Small Steps Out Of Massive Debt!

EssexHebridean

Oh my word - that's incredibly exciting, congratulations! 

Estate agent recommendations for solicitors are usually fine - there are incredibly tight regulations around referrals these days. Mostly an agent will refer to a solicitor who they are comfortable working with, which can help to make things more seamless down the line. Regardless though, it's good practise to get several quotes and choose the one that you feel happiest with.

Best bit of advice I can give you is to assume that everything will take at least a week longer than you are told it will, at each step. Also make use of the agents to drive things forward - they are getting a nice fat commission and often end up doing only a fraction of the work the solicitors will - for a far, far lower fee!  Remember that although the agents aren't working for you, but for the seller, they are still every bit as keen to get things completed! 

enthusiasticsaver

Ooh exciting news on the house offer.  AC offers some good advice on survey and solicitor.  Hopefully you will start up a MFW diary soon.  Beware of debt creeping up after moving as that is often a catalyst.  My advice would be do not rush to make changes to a house or the garden as soon as you move in.  Also set a savings challenge to save as much as possible before the move as the costs of removals, solicitors, land registry fees and search fees can all add up.  You have put yourself in a strong position though by getting rid of the debt.  Any idea on where you are going for your new mortgage? 

GeorgianaCavendish

Thank you so much @astrocytic_kitten and @redofromstart - it is very exciting (and scary)  

GeorgianaCavendish

Thanks for the great advice @another_casualty  We're buying a house that is around 50 years old and so the more expensive survey will be well worth it for peace of mind. We've got solicitors in mind who come on personal recommendation from some friends, so we won't be using the EA's inhouse solicitors either We did get a quote from them but they were more expensive than the firm we went with, and didn't have the benefit of a personal recommendation from someone we trust.  

We're lucky in that we don't have a deadline for moving out of our current place, so we aren't up against a tight timeline but I'm sure that the process is going to be challenging for me - so much out of my control!  That is a really great tip about using the EA to hurry things along @EssexHebridean - I'll definitely keep that in mind  

Really great advice, thank you @enthusiasticsaver - I tried to factor in as many of the "real" costs of moving as possible (stamp duty, legal fees, survey fees, removals etc) when calculating what I call the "deposit costs". It was a bit of a finger in the air calculation, using some rough figures from the House Buying boards, but I went at the highest end of the ranges suggested so now I will see how accurate that was. The house is not at the top of our budget range, so we are already at target in terms of those costs. But the house does need some cosmetic work doing - so we'll continue to save as much as possible in next few months to build our war chest. We'll wait for the results of our survey to come back first so we can get an idea of any work that will need to be done immediately, and then anything likely need to be done in say the next 5 years. On the cosmetic side, the only thing we really want to do quite soon is update the bathroom (it had some strange adaptations done for the previous owner, and the shower unit is very dated); everything else can wait until we've lived in the house for a while. We've got longer term ideas about an extension on the kitchen, and updating an outbuilding to a home office - but those are in the 2-5 year plan. I'm actually very excited about getting the survey report so that we can start making a proper budget for the next 1-2 years   

We have got a mortgage broker - I really wanted a sounding board to discuss our options and help us decide exactly how much to borrow and talk through the different products - so should have more news on that in the next couple of days We're planning a 2 year initial term, which will give us a chance to do any remedial work (and sort the bathroom) and then remortgage at a better LTV for a longer term.  

I think what I will do is start a MFW diary when we exchange, I feel like it might be tempting fate to do it before then!  

EssexHebridean

Bear in mind that you will read the survey and panic - as they tend to make it come across as though the place is likely to fall around your ears any second. Ultimately it's a case of taking a deep breath and going through things using the measures of urgency to decide whether you're happy to proceed. Some things should flag up concern - ie high damp readings. others less so - for example it's close to impossible to buy a Victorian house in London without some signs of historic movement - combine London Clay with wartime effects and it's almost more worrying if they apparently haven't moved! 

Something to think about...your initial 2 year term on a fix would be a good idea in most circumstances, but right now the only way rates are going is upwards and - and the mortgages board might be the right place to get a more educated view on this one - I'd say that  my gut feeling is that it's going to be relatively unlikely that the modest change in LTV you will have made in 2 years will get you a better rate then, than you will start out on. In some ways you're in the opposite position to the one were were. We started out at (from memory) 5.64%, by the final fix had dropped to 4.34% but by the time we reached the end of that fix there were FAR lower rates out there. If I were buying now I'd personally be looking for a 5 year fix I think, and panning to absolutely hammer the OP's as hard as I could to ensure that I minimised the rate increase when that fix ended. I stress that this is largely working on my own gut feelings, your broker may well have different views. 

astrocytic_kitten

EssexHebridean said:

Bear in mind that you will read the survey and panic - as they tend to make it come across as though the place is likely to fall around your ears any second. Ultimately it's a case of taking a deep breath and going through things using the measures of urgency to decide whether you're happy to proceed. Some things should flag up concern - ie high damp readings. others less so - for example it's close to impossible to buy a Victorian house in London without some signs of historic movement - combine London Clay with wartime effects and it's almost more worrying if they apparently haven't moved! 

Something to think about...your initial 2 year term on a fix would be a good idea in most circumstances, but right now the only way rates are going is upwards and - and the mortgages board might be the right place to get a more educated view on this one - I'd say that  my gut feeling is that it's going to be relatively unlikely that the modest change in LTV you will have made in 2 years will get you a better rate then, than you will start out on. In some ways you're in the opposite position to the one were were. We started out at (from memory) 5.64%, by the final fix had dropped to 4.34% but by the time we reached the end of that fix there were FAR lower rates out there. If I were buying now I'd personally be looking for a 5 year fix I think, and panning to absolutely hammer the OP's as hard as I could to ensure that I minimised the rate increase when that fix ended. I stress that this is largely working on my own gut feelings, your broker may well have different views. 

Seconding basically everything EH says on both the survey and the mortgage. 

Assuming my imminent purchase actually happens (looking less likely by the day), I’m going for a 5 year fixed rate and planning to OP as much as possible in that time, on the assumption rates will be much higher by the time the fix ends. Similarly to EH I started off with a rate close to 6% so now I’m desperate to lock in the current low rates (the rate on my mortgage already went up from 1.49% to 1.64% over the past couple of months, and who knows what will happen if the current purchase falls through). 

It’s definitely worth doing some sums on how much you’ll have paid off after 2 years v 5 years and where LTV will be etc, and trying some guesses with interest rate rises to see how things might change after 2 years. Online mortgage amortisation calculators are good for this, and the MSE overpayment calculator gives you the figures annually and also lets you add in OPs. The first 2 years will absolutely fly by, especially if you’re doing work etc. Though locking in for a longer term does mean that if you want to move before 5 years you have an early repayment charge.

GeorgianaCavendish

Thank you both, lots to think about!  

GeorgianaCavendish

Thanks for the comments, it did give me lots to think about and discuss with DH. We've decided to go for a 5 year fixed rate and do improvements slowly (originally were planning to do a 2 year tracker and get the work done during the first 2 years).

Now the waiting game continues ... 

EssexHebridean

That sounds like a good solid decision in the circumstances - at least then you know where you're at - and I honestly can't see you being anything other than better off for going that route unless something truly apocalyptic happens - and I think we've had enough of apocalyptic over the past two years to last a lifetime! 

GeorgianaCavendish

I’m happy to trade a little bit of savings (if rates do go down) for the certainty of knowing exactly what our payments will be for the next 5 years. 

I don’t mind if we do end up “missing out” on a rate reduction (although we’ve got a very good rate now) but I can’t stand the idea of the rates going up and up! 

As I see it, the base rate can only really go down by 0.25% but it could go up by loads - I remember it being 6% when my aunt was buying her house in 2000!