renting a second house within it and living there for 12 months to get them in. Might actually give this idea some thought!

3 Years ago HSBC were happy to lend me 200k ++ earlier this year on a higher salary they thought 150k was too much...

Procrastinator333 wrote: »

It was HSBC, not sure if any or all use different criteria....

In terms of the shares, I just don't think it is consistent. The only way they will be worth zero is if the company goes under. And if it goes under then my salary will be zero anyway. Maybe it only makes a difference to a relatively small number of applicants, so not worth their time. But didn't actually change anything for us as we were not after a high multiple.