Tag Archives: mortgages

That first mortgage. Madness or maturity

Sales,

To some, owning a property is the most exciting and important purchase of their life, to others, it’s a route of endless repairs bills and lifelong debt. But are the negatives of taking on a mortgage really enough to keep you in paying rent if you have the option?

“Stay in rented, let your landlord pick up the repairs bills”

A comment an old friend of mine once said to me when I questioned his reasoning for not wanting to buy a house, and something I’ve heard from a good number of people over the years. Sure, not needing to worry if you have the spare money to hand when the boiler goes bang is a luxury we would all rather have than not, but is that really a good enough reason?

The freedom to move to something new when you fancy a change and in a lot of cases, rent a property that you may not otherwise be able to afford, are both huge positives of renting. Having a mortgage is a huge responsibility and for some, being tied down can be very limiting, especially if you live life on a whim. London house prices have also been increasing rapidly over the last few years so the desire to live in a house that may be beyond your budget is certainly appealing – although as the old adage goes, cheaper is not always better.

“Stop paying someone else’s mortgage off and get on the ladder”

The opposing view and one almost everyone in the housing industry would likely agree with. Whilst renting is the only route for the vast majority of the population, the thought of optionally paying rent rather buying your own home can be a tough one for people to get their heads around.

The big worry we often see from first-time buyers is when there’s a lack of confidence in the housing market; if the papers aren’t reporting house price surges, they don’t want to buy and risk losing their life savings. Most of this stems from the idea that property is worth buying because house prices always go up, so if prices aren’t increasing, then surely buying is a bad idea, right? What most first-time buyers fail to see is that renting a property is a guaranteed, surefire way to lose money. The rent they pay to a landlord is never coming back, whereas if they had owned property, that property could be worth the same money in 2 years’ time, and even if it does fall by a few % that lose would be offset against the mortgage paid off as opposed to rent paid out that’s gone forever.

To put this into perspective, the average rental runs for 2 years, which is also the most common fixed period a first time buyer may go for on their mortgage. During these 2 years, and assuming a rental of £1,200pcm for a 1 bedroom flat, you would be paying just under £30,000 in rent – that’s £30,000 into your landlords pocket and in most cases, off their mortgage.

Over the same 2-year period, let’s say you bought that same 1 bed for £300,000, a mortgage will be around £1,100 a month if we factor an average deposit size and typical mortgage rate. Over that same period of paying £30,000 to your landlord, you would be paying just short of £28,000 towards your own mortgage. OK, not all of that is money off the mortgage as the interest is obviously lost money, but you would be chipping away at your own mortgage rather than your landlords. Money off your mortgage is money in the bank when you come to sell so even if the property was worth the same money when you come to sell, it’s been one big saving pot and you’re laying down the roots for your future.

Last word

If you want the freedom of moving around and going travelling around the world, owning property may not be for you. However, if you wanting to start building for the future and have a job that will keep you in one place for the foreseeable, I would really suggest that you stop chipping away at your landlords mortgage and get your own. Who knows, in years to come maybe you could be a landlord and could have someone paying off your mortgage for you.

 

“ Written by Alex Gilbert, Hither Green”

Stanford Estates

Don’t Panic, we’re here to help!

Sales, Stanfords, , , , ,

The first time I heard the words Japanese Knotweed, I expected Robin Williams to jump out the wardrobe and scream Jumanji!

Who would have thought that this innocent looking plant could cause so much grief around the purchase of a house… I mean, the thing wasn’t even a foot tall!

A similar event occurred upon reading my first damp report – I turned up to my next viewing with wellies and rain jacket in the boot, expecting the River Thames to be flowing down the stairs.

Fear Factor

These are a couple of the many ‘red flags’ that will be  listed on a home buyers report and can be absolutely terrifying to a First Time Buyer. The first time a buyer sent me their survey report, I was terrified for them and wondered why the boss hadn’t made me wear a hard hat to the viewings and I was the one selling the home! But jumping ship straight away could result in more of the same from the next property you get surveyed. So its important to take a step back and a deep breath.

Realistically…is the house going to fall down? Probably not… (and its insured right?!)

Can everything be resolved? Most likely, just needs to be stripped down to its basics

Should you read through your home buyers report more than once…. absolutely! If you get a chance read through a friends too, when you aren’t emotionally involved in their purchase it might give you a level of perspective you need in your own circumstances.

We do our best to establish some balance on the frightening wording and confusing jargon with the daunting issues that are always raised when purchasing a home which, without advice – can leave you feeling like the house you are buying is doomed! (don’t worry, it probably isn’t!)

Buying your first home will be one of the biggest and most important decisions in your life, you want it to be be fun and exciting – unfortunately, it is likely to be arduous and frustrating. Being properly prepared can make a big difference to a potentially very stressful experience.

From the moment you receive the phone call from the estate agent letting you know your offer has been accepted, the 3-month journey (roughly) begins, which will no doubt have its ups and downs and inevitable stresses, which is why it is important to have support along the way to guide you through the process. A common misconception is made that the estate agent is only interested in supporting the vendor given they pay the fee; in reality the buyer is also legally ‘the client’ and therefore should receive the same genuine support, advice and attention throughout. So use your agent, the good ones have amassed experience and knowledge that should provide a helping hand throughout the transaction.

Solicitors and Surveyors

Involved to protect you, but will protect themselves just as much if not more.

I never realised before working in the industry how important it is to instruct the right solicitor – now don’t get me wrong, like every industry, you will have certain solicitors who differ in cost for their services – I would always recommend speaking with family or friends before instructing someone to figure out who is going to be the right fit for you, rather than a quick google search to find the cheapest option!.

If all else fails, ask your agent! (Remember, we’re here to help you!) given the fact we deal with solicitors on a daily basis; the likelihood is your agent will be able to pass over a few recommendations who can really make the difference in having a successful and smooth process and also taking the stress away from you as the buyer.

I often get asked from clients ‘’should I get a survey’? and the answer often differs based on the scenario – for example, If my buyer was asking if they should have a full structural survey on a new build flat, it was be more inclined to recommend they save their money for obvious reasons! however, I do recommend  getting at least a home buyers survey as this will provide some detailed answers around the bones of the property and can sometimes offer recommendations on a few things that may need further inspections.

Reading a survey report for the first time can leave a buyer terrified! I remember the first phone call I had with a buyer who had just received her report and she honestly thought the house was going to fall down! In reality, the issues raised were relatively common  – So I like to make sure that I pre- warn buyers of a few common areas which may flag up,  for example, ‘area is known for subsidence’ – given the fact the majority of buildings in London are built on clay, this is something we cannot get away from and I’d recommend looking outside of London if this is of major concern!. Another one that’s quite common is finding some elements of damp in period homes -. My biggest recommendation to first time buyers is to contact the surveyor after reading through the report as quite often, the reports can be worded in ways which can be confusing; Having the surveyor break this down over the phone can be helpful.

To summarise, every step along the way of buying your first property is a journey into the unknown, but with the trusted help of friends, family, surveyors, agents, solicitors etc – most things are very much solvable (most of the time!) so use them to your advantage and remember, don’t panic, just talk.

 

“Article by Jay Scally, Forest Hill.”

Stanfords