Advice for a first time buyer - making an offer

adamzetec

Been reading this forum and picked up quite a few tips and tricks, however, I am now in a position to make an offer.

To give you some background, I only started looking on Wednesday when I met with a mortgage advisor who has offered me £185k (inc 10% deposit of roughly £18k). I am 23, earn £33k and my monthly take home after student loan and season ticket loan is circa £1600. At £185k, i'd be looking at payments of £938 per month. This is with the abbey at a 5 year fixed rate of 5.83%. Due to my budget, I would need to rent the 2nd room out to a friend.

I'm looking for 2 bedroom houses/flats in Essex. Today I looked at 7 houses, discounted 5 of them and fell in love with 1. It's up for £190k but have been told the vendor will accept £185k, perhaps less. It has been sold once already but fell through and has been on the market for 3 months starting at £195k (which the agent said was too optimistic).

The other houses I saw had dated kitchens and bathrooms, needed a lot of love in terms of patching things up and decorating, new carpets... the list goes on. This one is the closest to the station, in the nicest area, has a garage, large garden, brand new high quality kitchen and bathrooms and I could move in almost straight away with just the painting of the living room to be done. Also, the guy is emigrating to Australia so no onward chain.

So, what do I do now? What's the best strategy? As money is quite tight and the housing market being so uncertain, I want to get this for the best possible prices. Any tips for someone in my situation?

Jorgan_2

Have you done any research into what other properties have actually achieved in the area? Asking prices are one thing, achieved prices are something else. I'd spend a lot more time researching the local market before deciding whether this is the right property. How many mortgage advisors have you spoken to/researched online?

Is the property a flat or a house? If its a flat what are the service charges each month?

Personally I think you are stretching yourself too much at the moment with how much you are looking to borrow.

poppy10_2

Plug the postcode into http://houseprices.co.uk and see what they sold for last time.

adamzetec

It's hard to say, there are a mixture of 2/3 bed houses so hard to make a direct comparison. The ones I presume to be 2 bedroom have ranged between £169k and £190k in the past 2 years.

With regards to stretching myself, that's what i'm concerned about. I know i'll have to rent the 2nd bedroom out and that's not an issue for me. That should secure £450+ for the room and bills per month which will certainly ease the burdon. My girlfriend will be finished uni in a year and be in full time employment so that will also help!

ncooper1974

as jorgan says, it does sound like you are stretching yourself a bit. The £450 a month that you *think* you can get from a mate, how sure are you that you can get that?
what if you dont get £450, or even £400 for that matter, then what? what if your gf can't get a job when she finishes uni?
Also, is the mortgage advisor tied to the same agents that showed you the property? if it is, it might be an idea to get an indepenent FA to see if he (or she) can better the 5.83 offer from Abbey.

I dont want to sound all doom and gloom - I actually think you are going really well for yourself. I bought my 1st flat at the same age as you (in 1997), and I remember how nervous I was about completing, but I'm glad I did it now. But things are different now so you need to be careful

good luck if you go ahead, and if you do, I'd personally go in with a £165k offer and then work my way up to £175k max.
let us know how you get on

adamzetec

I am basing my £450 on the cost of renting on the local area. Before looking to buy, I had looked at various places to rent. A nice flat or 2 bedroom house achieves in the region of £700-750 excluding bills. When you consider the house would be very well presented, includes Sky TV, broadband and phone then I think £400-£450 is very reasonable including bills. The location (10 minute walk + 40 minutes on the train to London) means I can appeal to my friends who have quite a large disposable income. Well... that's the plan anyway

It's hard to know what to do and I am extremely scared! I have a second viewing at the weekend then I will look to make a very low and cheeky offer to test the water. If I could get the house for £175k i'd be absolutely over the moon :beer:

m00m00

a FTB with no chain should easily be able to get at least 10k off the price of a 185k property in the current market, especially if a sale has already fallen through once.

I'd be offering about 168 and letting them barter me up to the low 170s in your position.

lawrie28

I would also be negative on the second veiwing, mention things you would change etc to haggle with later, even if you like them. e.g. if the bathroom isn't as shiny and new as the kitchen, then say you would need to update to keep it in line with the rest of the house.

Spot something small and build it up a bit, us it as a haggling tool.

If you are in a position to run, you could also agree a price with a conditiion on exchanging/completing by a specific time. That shows you are serious, but would incentivise the seller as he wants out quickly.

Go for it, but get a full survey, you never know what's behind a new coat of paint....

carolt

Want an honest opinion? I think you'd be mad to take out a mortgage of over 5 times your income in the current market.

I'd be willing to bet you'd be in negative equity before too long. Rent and wait - in 6 months time they'll be begging you to buy it for 150K.

Doubt you could rent a room for 450/month, either - that sounds extremely high for 40 mins away from London by train - you can rent a room in Central London for that!

Basically, the maths doesn't add up - if you can't find a tenant, or they don't pay up regularly, you'd be absolutely screwed on less than £700/month to cover all eventualities - bills, food, repairs, interest rate rises, social life, holidays, clothes.

You might have a house but you wouldn't be able to afford a life. :eek:

adamzetec

carolt wrote: »

Want an honest opinion? I think you'd be mad to take out a mortgage of over 5 times your income in the current market.

Sure, definately do welcome honest opinions

carolt wrote: »

I'd be willing to bet you'd be in negative equity before too long. Rent and wait - in 6 months time they'll be begging you to buy it for 150K.

The idea of renting doesn't appeal to me, it's wasted money. By that logic if I were to rent for 6 months at £750pcm that would be £4500 that could have been used towards my mortgage.

carolt wrote: »

Doubt you could rent a room for 450/month, either - that sounds extremely high for 40 mins away from London by train - you can rent a room in Central London for that!

Not sure your estimate of £450pcm in Central London is entirely accurate. Per week possibly? As I said above, £450 will be an all inclusive rate including bills (contributing to my council tax, electricity, sky package, broadband etc etc).

carolt wrote: »

Basically, the maths doesn't add up - if you can't find a tenant, or they don't pay up regularly, you'd be absolutely screwed on less than £700/month to cover all eventualities - bills, food, repairs, interest rate rises, social life, holidays, clothes.

Yes, I agree. This is certainly a risk if I cannot find a tennant and I would certainly be much better off if I did rent out the 2nd room. Any unforeseen expenses will certainly stretch me!

carolt wrote: »

You might have a house but you wouldn't be able to afford a life. :eek:

Definately, which is why i'm hoping to get this house as cheap as possible. At £175k my mortgage repayments would be in the region of £860.

poppy10_2

adamzetec wrote: »

The idea of renting doesn't appeal to me, it's wasted money.

Where's that Star Trek "sigh" picture when you need it :rolleyes: