First time buy, excitement and worry.What is your advice or story?

NutterzUK

NutterzUK

NutterzUK

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18 Feb 2010
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940
Hi,

This is an exciting time for my partner and I, we have a lot going on, it's slightly stressful and it's certainly going to be a bit of a rollercoaster. I wanted to start a thread to just ask for opinions on things, advice and anything from "no, that's an awful idea" to "yep, sounds good". Generally I just want to speak to people :), let me know your experiences too and perhaps there are people in the same situation on here at the moment.

So, my situation is that I am a PhD student studying Computer Science in my first year at the same university I did my undergraduate studies. PhD students receive a stipend, I receive £13,500 with no tax, I also do some extra labs and teaching on top which probably over the year might earn me about £4,000.. of course that is casual work though and so not guaranteed. My partner is in her final year of her Masters course studying Genetics and earns a little on the side doing web work for a company she's been with for 3.5 years, with it being her final year though she has not a huge amount of time for work, so it's next to nothing really at the moment. She finished soon though so will be (hopefully) working.
We have looked

We currently pay £600 a month between us in rent, and so figured out after looking at online mortgage calculators that for a property even up to £80,000 the repayments would be around £350 a month, saving us a fair amount of money and actually going towards something rather than just rent. Of course with that comes a fair amount of risk and there will be maintenance to do, but overall we felt it's time to make a move for it. After speaking to banks etc, the amount they will accept as income is just my £13,500 since nothing else has a contract. This means we can borrow £54,000 with a 10% deposit making £60,000. OR we can wait until my partner has a job and has finished uni. Payments on that are no problem at all since I earn extra income through teaching which can't be counted, and the same with her web work. We saved up some and received some money from parents also for the deposit and found a property we fell in love with (after viewing many).

The issue is, it's a repossessed house. That means there is some chance of putting in an offer, it going to public viewing, paying solicitors fees and surveys and then getting gazumped by someone paying a higher price at the last minute. We however are lucky to have a great relationship with our landlord who has 25 properties in the area. He invites us over, I fix his computer things and he will come around on viewings with us to let us know what he thinks of them (Since he has done maintenance on 25 properties, he knows his stuff!). It got the go-ahead from him, and my parents for the house we fell in love with, but it's a lot of work. The whole thing needs re-plastering pretty much, the electric and gas are turned off so we don't know if they will work or not (no guarantee but who knows). The boiler is old(ish) and the fuse box will need replacing. All the carpets will need to be replaced and of course painting, decorating, fixing squeeky floorboards etc. It seems structurally sound though and our current landlord attests to that, who I really trust.

There is currently an offer at asking from another buyer, a cash buyer actually. We are in a good position too as it's a first time buy there is no chain, but those things don't matter with a repossessed house as it seems it will just go to the highest offer, which is now us. We are budgeting for the things that will all need doing before we can move in to the house, such as plastering as it will make an almighty mess, and think we just about have everything covers (haha,.. at least we think). We would spend the next few years doing it up a little until after my PhD finishes we will probably sell and move on. It's not the best area, not the worst, we could certainly get a better area if we waited and rented again elsewhere before buying, however our contract is up in June on the place we are in and we don't really want to sign another long contract, and we like the place we found. It would mean we can save some money next year to spend on the house, but again knowing that the value won't go up too much. Recently 3 bedroom semis (this is a 2 bed terrace) have been on in the area for around £80,000, so there isn't a huge amount to be gained. Gaining isn't really the plan though it's more just saving on rent and having a home which is ours. I would like to put a whiteboard up and buy a dishwasher, I can't in rented accommodation, and so it's not quite home.

So we put the offer in, we are waiting for the public notice that has to be served for 7 days, we are going to start speaking to solicitors and frankly, that's all new and rather scary for the first time! We are both at uni at the moment so we are rushing around to Uni, town, the estate agents, viewings etc a lot which as you can imagine isn't easy (but I am sure it will be worth it).

Really I started this thread just to tell my story, what I am doing at the moment, and I would love to hear about any other first time buyers, how they are feeling about the excitement and worry about it. Also advice from people who have been through the process is priceless. Do you have any tips, advice? Anything from decorating (Check the electrics before decorating!) to advice on what to offer on a repossessed house is good. Do we go as high as we are happy to before the public notice or do we try to see what we can get away with (but then do we run the risk of being gazumped?).

What do you think? How was your first buy? Did you stretch to the most you could afford or did you buy something which was comfortable with your salary? Do you regret that or was that good?
 
Your first house is always special.
When we moved into our first home we couldn't believe it was actually ours.
 
We borrowed as much as we could, lied through our teeth to the mortgage company, took a personal loan out for he deposit and put most of the fees on a credit card including stamp duty.

We struggled balancing debt and many months we had nothing a day after getting paid but the mortgage always got paid.

Times were different 7-8 years ago if you didn't buy you got left behind, we paid £127k for our first house and I could now sell it for £185k ish, we still have it, rented out now.
 
We were similar to maccapacca - borrowed £5k as a loan to push our savings to about £12k. At the time I was only earning £17k and my partner about £22k (2002). The house was £93k, we borrowed around £88k which was costing us £500 per month.

Mortgage companies were willing to lend us up to £150k, but we had our sensible heads on and didn't stretch ourselves.

We could afford the house fine but fell into the trap of spending loads on interior decorating and design which meant we struggled for a couple of years.
 
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Is that mortgage interest only? Because it sounds like it and that's not really any different to renting on your timescale.
 
Key points I noticed:
-Your partner will soon be working and thus have a hike in income
-The prospective property needs a lot of work
-Even after a lot of work, you can't add a massive amount of value because it's a 2-bed terrace and 3-bed semis in the same area are only an extra £20k
-You have a great relationship with your current landlord

If it was me, I'd wait until the partner has a job and then buy a 3 bed semi. The only spanner in the works as I see it is that you might need to rent for another year but given you have no issues with the landlord I would consider it. The key benefits of this approach in my mind are:

1) Assuming your partner gets a job later this year, you should have a larger deposit saved by June 2014, meaning you can afford a better property and/or get a better mortgage deal
2) I would recommend against buying a house so close to your partner finishing education and looking for a job because you are then tied down to some extent potentially limiting the job search area (or meaning she has an unpleasant commute). I'm no expert on genetics but I'd imagine it isn't the sort of field where every town has a huge list of propsective employers to choose from
3) You will get a better house at the end of it

Point #2 may seem a little strange but we made the mistake of buying a house while I was looking to move job and then a few months later a decent opportunity came up but sadly not the easiest to commute to. In the end we only stayed a couple of years before selling up and moving somewhere closer to my work. Obviously you shouldn't let work dictate where you live as the chances of staying in one place forever are pretty slim now, but it is best to start off on the right foot I feel (of course assuming all else equal in terms of the quality of the property etc).
 
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djferrick said:
Not even got this far yet mate. Plan to go for it next spring when have a bit of money . Paying a huge amount in rent so would be looking to drop that.
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My advise to you is to really keep looking around for your mortgage, I was fairly shocked at how different the rates were. Going through Natwest we got 4% with no fees, going through an estate agent the best was 6.5% with £999 fees! Granted on a mostgage of only 54k it doesn't make too much difference on a month by month basis, but if someone came to you tomorrow and offered you £999 + some, you would be a happy man, so it's certainly worth keeping an eye out even if it is a bit of a pain to keep looking.

HangTime said:
I doubt it, a £54k repayment mortgage at say 4% over 25 years works out at less than £300/month
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This is correct, it's repaying over 25 years and is less than 300 a month for the 54k, I think it was around £280, which when compared to the £600 rent a month is a big reason for the whole thing.
 
SDK^ said:
We were similar to maccapacca - borrowed £5k as a loan to push our savings to about £12k. At the time I was only earning £17k and my partner about £22k (2002). The house was £93k, we borrowed around £88k which was costing us £500 per month.

Mortgage companies were willing to lend us up to £150k, but we had our sensible heads on and didn't stretch ourselves.

We could afford the house fine but fell into the trap of spending loads on interior decorating and design which meant we struggled for a couple of years.
Click to expand...

I guess the borrowing was from friends etc? I was of the understanding that you can't borrow to pay your deposit, if I could.. I have a post-graduate loan I can get from Natwest, but I'm fairly sure that's not allowed?
 
Strictly speaking many lenders probably don't allow it, but I'm sure back then it wasn't hard to pull the wool over their eyes especially if going through a broker, you'd just go "I've got 12k savings for my deposit, here's a list of my debts" and you wouldn't directly attribute the deposit to the loan. In his case if he was being offered £150k and only borrowed £88k they probably weren't bothered about the outstanding £5k loan.
 
HangTime said:
Key points I noticed:
-Your partner will soon be working and thus have a hike in income
-The prospective property needs a lot of work
-Even after a lot of work, you can't add a massive amount of value because it's a 2-bed terrace and 3-bed semis in the same area are only an extra £20k
-You have a great relationship with your current landlord

If it was me, I'd wait until the partner has a job and then buy a 3 bed semi. The only spanner in the works as I see it is that you might need to rent for another year but given you have no issues with the landlord I would consider it. The key benefits of this approach in my mind are:

1) Assuming your partner gets a job later this year, you should have a larger deposit saved by June 2014, meaning you can afford a better property and/or get a better mortgage deal
2) I would recommend against buying a house so close to your partner finishing education and looking for a job because you are then tied down to some extent potentially limiting the job search area (or meaning she has an unpleasant commute). I'm no expert on genetics but I'd imagine it isn't the sort of field where every town has a huge list of propsective employers to choose from
3) You will get a better house at the end of it

Point #2 may seem a little strange but we made the mistake of buying a house while I was looking to move job and then a few months later a decent opportunity came up but sadly not the easiest to commute to. In the end we only stayed a couple of years before selling up and moving somewhere closer to my work. Obviously you shouldn't let work dictate where you live as the chances of staying in one place forever are pretty slim now, but it is best to start off on the right foot I feel (of course assuming all else equal in terms of the quality of the property etc).
Click to expand...


This is actually very interesting, you have spotted the exact kind of thing we have been thinking about here. The issue with renting is that unfortunately we made a website for our landlords properties, and it did surprisingly well and so they are all rented out. We can go elsewhere but it would be getting to be a bit late now and we would have to probably take somewhere not very desirable, but that isn't the end of the world. Your #2 point is also very interesting about being tied to one location. That's very true, with me being at University for a further two years she is (kind of) tied to the area anyway. The property is just off a main road near the M1 (not too much traffic noise though ). You are right about Genetics not having lots of available jobs, she also has the decision of if she should go into that field or if she will do web development. She has two opportunities, actually both on the University campus within genetics. One was that she may be a lab technician but that is pending a grant application which has been made, the other is to work for the NHS as part of their cancer research, it just happens to be that the hospital is within the University (Queens Medical Center, Nottingham) and so with either of those she would be ok. There is a big BUT though, neither is guaranteed, she is currently waiting to hear about the NHS placement and would be waiting on a grant to work within the university. Web development can be done remotely or there are many companies within the area which she could apply for. She will get good grades, probably a 1st class but unfortunately she may not want to go in to academic science. If she stays at the University studying a PhD or going on to be a lecturer, the hours are horrendous and there are all sorts of problems (I know this sounds crazy, but 40 hours a week would be a minimum and leaving to have children would be a huge problem if she wanted to).

#3, we will get a better house at the end of it, that's very true and something worth thinking about. If we go that route, we don't need to move twice and we will be more comfortable. However we lose a years rent (which isn't too much in the grand scheme of things, but I suppose if it is £600 a month that is £7,200 a year minus interest on the mortgage which is about £200 a month and fees so around ~£4,500 which doesn't sound much but as a percentage of the house value is close to 10%.). We would have a large amount of our income tied into a nicer house though which would make it harder to find the money to do things such as holidays, spending money on the house, or anything else. There is a good possibility it's only for a few years, so we aren't sure how much we would settle in, if it was for longer then waiting would be the way to go, but at this stage there is some uncertainty there.

I think we need to know when we are looking and keep it in the back of our heads that we can rent, and it's better to rent than buy somewhere we are not certain about. So far there have only been two properties we have fallen in love with, one was taken off the market just after our offer and the other one is the repossessed one we have an offer in on at the moment. The houses near to us at the moment are a lot smaller and are around £110,000-£120,000, but are in a nicer area and closer to the University. If we saved for a year, it would be one of these that we aim for.
 
I think you may need to change your way of thinking.

Buy something that makes sound financial sense, leave the house of your dreams for a while till you have more cash.
 
The way I see if even if "lose a year's rent" as you put it, surely in order to make this property habitable to a decent standard you are going to have some degree of capital outlay anyway.

-Solicitors fees
-Surveys
-Essential maintenance ("The whole thing needs re-plastering pretty much, the electric and gas are turned off so we don't know if they will work or not (no guarantee but who knows). The boiler is old(ish) and the fuse box will need replacing. All the carpets will need to be replaced and of course painting, decorating, fixing squeeky floorboards etc"

How much of your £4.5k is going to be left after all that? Plus the fact that a lot of that expenditure will be needed up front - you have to pay the fees, cosmetic stuff can wait but things like gas and electric I would view as essentials for moving in. I know you will be adding value by doing all that work, but my guess is if a run-down 2bed terrace is going for £60k, that those £80k 3-bed semis have a lot of potential to add value on too - probably even more so.
 
Bought my first place just over three months ago.
I'm currently having a break from stripping wallpaper to watch the rugby and football.

I'm in a slightly different position from the OP in that I live in one of the more expensive areas of the country (average price around here is > £400K) so it's taken 10 years of working and saving to be financially secure enough to get a decent place.
It's nice having somewhere to call my own - it still feels a little weird when doing the redecorating as I've not been able to do anything to the places when renting.
 
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