Soldato
- Joined
- 16 Nov 2003
- Posts
- 9,682
- Location
- On the pale blue dot
I'm currently in the process of buying a house. This is by far the most convoluted, backward, expensive process I've ever been through and though things are looking good I'm currently several grand down with nothing to show for it. Below are a few of my experiences, I'd be interested to hear other peoples' experiences too.
Intro
So I'm almost thirty, single and looking to buy a house in London. I've saved a sizeable deposit over the years but given how expensive London is, I've had to borrow some more from the parents. I have no debts, no defaults and always pay off my credit cards in full (which I only use for work expenses). Still, it's been a difficult process.
Estate Agents
The next time you hear an estate agent whine about how the market is terrible and they're all losing their jobs, remind them it's because they're crap at doing their jobs. Nine times out of ten the agents I've met put no effort in, know nothing about the properties and generally put no effort into making the sale. Is the floor real wood? Dunno. Is there a parking space? Dunno. What's the remaining lease and service charge? Dunno. Well what do you know? The other one out of ten is your stereotypical wideboy who still knows nothing about the property but starts off with the old 'I've had loads of viewings, better put an offer in today' even though thanks to the Internet you can see exactly how long a property has been on the market. On a couple of occasions I've even had agents who suggest in order to get the asking price, they'll agree a sale at £250k and then do another 10-20k 'cash in hand' to avoid 3% stamp duty.
Shared Ownership
Given the extreme cost of owning a property in London one thing I considered was the Government's shared ownership scheme, known as First Steps here in London. Basically you buy a share of a new build that's part of the scheme (from 25% to 75%) and then pay rent on the rest. As you save money you can buy further percentages of your home, which is known as staircasing, until you own 100% of the property. Unfortunately, it's turned into a massive money making scheme for the home builders and in my opinion not value for money for buyers or for the taxpayer. Basically in order to buy one of these places you have to meet affordability criteria. In an extreme example, one builder has renovated a block in Westminster (yes, Westminster) of luxury city flats. In order to qualify for shared ownership you have to have a family income of under £64,300 (why someone who earns that much should qualify for taxpayer assistance is another debate). For this block, you must be earing at least £59,000 to buy a £25% share. That means you have to earn in the slim window between £59,000 and £64,300 to afford a taxpayer subsidised luxury flat in the very centre of our capital. Really not in the spirit of the scheme.
Add to that the problems selling such properties and the numerous articles that show after a two year lock in period the vendors massively bump up the service charges and rent, I decided shared ownership was not for me. In the end with help from my parents I settled on a flat in 'zone 3' of London, close enough for an easy commute but far enough away to reduce property prices.
Lastly I'd like to add that every experience I've had with one of these housing associations when trying to look at shared ownership properties give me the opinion they are more incompetent and more scammy than even the estate agents.
Mortgages
So the banks claim they have lots of mortgages for first time buyers. What they don't tell you is that you have to be beyond perfect to get a mortgage from them. Through work we have a financial adviser who thankfully did most of the grunt work for me. This was invaluable. He advised for example that my student loan will reduce the amount of mortgage I can raise and so I should pay it off. This I did, and within a day of applying for a mortgage I was rejected on the basis that I have a student loan debt.
Enter the world's most incompetent lender: the Student Loans Company. Before Christmas I received a letter stating that I had less than a year left to pay off my loan and so to avoid overpaying I should switch to a direct debit. This I did and I was told that a stop would be put on my PAYE deductions immediately. Three months and several phone calls later I am still being deducted PAYE, and direct debit as well (though I cancelled the latter). So when deciding to pay off the debt, I duly read out to them all of the PAYE and direct debit amounts to them, which gave me an outstanding balance that I've now paid. The problem then arose because I chose a mortgage with a lender that I also happen to bank with. When the saw my payslip still has student loan repayments and direct debits coming out of my account, they flagged the application.
Phoning the SLC proved to be an exercise in futility. You see quite notoriously the way student loan repayments work is they're taken from your salary and put into HMRC's coffers until the end of the tax year, at which time HMRC gives the money to the SLC. This means it's like taking a loan and only paying it back once a year, the interest accumulates as if you haven't paid anything. So because of this quirk, the SLC has no record of my PAYE deductions after April and due to their comical level of incompetence, cannot produce a record of my direct debit payments or the lump sum I paid. My only option is to post (not email or fax, they don't accept that) all of my payslips to them (to their general address, they have no department to send it to), wait (with no specified timeline) for them to process them and then wait again for a letter of confirmation. This clearly is no use to me when I'm trying to get a mortgage.
Luckily my advisor and my firm have been a great help. They were able to get copies of my payslips across to the bank who could then see although my creditor has no idea what the actual balance of my debt it, we can work out that I've paid it off.
The next problem was that the bank's underwriter suddenly became very pedantic. My firm was recently taken over (we sent letters to prove this) however the payer of my salary now reads on my bank statements as a third firm, which is my new employer's old trading name from a previous takeover (confusing). So, even though my payslips match my bank statements, mortgage denied for a second time.
Next they could see that my parents had loaned me a tonne of money. Luckily for me they consider this a gift so don't want me to pay this back. The problem was as I bank at the same place as my parents, the bank could see the whole money trail and classed it as a loan. Mortgage declined for a third time. So I had to get a letter from my folks stating that they don't want the money back and have no right over the house.
Next they wanted to know why I received money from my brother every month. I live with him and for ease of paying the rent he pays me and then i pay my landlord. More paperwork required.
Next (yes this stories goes on a bit) they noticed that I spend more on my credit card than I earn (this card - with the same bank - is used to pay for company expenses as I travel all over the place, this is paid for every month by my firm). They weren't happy even though you could clearly see each month's balance matched the payments from my firm (again though the wrong company name) that perhaps I owed someone else money. They asked for copies of my expenses forms, receipts and a breakdown of all the other items on my debit card (such as why I was giving BT, Orange and EDF money every month
).
At this point I was getting fed up to the point that I felt like my business wasn't wanted and felt like moving all my accounts away from this bank due to their pettiness. My advisor phoned the bank, got through to the underwriter after much arguing and after a shouting match where he argued that if I banked with someone else they wouldn't even know about all of this and they agreed to reassess without being such pedants.
Fast-forward to yesterday, I have a mortgage agreed subject to valuation.
Of course there's still some way to go until I have the keys, but hopefully the worst is over. I understand in this post-credit crunch world they have to be very careful who they lend to, but if it is this difficult for me, Joe Average, how is anyone else supposed to have a chance in hell of getting onto the market?
Intro
So I'm almost thirty, single and looking to buy a house in London. I've saved a sizeable deposit over the years but given how expensive London is, I've had to borrow some more from the parents. I have no debts, no defaults and always pay off my credit cards in full (which I only use for work expenses). Still, it's been a difficult process.
Estate Agents
The next time you hear an estate agent whine about how the market is terrible and they're all losing their jobs, remind them it's because they're crap at doing their jobs. Nine times out of ten the agents I've met put no effort in, know nothing about the properties and generally put no effort into making the sale. Is the floor real wood? Dunno. Is there a parking space? Dunno. What's the remaining lease and service charge? Dunno. Well what do you know? The other one out of ten is your stereotypical wideboy who still knows nothing about the property but starts off with the old 'I've had loads of viewings, better put an offer in today' even though thanks to the Internet you can see exactly how long a property has been on the market. On a couple of occasions I've even had agents who suggest in order to get the asking price, they'll agree a sale at £250k and then do another 10-20k 'cash in hand' to avoid 3% stamp duty.
Shared Ownership
Given the extreme cost of owning a property in London one thing I considered was the Government's shared ownership scheme, known as First Steps here in London. Basically you buy a share of a new build that's part of the scheme (from 25% to 75%) and then pay rent on the rest. As you save money you can buy further percentages of your home, which is known as staircasing, until you own 100% of the property. Unfortunately, it's turned into a massive money making scheme for the home builders and in my opinion not value for money for buyers or for the taxpayer. Basically in order to buy one of these places you have to meet affordability criteria. In an extreme example, one builder has renovated a block in Westminster (yes, Westminster) of luxury city flats. In order to qualify for shared ownership you have to have a family income of under £64,300 (why someone who earns that much should qualify for taxpayer assistance is another debate). For this block, you must be earing at least £59,000 to buy a £25% share. That means you have to earn in the slim window between £59,000 and £64,300 to afford a taxpayer subsidised luxury flat in the very centre of our capital. Really not in the spirit of the scheme.
Add to that the problems selling such properties and the numerous articles that show after a two year lock in period the vendors massively bump up the service charges and rent, I decided shared ownership was not for me. In the end with help from my parents I settled on a flat in 'zone 3' of London, close enough for an easy commute but far enough away to reduce property prices.
Lastly I'd like to add that every experience I've had with one of these housing associations when trying to look at shared ownership properties give me the opinion they are more incompetent and more scammy than even the estate agents.
Mortgages
So the banks claim they have lots of mortgages for first time buyers. What they don't tell you is that you have to be beyond perfect to get a mortgage from them. Through work we have a financial adviser who thankfully did most of the grunt work for me. This was invaluable. He advised for example that my student loan will reduce the amount of mortgage I can raise and so I should pay it off. This I did, and within a day of applying for a mortgage I was rejected on the basis that I have a student loan debt.
Enter the world's most incompetent lender: the Student Loans Company. Before Christmas I received a letter stating that I had less than a year left to pay off my loan and so to avoid overpaying I should switch to a direct debit. This I did and I was told that a stop would be put on my PAYE deductions immediately. Three months and several phone calls later I am still being deducted PAYE, and direct debit as well (though I cancelled the latter). So when deciding to pay off the debt, I duly read out to them all of the PAYE and direct debit amounts to them, which gave me an outstanding balance that I've now paid. The problem then arose because I chose a mortgage with a lender that I also happen to bank with. When the saw my payslip still has student loan repayments and direct debits coming out of my account, they flagged the application.
Phoning the SLC proved to be an exercise in futility. You see quite notoriously the way student loan repayments work is they're taken from your salary and put into HMRC's coffers until the end of the tax year, at which time HMRC gives the money to the SLC. This means it's like taking a loan and only paying it back once a year, the interest accumulates as if you haven't paid anything. So because of this quirk, the SLC has no record of my PAYE deductions after April and due to their comical level of incompetence, cannot produce a record of my direct debit payments or the lump sum I paid. My only option is to post (not email or fax, they don't accept that) all of my payslips to them (to their general address, they have no department to send it to), wait (with no specified timeline) for them to process them and then wait again for a letter of confirmation. This clearly is no use to me when I'm trying to get a mortgage.
Luckily my advisor and my firm have been a great help. They were able to get copies of my payslips across to the bank who could then see although my creditor has no idea what the actual balance of my debt it, we can work out that I've paid it off.
The next problem was that the bank's underwriter suddenly became very pedantic. My firm was recently taken over (we sent letters to prove this) however the payer of my salary now reads on my bank statements as a third firm, which is my new employer's old trading name from a previous takeover (confusing). So, even though my payslips match my bank statements, mortgage denied for a second time.
Next they could see that my parents had loaned me a tonne of money. Luckily for me they consider this a gift so don't want me to pay this back. The problem was as I bank at the same place as my parents, the bank could see the whole money trail and classed it as a loan. Mortgage declined for a third time. So I had to get a letter from my folks stating that they don't want the money back and have no right over the house.
Next they wanted to know why I received money from my brother every month. I live with him and for ease of paying the rent he pays me and then i pay my landlord. More paperwork required.
Next (yes this stories goes on a bit) they noticed that I spend more on my credit card than I earn (this card - with the same bank - is used to pay for company expenses as I travel all over the place, this is paid for every month by my firm). They weren't happy even though you could clearly see each month's balance matched the payments from my firm (again though the wrong company name) that perhaps I owed someone else money. They asked for copies of my expenses forms, receipts and a breakdown of all the other items on my debit card (such as why I was giving BT, Orange and EDF money every month
).At this point I was getting fed up to the point that I felt like my business wasn't wanted and felt like moving all my accounts away from this bank due to their pettiness. My advisor phoned the bank, got through to the underwriter after much arguing and after a shouting match where he argued that if I banked with someone else they wouldn't even know about all of this and they agreed to reassess without being such pedants.
Fast-forward to yesterday, I have a mortgage agreed subject to valuation.
Of course there's still some way to go until I have the keys, but hopefully the worst is over. I understand in this post-credit crunch world they have to be very careful who they lend to, but if it is this difficult for me, Joe Average, how is anyone else supposed to have a chance in hell of getting onto the market?
Last edited:
Hey I used paragraphs at least!
