Andy Coates Blog

So finally me and my girlfriend bit the bullet and decided to begin that long hard climb up the property ladder. Around 4 month ago we started looking for a house and had no idea where where to start once we had found the home of our dreams. I thought I would write this article now as the experience is still fresh in my mind, we currently still need to exchange contracts but I'm going to document our journey so far!

Initially we needed to decide on a budget which was mostly determined by what we had in savings for a deposit. Because we were first time buyers the most any mortgage lender would currently lend us was 95% of the property o the house, so for every £1,000 we had saved up for a deposit, they would lend us £19,000. Eventually we had budgeted we could afford around £5,500 deposit which meant they would lend us £104,500 which worked out to a total of £110,000 to spend on a property. At this point we still didn't know what the bank would lend us depending on our salary's and how it affected us with me being self employed. After working out our initial budget we made an appointment with a few mortgage advisers, several days later and allot of talking with different banks we were offered a deal with Halifax who had no problem with lending us up to £120,000!!!

Halifax was the best deal for us and even though they were offering us £120,000 we decided to set our buying budget at £100,000 as the repayments would be much more comfortable! We went back to see Emily, our mortgage adviser and got an "Agreement In Principle" which was to prove that the bank had agreed to lend us that amount based on our circumstances.

Armed with this information we began the hunt driving around ares we liked and taking note of properties which were for sale. Also the best on-line resource we found was Rightmove, an on-line database of houses for sale which most estate agents contribute new properties to. We narrowed our list down to a few specific houses which we liked and called the relevant estate agents to arrange a viewing, some houses were empty which the estate agents showed us around and some were still occupied which we met the vendors (the current owners) and they showed us around. It was a very strange feeling looking around someone else's house and easy to forget some important questions which you should ask.

Here are the key ones we eventually remembered to ask!

• Is the house freehold or lease hold?
• Is there a chain?
• i.e You first time buyer –> seller-buyer <– seller - buyer –><–seller-buyer–> empty house
• How long has the house been up for sale?
• Any structural problems?
• What major work, plumbing, heating, electrical or building work has been carried out in the past few years?
• What is the property being sold with, curtains, fitted units (light switches!!)
• What is the council tax payments?
• How far is the nearest pub?
• Add your own here……..

After looking around several properties over a period of around 3 weeks this was the hardest part, deciding which one we liked most. Finally we picked one ad called the estate agent and said we would like to make an offer on a property we had looked at. Being completely green to this we weren't sure what the protocol was and how much to offer. We decided to be rather cheeky and offer 10% below the asking price because its easier to increase your offer and nearly impossible to reduce! immediately the vendor refused and we went straight in with a higher offer in the same day! This was our biggest mistake was rushing in to the sale, we were afraid that someone else would put in a better offer! In hindsight we should have left it a couple of days before putting in another offer! Within the day we had out offer accepted and had nearly bout a house, our next step was to see our mortgage adviser and get the final amount we needed to borrow confirmed and decide which mortgage type we were going to take!

Which Mortgage package?

This confused the hell out of me initially but eventually after looking at the numbers and how the interest rates worked it wasn't as daunting! We were offered these types of packages, Fixed repayment for 3 years, fixed interest only for 3 years, repayment tracker for 2 years, interest only tracker for 2 years. Here I'll try and explain what these weird and wonderful terms mean?

• Interest only - You only pay the interest on the money you borrow, so if you borrowed £100,000 and the interest rate was 5% you would pay 5% interest on £100,000 each year, so you would pay £5,000 interest over 12 month each year! and still owe £100,000 at the end of the term.
• Repayment - With this package you pay the interest and a little extra toward paying off the £100,000 so you may pay the interest and an extra £1,000 each year over a 12 month period. So you would pay £6,000 each year but you would be paying off a little of the amount each year too, bring down (slowly) the amount of interest you pay as the balance gets smaller.
• Fixed Rate - The percentage rate is fixed so you know exactly what you will be paying each month.
• Tracker Rate - This tracks the central banks base rate plus a percentage so you monthly payment could go up and down depending on the interest rate!

After much deliberation we decided on a Fixed Interest-only mortgage which meant lower fixed monthly payments for 3 year with plans to pay a little off the balance (over pay) every other month. We chose the because of the flexibility of not being tied into repayments but we could pay a little extra when we could afford it!

Ive just looked at how much I have typed and have decided to split this onto a couple of parts as there is too much information to fit into one post! And to think that this morning I wasn't too sure what to blog about!!

A Rough Guide To Buying a House - Part 2

Andy

If you enjoyed this post please feel free to buy me a gingerbread late! mmmm!