On Friday night I was talking to one of my old uni mates (still see him once every two months) in the club and he was telling me how he has managed to get a mortgage and how I really should think about it.
He is a little bit older than me and has managed to get a scheme which will pay his deposit (I don't know the details).
He is very practical and has just bought a 3 bed house in a not so great area for £80,000 but I know from experience with my parents house that houses can cost a lot to repair.
His reasoning is he couldn't give a stuff about the property ladder, but like me has no real pension and doesn't want to rent all his life but he was fairly convinced I would be able to get a mortgage. He earns just over £17k and has only just started his job (working for another mate of mine) he does business IT support.
However I do my accounts etc myself which may hold me back but my credit history is excellent and I am no longer over drawn and I have paid a lot of my credit card off. I am hoping to the in the situation that in a years time all my debt will be paid.
My parents will probably need to sell him up early next year, unless my dad can get a new job and that is really time to me to move out but I don't want to rent as it is dead money and landlords won't let me do all the DIY which I enjoy.
My plan is to try and buy a slightly run down flat for around £40,000 in an area such as the far parts of Salford but with a long lease. This way I wouldn't need to worry about structural problems and the most work I can do myself. Where I live the same flat would be around 120k+ so I would have to move out of the area. However I am worried a slightly down hill area could go down further, but it is generally on the up.
I am owed around £3k too which will help towards the deposit.
The main issues I can see are my self employed status, the fact it will be 10-12 miles away from where I currently work (so potential for high petrol costs, I am already spending £25 a week on fuel) but it will pretty much mean I have a place for life.
I am also starting college in January to do the basic adult teaching course with a view to pushing my business into that direction.
I would need to make a lot of life style changes but if I had a goal to work to then this is quite easy. For the past few years I have just given up any ideas of getting on the property ladder but the fact my mate who is in a very similar situation to me has makes me thing I can do it.
I was thinking of aiming to do this around this time next year and save as much money as I can in the mean time and work harder too.
Sorry for the long post.
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>>buy a slightly run down flat .............This way I wouldn't need to worry about structural problems
Why do you think you wouldn't need to worry about it's structure? It's still got walls and a roof for which you'll be responsible.
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judging by the way you fixed the leak, I would say DIY is not a core skill of yours!
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What leak? The cistern was a temporary thing, I have since bought a new hose which was designed for the job.
Flats are also cheaper than houses, but there is often a service charge and this is a draw back. A house would also cost more to run but they are bigger and probably have less issues with neighbours.
Generally with larger blocks of flats it is the owner of the lease itself which is responsible and that is what the service charge covers, but some times flats have short leases so that is something I really need to watch.
Last edited by: RattleandSmoke on Sun 16 Oct 11 at 18:30
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>> I am already spending £25 a week on fuel
You're worried about an extra £5/week on fuel yet you want to take on a mortgage?!
You're living at home where effectively rent, council tax, gas, electricity, water, phone, broadband, insurance, and upkeep are free, yet you're struggling to pay off a credit card?
Stay in at the weekends for six months and pay it off (honestly, how big can it be?). Work out the absolute maximum you can afford to pay each month and do that. Pretend it's a mortgage and set up a direct debit of £700/month or something.
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The mortgage wouldn't be anything like that a month if I take out over a long term. In terms of fuel the distance would be an extra 100 miles or more a week, so a lot more than £5 in fuel but mainly it is time as well.
The credit card is nearly paid off, I only owe £300 on that and I've already cleared the over draft.
I do pay rent and I do also help with my parents out with other things. I am aware of the other bills hence wanting a small flat with lower costs. I also pay the phone bill and broadband.
I am not saying I could afford it now, but my paying of my car early etc and hopefully earning more money with my training idea I should be in a much better position.
What I probably need to do is speak to some mortgage advisers now and find out what the position is.
Last edited by: RattleandSmoke on Sun 16 Oct 11 at 18:50
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Yep that is a good option but it does depend on the rent levels as you have to pay rent on the other half. So it is an option if the mortgage company won't lend you much rather than not being able to afford the monthly payments.
It is certainly an option.
The idea is to find out as much as I can now, then I have something to aim for, instead of my only aim of life now which is to get drunk on a Friday or Saturday, too old for that not that I would give up completely, but I have already cut down a lot in this regard.
Last edited by: RattleandSmoke on Sun 16 Oct 11 at 19:03
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Rats from my experience, you need to be earning at least 18-20k minimum (i'e working full time with a contract) to be able to afford a house. My 73k house which I got 6 months ago runs out at £350 per month for 35 years! 10% deposit min for a highish rate (mines 5.49%) and adding a further £250 for bills.
My tip clear the debts, and save 7k (5k deposit 2k fees) over the next year and you will do it.
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You could make some savings. Your Council Tax will be 25% less, your water (on a meter presumably) will be less in a single household, get a cheap deal on the leccy and some careful management you will save a lot of money. You'll have to budget it out carefully, 'cos once your in there - you'll be stuck with it effectively until the market recovers. Look at any service charges, they may be cheap enough now, but it can be a way lease-holders get screwed. The mortgage market can be a bit sniffy on leaseholds, especially short ones, especially in the current climate.
You'd be better looking out for a modern, if not new, affordable housing houses. As cheap to run as a flat these days with proper energy performance....
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I realise I need to clear the debts, its not much though, by 2013 the amount I owe on the car will only be a couple of grand too. If my parents do sell up the money they owe me will pay the car off so it will only cost me £500 a year insurance, around £700-£1000 in fuel and maybe £250 for repairs.
I will need to earn more to cover the bills but I am working on that.
RP that is a very good point on the service charge, unlike the mortgage will stay more or less the same apart from the usual interest increases the service charge could be hiked up. A good small but structural sound house might be a safer bet and also easier to sell.
The way I am looking at it I can't live with my parents for ever, and renting will cost the same if not more the only advantage of renting is no repair bills to pay.
Last edited by: RattleandSmoke on Sun 16 Oct 11 at 20:51
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I assume the amount you pay your parents for 'rent' is what you will have to cover a mortgage? I assume this because the monthly mortgage payment will be more than your credit car bill is now, i.e. you could pay that bill off immediately.
You keep mentioning this credit card bill - you must have paid a lot in interest by now on a very small amount. What you doing, paying off just over the minimum every month?
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RP that is a very good point on the service charge, unlike the mortgage will stay more or less the same apart from the usual interest increases the service charge could be hiked up. A good small but structural sound house might be a safer bet and also easier to sell.
The way I am looking at it I can't live with my parents for ever, and renting will cost the same if not more the only advantage of renting is no repair bills to pay.
Bills would be:-
House insurance
Council tax
Electric
Gas
RJ -
I am already paying £150 a month rent now and the landline and broadband, oh and I am paying for the lockup which is £40 a month which I would get rid off so a mortgage would only cost me around £150-£200 more than I am paying now. What I am not paying now is the house insurance, electric, gas, council tax and other silly bills like TV licence and I know this what will really add up.
I did owe around £1500 on the credit card earlier this year, I've got that down to £300 and also paid of my overdraft.
If I was to this I am thinking I would get a part time any old job too which will help things.
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Another thought why not get a lodger - you must have plenty of friends in need of decent houseshare. Make sure it's properly documented and declared to tax etc though.
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I think a lodger would have to be something I would do for a bit of extra money rather than rely on it but it is something worth considering.
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You'd need someone with an interest in Punk though Rats - music compatibility is everything in a bijou home !
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Alternative music will do :) Although I suspect my headphones will be used far more than my speakers.
The most the stuff I like is probably more post punk too rather than punk its pure form.
Two bedrooms might be worth considering though, would be easier to sell if I needed to and would have more space.
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You say your parents will have to sell up next year, would you be in a position to buy them out and have them live there as tenants? The rent would help with the mortgage.
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Well the end terraced on my block went for £250,000 not so long ago, so even if I got a massive discount no.
I won't go into my parents situation too much. They can manage, there is a lot of equality in the house so if they sold up and bought a flat they would be much better off, lower bills etc too. I've patched things up over the years, but I can't replace the roof, the boiler, repoint the walls etc etc.
I've lived here all my life and I want a change too :), so even if my parents do keep the house I will want to move anyway.
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>
>> am paying now. What I am not paying now is the house insurance, electric, gas,
>> council tax and other silly bills like TV licence and I know this what will
>> really add up.
Add up? understatement
My council tax, water, fuel bill is about 250 quid a month
You want to get a house, you give up the beer - permanently
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There needs to be a balance, when I go out I spend less than £30 but that four times a month does add up.
I would never give up completely but I would have to cut down a hell of a lot and I could invite friends over etc instead of going out. I won't have a house if I get so depressed anyway so there has to be a balance.
Of course I will have to make major life style changes and I will need to do it well before I move out, I am very much aware of that. But I simply cannot stay in 365 days a year.
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Most of us, on buying our first house, had to make exactly that sacrifice. Money is always *really* tight with your first house and frivolous stuff like that has to go by the board.
30 quid could be the difference between paying a mortgage that month or not.
edit and 30 quid down one month becomes a 60 quid missing the next,
Last edited by: Zero on Sun 16 Oct 11 at 22:43
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>> Most of us, on buying our first house, had to make exactly that sacrifice. Money
>> is always *really* tight with your first house and frivolous stuff like that has to
>> go by the board.
>>
You really have to get down to a detailed list of mandatory spend on your flat /house.
Many will have stories of hard times to start with
The first house that I bought with my wife to be was a fantastic buy BUT.
Wiring was 1930s ( not a single power socket) and all the insulation perished. No running hot water. Belfast sink with wooden draining board, 1930s GLC cooker was shot. No floor coverings, no curtains, no insulation. Open fires for heating.
Of course no furniture whatsover.
We bought a cooker and a bed on hire purchase and scrounged what ever else we could find and went from there.
IMO If you are really serious then you have got to be prepared to start from a shell of a property and slowly fit it out as funds allow. Expectations are much higher in this era but if the pounds are not available you have to grin and accept a lower standard or else!!!
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>> I would never give up completely but I would have to cut down a hell
>> of a lot and I could invite friends over etc instead of going out. I
>> won't have a house if I get so depressed anyway so there has to be
>> a balance.
>>
Get yourself a place, and, as Zero says, you WILL give up the booze.
From what you have said in this thread, I dont think you really have a grasp of the costs involved....
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Well obviously if money is tight that month or what ever I won't be able to go out, I am thinking more if it is a bad time I will be sat there in the cold with lots of jumpers on etc. The only luxury I will have is broadband. There will be hidden costs and I will have to give up things like fancy phones etc.
I am not saying I want a nice fancy house, a flat in one of the cheapest parts of Manchester will do fine. I don't drink that much now, it is only once a week and would have to cut that back to once a month when I move. It is also not like I will do any fancy holidays etc.
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>> My council tax, water, fuel bill is about 250 quid a month
>>
>> You want to get a house, you give up the beer - permanently
>>
Agreed, expensive things gaff's, our rates, gas, elec and water work out at £350, gulp.
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For most mortals, some major sacrifice is needed;
The way we did it was to buy somewhere that was in a bad state, and in a less than ideal area. The house we bought in 2000 had been on the market for 8 years. During the first year we lived in the house, we put new floors in, new damp proof, new heating, new (modest) kitchen, and generally fixed the place up.
It was easily the best money we have ever spent though
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It is exactly what I am planning to do, I am even thinking of going to college to learn some basic trades. I can put a kitchen in no problem providing I don't need to mess with the electrics (part P) but I cannot plaster for the life of me.
The area I am looking to buy in is not really a good area at all but its not quite the worse, working class rather than underclass is the best way to describe it. Certainly a far cry from the tea shops and delis where I live but I don't make use of them anyway!.
Depending on my job too I will be able to get rid of the car as the business area I am slowly moving towards won't require me to be so dependant on it.
The idea of a run down place too is that I can slowly do it up over a few years. I will have to buy some where with no major damp issues and a decent roof though, unless I can budget for that.
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>> Expectations are much higher in this era
Indeed they are - this generation seems to want and expect everything now. The concept of saving seems beyond them.
>> From what you have said in this thread, I dont think you really have a grasp of the costs involved....
Apologies Rattle, but I agree. I think Zero's example of costs for council tax etc. is even on the low side.
>> The area I am looking to buy in is not really a good area at all but its not quite the worse
You have factored in the increase to car insurance haven't you? And what about insuring customers' computers if you bring them home - and their security too.
But I think you are right to consider buying somewhere. I just think you need to think more carefully about the actual costs. Do you know how much a repayment £40k mortgage will cost you. How good a rate you get depends on size of deposit. And don't forget interest rates might go up a lot in the near future - they have to.
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>> Agreed, expensive things gaff's, our rates, gas, elec and water work out at £350, gulp.
Mine too.
I have a relatively large mortgage, and even that represents less than half my monthly outgoings.
It's important not to focus too much on the mortgage payments, but on the total outgoings. You will be amazed how it all adds up. Energy prices in particular have skyrocketed in the last couple of years. It wasn't so long ago we'd spend £40 a month on gas and electricity. It's comfortably more than double that now.
SWMBO and I still use the same bank account system we used in the beginning. As well as our own accounts, we have a joint "household" account. Mortgage, food, utility bills, council tax and all other essentials come out of that. We put enough in at the start of a month to cover all of those for the month, and basically do not touch the account, except for food shopping (to a strict budget). That way, we know the basics are always covered every month, and what's left in our own accounts is ours to do with as we please.
Simple little thing, but highly recommended.
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As someone who has done loads with property since I was about 20 I'd...
Avoid shared ownership schemes. Far better to know where you are owning (mortgage accepted) all of the place. Also many shared ownership schemes are on overpriced places. Example in the local city there are brand new townhouses on a massive development at £100,000 selling for £80,000 on an 80% scheme. Just round the corner you can find ones that have already been lived in and repossessed which only make around £76,000 so it's a farce paying more and still owing someone else 20%.
Avoid leasehold. You seem to think it means trouble free maintenance of the structure. Leases aren't always perfect and you can end up with a fight to get stuff done properly. Like a relative who's just in the middle of a messy and expensive court case... the guy has been taking the money but doing nothing. By and large as a freeholder your rights and responsibilities are stated in deeds and are under your own control.
When budgets are limited be very wary of buying old property for renovation (pre 1960s). The constant cost of damp repairs, wiring, plumbing, roof, windows, structure, decoration, kitchen, bathroom, insulation etc can soon exceed the monthly payments of buying somewhere better in the first place.
Try and get at least two bedrooms. Far more flexability for your own living and so much easier to sell on.
And finally you should really be doing this with a partner.... halving the costs puts you into a different class of place and makes it so much easier.
Last edited by: Fenlander on Mon 17 Oct 11 at 08:04
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Forget all the detail. Sit tight.
When interest rates finally start to go up, property prices will nosedive again.
You might live long enough to see the situation back to 'normal' Rats, but I'm not sure I will.
ps: I started on shared equity - or co-ownership as it was called 40 years ago - because prices were rising and there was no other way if you didn't have much money. It all worked very well, but that was during the era that people will look back on one day as the strange time when everyone believed they were well off because they were forced to pay an exhorbitant price for a roof over their head and could borrow against a figure conjured from thin air.
It isn't just the banks that make it up as they go along.
Ducks back below parapet...
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>> It isn't just the banks that make it up as they go along.
>>
>> Ducks back below parapet...
>>
You don't need to duck, when interest rates go back up and inflation cuts in because of the money the government is printing there will be cheap repossessed houses (and cars) aplenty.
There are a lot of people with their heads deep in the sand of debt.
Last edited by: Old Navy on Mon 17 Oct 11 at 12:36
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I'm horrified at the level of debt in my 12 months with CAB the phones ring off the hook every day and the vast majority are debt related calls, either directly or indirectly. What's shocked me debt pervades every level of society from households with anything up to 80k income to those that survive on benefits. The Government is making the DWP re-asses every claim and whilst I agree with the principle, this is causing casualties amongst decent people. I'm looking at being a debt specialist with them (and am very impressed with their training regime) - I would recommend becoming a volunteer to anyone with time on their hands.
Last edited by: R.P. on Mon 17 Oct 11 at 12:50
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My jobless friend is surving on pay day loans, I don't think the fact she could end up owing around half a million quid on a £5k loan has quite sunk in yet.
I think her idea is that she will just go bankrupt or get daddy to pay it off.
Fenlanders suggestion about the problem with leaseholds is very valid, the problem is on my budget even in poor area any 1960+ house is going to be out of my budget by a long way.
I've noticed in cheaper areas newer houses are more expensive than older ones, but in more expensive areas the older peroid houses go for a lot more. My parents nearly bought a 1960's house at the end of our road in the 1980's, at the time the were a lot more expensive than our terraced, now our terraced is worth more.
We do have problems with damp though (reminds me I need to clear out the gutters) although I suspect it isn't actually a that big a job to cure. I think it is more due to poor ventaliation than rising damp.
A lot of lease properties just depends on who the main leasholder is, if it is a housing association which many are then I guess the risks are much lower.
Last edited by: RattleandSmoke on Mon 17 Oct 11 at 13:05
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>>I think it is more due to poor ventaliation than rising damp.
According to Stephen Fry, rising damp doesn't exist (39 minutes in):
www.bbc.co.uk/iplayer/episode/b016bps8/QI_XL_Series_9_Inventive/
What do the builders here think?
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>>>According to Stephen Fry, rising damp doesn't exist.
Broadly speaking very true and knowing this for over 30yrs has saved me allowing others to spend my money in a variety of houses on something that doesn't exist.
The chemical damp proofing business has a lot to answer for.
Last edited by: Fenlander on Mon 17 Oct 11 at 15:00
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>>>there will be cheap repossessed houses...
As someone who's been forensically following the market in our area of interest for the whole of this year I can confirm It's happening already ON.
Just two examples I'd noticed this week. Repossed house in a nice close where the rest of the owners would hope theirs would fetch £220,000 has just gone for £190,000. Similarly a repossed place in a close of £170,000 places has just made £130,000.
And these aren't knocked about places with stolen boilers... they're just as ready to move into as the normal sales.
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I wouldn't buy at the moment.
You should get saving. If you cannot save 5k per annum, then you cannot afford a mortgage. Go out and drink water, not beer.
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As the property market down spells usually last 5-10 years, buying now is I suggest premature.
Wait for the really forced sales when houses don't sell. Last period was 1981-83...
If the house for sale has not had its price reduced by 15% and then you can't knock a further 15% off, it's too expensive..
The first 3-5 years are full of people buying cos prices have fallen and they look "cheap". Uk housing costs are the highest in Europe and near the highest in the world. Builders are inefficient and building very few new houses..
Lots more to fall. When unemployment reaches 3 million...
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>>>If the house for sale has not had its price reduced by 15% and then you can't knock a further 15% off, it's too expensive..
Unless of course it was correctly priced... and some are. Ours sold recently just 4% under asking and the reduction was really only a sweetener for the buyer... its price was on the button anyway.
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Fenlander
A correctly priced house is a rarity in my experience.
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I'd agree they are a smaller percentage but there are a few about. Despite the stuttering market in this area, as many, over the last few months there are several that have sold for virtually asking in under 2wks on the market.
Mind you it is a difficult call to value anything now... do you value for the day you make the offer or its worth 10wks on at completion?
Last edited by: Fenlander on Mon 17 Oct 11 at 15:20
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When we sold our house in 2009 we got offered 3% below asking price and agreed. We had to knock another 1% off due to things showing up in the survey.
However, the selling agent had said he thought it was worth £x but was saying we could always try it at around 6.5% higher. We decided not to because we thought the initial valuation was accurate. And it sold fairly quickly.
Last edited by: rtj70 on Mon 17 Oct 11 at 15:30
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It begs the question as to whether property ownership is the right thing for somebody like Rattle. We all know the argument. Rent is £300pm, mortgage is £275. Saving £25 per month, or £300 per annum, bargain!
But then you need a new roof/boiler/whatever and savings of many years are taken away. Managing cash flow is much easier if you rent than own.
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There risks, but things like electric storage heaters and maybe a large element would reduce the need for a boiler you just have to budget for those repairs.
Or you could do what my aunty did in their old mansion when the boiler broke (£30k replacement) just live in cold every day until they sold the house.
You are right though and I could only do it if I can afford to put away a bit to cover things like that. I would make sure the basics such as the roof are in good condition before I buy the place though.
The only major advantage to renting I can see is that in the better areas renting can be slightly cheaper than a mortgage. My sisters 1 bed flat for example would be worth around £130k. Since moving in she has had a new consumer fitted and a few other minor repairs, all done by the landlord. To be fair all the repairs bar the consumer unit I could have done myself.
The other side to this is I am hoping to earn a lot more money in the next few years too, and that is what I am working on right now.
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>> There risks, but things like electric storage heaters would reduce the need for a boiler
>>
Hahahahahahahahahahaha. Excuse me. *Wipes eyes*
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Just saying there are alternative ways of doing things, rather than spending £2k on a new combi boiler every 5 years.
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>> spending £2k on a
>> new combi boiler every 5 years.
>>
Mine was 1K and has a manufacturers (Bosch) 7 year parts and labour warranty.
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I suppose if the people who fit are genuine the warranty is genuine you just hear so many horror stories about them.
As a completely side note and relevant to my parents house, if a gravity boiler is already installed could the existing boiler be replaced like for like? I know combi boilers are now illegal on new installs, but this would not be a new install.
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>> I suppose if the people who fit are genuine the warranty is genuine you just
>> hear so many horror stories about them.
>>
Exactly Ratts, most boiler faults are down to poor installation, most combi boiler failures in cold weather are due to the condensate drain pipe freezing, the boiler does exactly what it is supposed to do and shuts itself down. People blame the boiler but it is poor installation of the drain pipe.
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And it sounds like that is probably a DIY job to fix too (unfreezing the pipe I mean).
Does make you wonder how many of these call outs are actually something very simple like a blown fuse.
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>> And it sounds like that is probably a DIY job to fix too (unfreezing the
>> pipe I mean).
Yes, hot water bottle, (internal) kettle of boiling water, (external) and reset the boiler, (push button). Even I could manage that, but mine won't freeze, its internal and insulated.
Last edited by: Old Navy on Mon 17 Oct 11 at 19:34
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>> combi boilers are now illegal on new installs
No, they're not. Non-condensing boilers are not permitted, combi boilers are.
>> Could the existing boiler be replaced like for like?
It would have to be a condensing type, they are the only sort that meet current regs.
You don't have to have it on an outside wall, the flue can be ducted several metres from the boiler site if necessary as the exhaust temperature is lower even than the hot water pipes already in the house.
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I meant gravity ones are illegal not combi ones, it was a typo :).
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>>Non-condensing boilers are not permitted, combi boilers are.
I thought you could have any sort of boiler you wanted, as long as it met efficiency criteria?
Aren't there also exceptions for some installations, I've a back boiler for example?
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The exceptions are pretty hard to meet, there is a 25 page booklet on the criteria to meet before you can opt out of the high efficiency boilers.
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My boilers 6.5 yers old.....
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i have lots of electric storage heaters that cost a small fortune to run and just about manage to keep the room warm for around 3 minutes a day
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>>i have lots of electric storage heaters that cost a small fortune to run and just about manage to keep the room warm for around 3 minutes a day<<
Do you live in an older type property then nyx? if it was of recent build i.e with a good energy performance,
then modern storage heaters could be quite cost effective on economy 7.
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Long time ago I had an old stone built cottage which when I bought it had only a woodburner for heating. All very well but as I was out at work all day and couldn't always be harrised to light a fire when I got in, I had storage heaters put in. Very good they were too but apparently inconsistent. Until the penny dropped.
One day a week I had a cleaning lady to come in while I was at work. Turned out she got too hot with the storage heaters and threw all the doors and windows wide open even on the coldest days. Place was chuffing freezing by the time I got home albeit clean...
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A bit like our council offices, thermostat right up and windows wide open.
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The offices I latterly worked at had it's heating controlled from a remote location (40 miles away) I reckon the weather there was always a damned sight better.
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>> A bit like our council offices, thermostat right up and windows wide open.
>>
And my late MiL, when she briefly lived with us.
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Storage heaters are NEVER quite cost effective on any Tariff.
Useless things
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Thoughts of the property ladder - bathtub tom
