House buying costs and stamp duty advice in London

ejh18

I'm just after a bit of advice about the costs involved in buying a property for the first time. Just to be clear however, I have absolutely NO intention of buying now, I will probably be buying in around 1-2 years as I need to save more money for a deposit. My question is basically, how much cash would I need to buy a property of around £300,000? The properites that me and my OH like are currently priced around the £270,000-£320,000 mark (but hopefully they will fall a bit in the next few years :rotfl:) and £300,000 is about as much as we are prepared to spend.

So far we have saved around £18000, and I understand that I will need a deposit of around £30000, but what are the other costs involved? I know there are solicitors fees etc, but my main concern is the stamp duty. Does this have to be paid in cash (i.e. would we need to save another £9000 :mad:, or is this cost usually added to the mortgage? Ideally we would like to be able to negotiate on price at the time and pay under £250,000, but this may not be possible. I'm not keen on the properties that are currently marketed at about £250,000-£270,000, so property prices would have to fall for us to be able to get under the 3% stamp duty threshold.

We're looking to buy in London, and would like to be in either Balham or Wimbledon town, with the possibly of extending to Tooting/Streatham Hill or South Wimbledon. Does anyone know if these are strong areas for property prices? I would obviously like prices to fall as they seem to be in the rest of the country, but people keep telling me (allbeit friends who have already bought!) that prices in London don't follow the national trends, so I don't want to rely on this. Asking prices on property bee are being lowered in some areas, but I don't know if this reflects real falls.

I would really apreciate any advice. It's proably one of the biggest decisions we will ever make, and its really scary spending that much money on what will probably be a flat, especially for a lass from Yorkshire!

Thanks :rotfl:

Rabiddog_2

Balham and Wombledim are both expensive. Tooting and Streatham hill less so.. maybe you should cast your eye over Wandsworth Clapham and St. Ockwell. Or even the Elephant and Castle, Camberwell . I'd rent first before buying so you get to know your areas a bit better. Subscribe to the South London press (tuesday edition).

ejh18

Thanks for your advice rabiddog. I'm currently renting in Balham, and I'm not really interested in areas much further afield. I really love where I live, and its also really close to my OH's family, so there are reasons beyond price for wanting to buy where we do. As I have said I would consider cheaper areas close by, but I'd rather stay renting where we are than move somewhere I wasn't happy.

However, I've been renting for 10 years, and I now want my own home. I want to live somewhere that I won't have to leave at a months notice, and where I'm not worried about putting pictures up in case the deposit is withheld! If it was a bit more like the continent in this country, where tenants have more security, I would probably not even be looking to buy. We're looking to buy a nice property in nice location, as we want to stay in a place for the foreseable future!

My main query about prices where we want to live, is that I'm not sure if they have actually reached their peak. If prices in Balham are currently expensive, then that's got be a good thing right, as they won't continue to go up, expecially in the current climate? I'm worried that as people are wary of house price falls, they may want to buy in areas that are "up and coming", and the cheaper areas like Tooting certainly are. By leaving it two years I'm worried we won't be able to afford where we can at the moment (although not as much as I was a year ago!). I know no-one has a crystal ball, but what do you think? I obviously do not want to buy at the peak of prices, but I'm not so worried about prices falling after we have bought as I would be quite happy to stay put long term. I don't want to be priced out of the housing market YET AGAIN, when we can finally afford something decent. We were originally planning to buy around now, but that was in the days of 95% mortgages. We're holding off as we're hoping prices may fall, and we now need more money for a deposit.

ejh18

Sorry, I'm rambling again. My most pressing question was actually about the stamp duty. Does anyone know if this can often be added to the mortgage?
Thanks.

Old_Git

if you buy at £300,00 I would suggest you ask the seller to pay all or part of the stamp duty .They can only say yes or no .

PasturesNew

At £300k the stamp duty would be £9000. It's 3% on the whole amount once the price is over £250k but under £500k.

So you probably need to think in terms of "losing" about £11k of your savings in stamp duty, searches, solicitor costs.

You can't add it to the mortgage.

What sort of salaries do you both have?

ejh18

Thanks Old Git, I hadn't thought about asking the seller to pay, but its a good idea.

PasturesNew - I had hoped we would be able to add it to the mortgage, but I guess we'll just have to save up for longer in case the option above doesn't work. I earn £25,000 with OH on £49,000. We're both quite early on in our careers and if progression is usual we should be earning more in 18 months. My salary increase is fixed at minimum of £1500 over that time, but with a possibilty of more with promotion. My OH has recently changed jobs after professional qualification, so he could be earning significantly more. However, I think we can afford £300,000 on our current salaries, in case he doesn't get any more money. Alternatively, OH will lose his job due to the credit crunch, and we'll have to move in with the folks!