first time buyers !

gemma_1990

Hi all,

I'm a newbie have just come across the forum on google. Basically me and my partner are both 24 and have been saving to buy a place for three years, we have roughly £27,000.

This evening we viewed a flat for the second time which we both love and would like to put in an offer in the morning, however I have a few questions before we do:

1. Could somebody please explain to me what share of freehold is (I understand basic concept but not all the details) and if this is preferable to leasehold ?

2. Should I arrange a DIP before putting in the offer? I have checked with the bank how much roughly we could borrow based on our salaries and current credit commitments but not had formal DIP.

3. This question may sound stupid but is it standard practice to put an offer in below asking price first ??


we have asked our family members who mostly all own their properties but they were all council right to buy purchases so they don't know either !

Also any general tips for first time buyers ?

Thanks

ACG

Each flat owner owns a share of the freehold (the land that the building sits on). I have only ever had 1 of these crop up on a Buy to let mortgage and it was quite difficult to get a mortgage... im not sure if it will be different with it being a residential or not.

I would put your offer in, see if its accepted and then get a DIP. if your offer is not accepted chances are it may expire before you find another property, meaning another DIP will be needed.

Usually, although if the property is priced for a quick sale then it may not be.

Tips:
- Do NOT speak to the estate agents broker - you can not be sure if they are biased in the interests of their employer (the agent). Also do not be bullied/blackmailed into seeing them...
- Remember the agent works for the vendor - not you.
- Also its not usually a great idea to use the estate agents solicitors, especially if its countrywide. They are expensive and not worth the extra.

nick12

As a recent FTB I would strongly recommend engaging a mortgage broker (independent, whole of market i.e. not , as ACG says, the Agent's in-house broker). It makes the getting a mortgage part of the process a great deal easier.

The approach taken to making an offer (in tems of how it relates to the asking price) will depend on where you're buying. In some areas it's pretty much a waste of time to offer under as most properties will be going to sealed bids and will generally go for above asking. If the market is slower where you are then worth a shot. Ultimately of course you can offer whatever you want to.

If you can shown you have finances in place then as FTBs you are an attractive proposition to sellers so use that to your advantage. We are in Bath where the market is fairly lively and we managed to get a few £K off asking.

Good luck and I hope this doesn't sound patronising but well done for getting into a position to buy at the age of 24!

Kynthia

The flat is still a leasehold flat. It's just that you will also have a share of the company that owns the freehold. 'Share of freehold property' is a bit of a misleading term, and if you understand why it will be better for you.

I didn't get an AIP/DIP first as I had found my own independent mortgage broker and therefore knew I would not have trouble getting a mortgage, roughly the max I could borrow and what repayment amounts were at various borrowing amounts. Remember you don't have to borrow the maximum someone will lend you. Have you worked out what all your bills, council tax and other expenses will be so that you know the maximum you can afford each month on a mortgage repayment as that should be a key factor on how much you should borrow.

If you don't know any mortgage brokers then put your postcode into unbiased.co.uk and untick the sponsored listings, it should give you a few companies to try.

Your offer price should be based on what you think the property is worth. The seller might think it's worth more than you do so then you decide whether it's worth enough to you to pay a little more but then you also need to factor in how long you'll be staying and the price when you sell. The best way to work out what a property is worth is to see what other comparable properties have sold for in the area recently. Zoopla and Rightmove have sold prices (don't confuse these with asking prices) for you to look at. Also factor in whether other buyers are interested or has the place sat on the market for months.

Read up on leasehold properties and lease length. If the lease gets too short it will cost you thousands to increase it before selling, so know what it is now and what you are getting into.

MarkBargain

Do mortgage brokers always have access to the best deals though, given they must earn commission for referrals? I would also speak to your own bank to compare what they can offer, as they already know you as an existing customer and might offer exclusive products.

I was very pleased with the mortgage Nationwide gave me. It might be worth running some numbers through their calculator: http://www.nationwide.co.uk/products/mortgages/first-time-buyers/mortgage-rates The Loan to Value (LTV) ratio is a key thing when it comes to the interest rate, so sometimes putting a few more pounds down on the deposit can lower the rate and save you loads of money.

princeofpounds

Each flat owner owns a share of the freehold (the land that the building sits on). I have only ever had 1 of these crop up on a Buy to let mortgage and it was quite difficult to get a mortgage... im not sure if it will be different with it being a residential or not.

Ignore that. 'Share of freeholds' are not difficult to mortgage, in themselves.

Share of freehold is a lazy term which means that you are buying a leasehold flat, and also a share in the company which owns the freehold of all the flats.

Generally speaking it is preferable, but don't think that it is automatically better.

As a part-owner of the company that owns the freehold, you have some more power over how the freehold is run than you would otherwise do. For example, you can vote for who becomes directors of the freehold company.

The leasehold and freehold still exist as separate entities, so you may still have to pay ground rent, service charges and lease renewals to the freehold company, you just happen to also be a part-owner of that company. You don't normally get a 'free pass' or to withdraw your share of the money from the company, although as all the freehold shareholders will also be leaseholders there is normally more incentive not to try to profit at the freehold level.

How much power you have depends on the circumstances. In a large block of flats you might be one vote amongst many with little direct influence. In a small block of flats, you would have much more significance but might find one disruptive shareholder can be a notable burden on everyone else.

ACG

90% of the time we have the same as what the bank offers.
The exceptions being HSBC/First Direct/Co-op (who have a month wait for an appointment). Occasionally lenders have exclusives that are only available in branch and likewise they sometimes offer exclusives to brokers.

The commission paid to brokers is negligible (in the region of 0.35% of the mortgage amount) but if it is not paid to the broker, my understanding is that it gets paid to the bank instead... they pay themselves effectively.

I dont see my job as finding the best rate, with all respect any idiot can do that. I see my job as ensuring you fit criteria, playing the game in my clients favour, resolving any issues basically just taking it out of the applicants hands and getting on with it.

gemma_1990

hiya everyone, thank you all for advice our first offer (5k below asking) was refused so we offered asking and it was accepted :):)

I got a DIP from nationwide today but will consider trying a mortgage broker, is it to late now we've done DIP? We have already been offered the agents in house broker 3 times but haves refused luckily !

I have requested quotes from a few local solicitors and one online firm, 1st property lawyers, anybody used this service, better to be local or not much difference ?

Also, is there anything else I need to be doing apart from picking out wallpaper and furniture ha ha ?

Thank you everyone

MarkBargain

gemma_1990 wrote: »

I got a DIP from nationwide today but will consider trying a mortgage broker, is it to late now we've done DIP? We have already been offered the agents in house broker 3 times but haves refused luckily !

You can still get other quotes if you have a decision in principle. Nationwide are a good lender though, so you are in safe hands with them.

gemma_1990 wrote: »

I have requested quotes from a few local solicitors and one online firm, 1st property lawyers, anybody used this service, better to be local or not much difference ?

I have used both. The online solicitors were a nightmare and slowed the process down, causing us stress that the sellers might pull out! The local solicitor was by contrast very good,so I would use a local one even if it costs more. It's also easier to drop into the office with documents etc. rather than having to post stuff off all the time.

gemma_1990

Thank you I instructed a local solicitor and full application gone in with nationwide today , all moved so fast since viewing the flat !!!