Potential first time buyer, uncertain about whether or not to take the leap

MS1982

Hello all, this is my first post, and I'm seeking a little advice. I'm thinking about buying a flat, but have a host of questions that leave me slightly undecided.

I live in London and don't mind what part of town I live in - travel isn't an issue. I'm 30-years-old, earn £30k a year and over the last five years I've put away a £20k deposit. At the moment I'm paying £650 a month in rent, so potentially a mortgage could be the same amount - but with the obvious bonus of capital accumulation. But will house prices drop? Is it a good move to buy a place, or will I live to regret it?

I went to see a mortgage broker who said he could get me £150k, but I don't really want to stretch myself that far. I think a £130k place would be safer, leaving me with a £110k debt. He also was going to charge £600-700 as a fee. Is this necessary?

I'm just not sure what to do.

ACG

I didnt realise you could buy in london for £130k...you learn something new everyday.
Nobody knows what will happen with property - personally i dont think it will drop that much more...if at all, to put my money where my mouth is im actually looking at buying again as we speak.

£600-700 as a fee to me seems a bit on the high side, however im from Manchester where everything is a lot cheaper anyway. But i suppose it depends on your circumstances - i have seen advisors charge upwards of £1500 but that was on much more expensive properties.

MS1982

You can buy a tiny flat, needing work, in an unfashionable/scruffy area of London with poor transport links for that, if you look hard enough. It won't be pretty!

ACG

Nothing wrong with that, its your own space and im sure you will love it just as much as someone in a £300k place!

Seems like your being quite practical about what you can lend and what you want to lend etc.

Maybe_its_because

MS1982 wrote: »

You can buy a tiny flat, needing work, in an unfashionable/scruffy area of London with poor transport links for that, if you look hard enough. It won't be pretty!

I might be teaching my granny to suck eggs here, but I think you'd be pleasantly surprised at what you could get for your £130k as long as you looked beyond the underground line and onto train/overground links. E.g the SE corner of London like Beckenham, Sydenham etc gets you into central London in 15/20 mins.

MS1982

ACG wrote: »

Nothing wrong with that, its your own space and im sure you will love it just as much as someone in a £300k place!

Seems like your being quite practical about what you can lend and what you want to lend etc.

Yep. I don't want to run into this without being 99pc sure it's a sensible move. My current flat is nice - nicer than I could afford to buy - but I share it with a flatmate and it'll never be mine. I can't paint the walls, hang pictures, etc, etc...

Maybe_its_because wrote: »

I might be teaching my granny to suck eggs here, but I think you'd be pleasantly surprised at what you could get for your £130k as long as you looked beyond the underground line and onto train/overground links. E.g the SE corner of London like Beckenham, Sydenham etc gets you into central London in 15/20 mins.

That's not a million miles from where I've been looking. I saw a small but well-formed place which has been on the market for 7 months at £140k, offered £120k (perhaps cheeky) and then £124.5k. Both were turned down. Thinking about upping it again, but obviously that will incur stamp duty. So a £130k offer is actually £131.3k. I still don't have an agreement in principle yet - should do that - but unsure about the broker thing.

Morgage_Confused

Might be an idea to stretch yourself and maybe get 2 bedrooms. You can always rent one out to cover part of your mortgage payments.

ACG

Go to £124,999 say your looking to avoid stamp duty so thats your maximum.

There is nothing stopping you going with a bank, but advisors can obviously search high street banks, building societies, smaller lenders who only work with advisors etc and do everything for you pretty much.

You know what you can borrow as a maximum so atleast you have somethig to work towards. I would probably get an advisor in place before you get an offer accepted - atleast then you can shout helpppppp i need an AIP as soon as the offer has been accepted.

MS1982

This place I saw was very, very small: standing room only in the kitchen, comically tiny bathroom, claustrophobic hallway. But it did have a box room. You'd probably struggle even to get a single bed in there. But someone would probably take it for £350 including bills - very cheap in London - which is the tax-free limit for having a lodger...

MS1982

ACG wrote: »

Go to £124,999 say your looking to avoid stamp duty so thats your maximum.

There is nothing stopping you going with a bank, but advisors can obviously search high street banks, building societies, smaller lenders who only work with advisors etc and do everything for you pretty much.

You know what you can borrow as a maximum so atleast you have somethig to work towards. I would probably get an advisor in place before you get an offer accepted - atleast then you can shout helpppppp i need an AIP as soon as the offer has been accepted.

I thought about that, but thought it was too small an increment upwards. But I suppose you're right - it's worth a go. I'll email the agent and offer £499 more.

It's not a lovely place, and I wouldn't be excited about moving in, but it would be a lovely feeling to know that the payments are doing something useful.

ACG

If you give a reason for your maximum they may be more inclined to accept. Its one of those awkward values where anything more and its like an extra £1300 on top of any offer which is probably what is putting a lot of people off.