Very concerned we are significantly overpaying for flat??

nicknameless

FTBJo said:

London21 mortgage offer valid till end of the year. Enough time but not a huge amount of time to find another place and complete, if this one falls through.

It will depend on the lender whether you can swap to another property or not.  Do not assume that you can do this automatically.

SensibleSarah

A few weeks after I completed and moved into my first home, next door (which has an additional bedroom, was in better condition/needed less work and had a much better layout/extension) put theirs on the market for about 10% less than I bought mine for. I was a bit gutted - but knew my house was a bit overpriced at the time I bought it, I just didn't have much choice because of lack of stock that matched my requirements at the time. This was coupled with next door wanting a quick sale and so slightly underpricing theirs. In the grand scheme of things, it doesn't really matter long-term, but if I'd tried to sell after 5 years, I probably wouldn't have got back what I paid because of what prices were doing at the time. After 12 years, it's a different story thankfully.

The kinds of figures the OP is talking about are fairly substantial. I'd be looking at the other properties at this stage. Yes, the mortgage rate thing is a consideration, but so is getting a home that you're happy with. If you're only planning on staying 5 years in whichever flat you buy, don't worry too much about total interest due over the course of the entire mortgage, just do the sums on the difference between the rate you have now and the likely rate for the 5 year fixed term. That's unlikely to be more than £50k - even in London   

thegreenone

Perhaps take a look at the lease lengths.  Have previous owners of yours extended the lease whereas the others are running down and need renewing, hence the lower price tags.

£300k + £20k for new kitchen/bathroom + £30k lease extension = £350k

Just a thought.

DE_612183

also properties where I live prices are still ending up 20-30k above asking - so that 300k could well end up going for 325/330, then you add in the other costs and hey-ho you're at 350 or more.

asking for a reduction is risky - the seller could say no and just remarket - depends on the state of the market in your area, or they may agree as it's hassle for them - what was the status of your vendor? Moving on?  

Llamaman_2

Is the flat in a building which was built in the 1980s or before? If so the two comparable properties could have a lease length under 80 years.

Many London leasehold flats build around this time were given 125 or 100 year leases. The length of these would now be below 80 years, meaning the price to extend becomes very costly (probably many £10,000s). So this could be factored into the sale price.

If you didn't see the comparable properties for sale on Rightmove, then there's a chance they were sold via auction to investors, due to the low lease length.

Sarah1Mitty2

FTBJo said:

I would also add to the above that we did our mortgage application early so have fixed at a low deal 2.63% for 5 years. Lenders were pulling deals before you even finished your application. I’ve looked again and the cheapest deals now are much worse +0.7% approx. So if we pull out, we risk loosing our mortgage offer and fixing on a worse deal. 

Would the more expensive mortgage deal cost you more than you can save by buying a correctly priced flat?

Sarah1Mitty2

propertyhunter said:

Also consider that if your current mortgage offer expires, what you might gain in a cheaper flat, you lose out on in higher interest rates. If we didn't complete on a recent transaction when we did (3 weeks to expiry), then we would have paid £28k more in interest over 5 years (it's a large mortgage but still 40% LTV). 

The person asking the question is looking at a saving of around 70k immediately though.