First time (cash) buyer in London - advice needed

kinger101

davidmcn wrote: »

When you come to make an offer, agents might want more reassurance that you can actually lay your hands on the money. If your parents can transfer the money to you now, that may help.

Following on from this, once money is transferred to the UK, don't hold more the £85K in any one bank, as that the limit for FSCS protection. Rather than having the faff of dividing it between 5 banks, you can also deposit it with NS&I, where the money will be 100% treasury backed. It's the safest place for cash.

steampowered

To be honest £300k-400k doesn't go that far in London. Could it be worth taking a mortgage and buying a more expensive property? Mortgages interest rates are very cheap right now.

There is really no need to worry about getting the money into the UK now. You will need a 10% deposit when you come to exchange contracts (this happens after your solicitor has completed all of their searches - weeks after your offer is accepted) and the rest of it before completion.

You need to find a solicitor or conveyancer. That is easy to do - lots of online search functions and review are available.

Other than that, you just need to start viewing properties. Good luck !

kinger101

steampowered wrote: »

There is really no need to worry about getting the money into the UK now.

Agreed, but it would be prudent to make sure it's here before exchange of contracts.

princeofpounds

What do you need an IFA for? I don't think you do, assuming that you just plan to hold the money in cash between now and ~May.

Just hold it in interest-bearing savings accounts with banks, preferably split between banks to benefit from FCA deposit protection on the full amount.

Most people who want a mortgage don't use IFAs anyway. They use mortgage brokers (although I'm sure many IFAs can provide that service too, but I doubt they beat a good broker). Just FYI.

I would advise you not to assume you can move on any specific date. The house buying process can vary hugely in terms of how long it takes, even if you already have the deal agreed and are paying in cash, for all sorts of reasons. This is especially the case if a third party is involved (e.g. a freeholder for a flat needs to provide a pack of information) or some enquiries need to be made.

If there are no complications, you might get it done in 3 weeks from initial offer. If there are complications, you can be looking at 12+ weeks easily, totally depends what it is. I'd suggest 6 is average for a cash buyer but it's almost worthless telling you that as it's so variable and individual.

Also, you have to be aware of chains. When a property sale completes doesn't only depend on you as a buyer, it also depends when the vendor can move out. If they are selling their place to buy another, and not renting in the meantime, then they can only start looking seriously once they have an offer. So you could then wait a few months for them, and then also be subject to how long things take on a transaction up the chain you aren't even directly involved in. Hopefully you won't be in a chain, or in a short one.

So I would suggest that you start looking at property seriously in December/January if you want to be somewhere by May.

It is also usually wise to try to complete on a place a little before your rental contract ends, even if you 'waste' a month or so of rent. That makes the whole process of moving less stressful. Most importantly, if the purchase gets delayed just as your rental contract ends, it makes what happens next much more difficult - do you sign up for another 6 months rental? That's not a decision you want to make in a rush.

The advice the other posters gave on the money and ID is fairly sound. To be frank, it would be much better if it were transferred into the UK and into your name. You will still need to provide evidence that it is a gift from your parents, and they will probably need to provide some evidence of where they got it from.

Money laundering regulations are much tighter these days, and you will raise some flags given the nature of your money - gifted and foreign. This could mean delays (although I wouldn't say it was base case scenario) and they might not be well-communicated because solicitors are not allowed to 'tip off' potential money launderers about checks that are being done. All the more reason not to get too wedded to a specific timeline.

You can shop around for a solicitors at any point, but you need to actually engage one around the time you actually negotiate an offer. When your offer is accepted by the vendor, pretty much the first thing they ask for is the details of your solicitor.

The other person you will probably want is a surveyor. Again you normally engage one around the time an offer is negotiated, as you can then ask for a quote depending on the type of property you are bidding for. But you can shop around before then.

Any offer you make should be subject to survey (assuming you want one - it's normal practice and usually wise, especially for an FTB), and like the solicitor, the vendor's EA will ask for their details once the offer is accepted and liaise with the vendor so they can visit the property.

The other thing the EA will ask for, when you make the offer, is evidence of funds. This isn't as forensic as your solicitor; they just have a duty to prove to their vendor that you aren't a time waster with no money, so a bank statement should satisfy them.

They will probably also try to cross-sell you a mortgage (which you obviously don't need), and possible a surveyor and a solicitor too. Remember, they work for themselves first, the vendor second and you not at all, so you don't have to take them up on these kind offers.

If you do choose to work with someone they refer, the surveyor or solicitor will work for you rather than the vendor, but there is always that conflict of interest issue at the back of your mind.

davidmcn

princeofpounds wrote: »

You will still need to provide evidence that it is a gift from your parents

The OP will need to prove who it's from, but for a cash purchase whether it's a gift or not isn't relevant - that's only where a mortgage lender wants to ensure there are no strings attached (or undisclosed liabilities to repay a loan).

hazyjo

steampowered wrote: »

To be honest £300k-400k doesn't go that far in London. Could it be worth taking a mortgage and buying a more expensive property? Mortgages interest rates are very cheap right now.

100% agree and wanted to suggest the same thing but was a tad hesitant. If I were in your shoes, I would be doing exactly that. Is it worth buying a small property in an average or not particularly nice area? I'd buy a smaller house in a popular area in greater London which is likely to hold value or increase in the medium term.

george4064

steampowered wrote: »

To be honest £300k-400k doesn't go that far in London. Could it be worth taking a mortgage and buying a more expensive property? Mortgages interest rates are very cheap right now.

I was thinking the same here too.

OP: Do you work at the moment? I presume in London? Are you self-employed or not? Are you single? Do you have any children?

With your large cash gift you'll be able to access the best LTV and therefore the best interest rates, would be silly IMO to not take on a mortgage if you are currently working.

For example, lets say you're working in London on £35,000 per annum and you're due to receive £350,000 from your parents. You could buy a nice 2 bed flat for around £450,000 with a £150,000 mortgage and a £300,000 deposit. This will leave you with a nice sum left over which will easily cover the additional costs of buying a house but also could serve nicely to start a Stocks & Shares ISA or something along those lines...

AKG23

To be honest £300k-400k doesn't go that far in London. Could it be worth taking a mortgage and buying a more expensive property? Mortgages interest rates are very cheap right now.

I would also tend to agree with this.

I recently bought a 2 bed flat in Zone 3 South West London for £430k so similar price range to you. £430k was our absolute max and we only went up to this as over the course of looking we both got a pay rise plus my parents gave us a little more help. We also had purchases fall through at £350k and £376k so decided to throw some money at the problem to ease the pain of losing the others!

Even going up to £430k from £376k has bought us around 200sqft extra so if I were you I'd put a small mortgage toward your deposit. Of course once you start looking you might find that your budget is more than sufficient for your needs but might be worth booking viewing at quite a wide price range to see the difference in what you can get (e.g. £300k up to £450k at £25k intervals).

bouicca21

OP, you need to think about transport routes and commuting times. Apart from that if I had ever been lucky enough to have that kind of money I’d also have been thinking about a mortgage or perhaps a refurbishment project.

eevamaija

Hi everyone, thanks so much for these useful responses.

Regarding a small mortgage, I haven't ruled it out entirely, but in a way I'd rather keep things really simple if possible (I mean, as much as buying property can be simple.)

I'm single, no dependents, working full time in central London, but my salary before tax is less than £30k a year (good old arts jobs.)

Right now I live near Battersea Park with good transport connections (also very close to my work). I think finding something I could buy outright which would be decent in my current area would be, maybe not impossible, but difficult.

I’d definitely consider moving a bit farther out (Putney, Wimbledon, etc, for instance - while certainly not cheap, I think those areas would be a little cheaper) but for someone like me there wouldn’t be much point in moving out of London, or to the outskirts, to get a bigger house or whatever. I want somewhere I can be comfortable and safe, and somewhere I can enjoy what London has to offer without it being a massive trek to get in and out. Buying a property that I’d spend a lot of time working on and renovating, for instance, doesn’t interest me much. (Yes, I know, this generous gift is probably wasted on me in a lot of ways!)

Although I basically see myself staying in London (having lived here for about 15 years now) it might also, at some point, be interesting to me to be able to leave London for (say) a few years and rent the place out.

Thanks again for all the suggestions, please feel free to keep them coming!