Last Update – 24th November 2017.
Here we are, finally at the stage of buying our first house! We’ve been saving for 18 months and waiting for the plot to be released.
Here is our experience of buying a house, this will be updated at various milestones, will include any issues, problems, fixes, headaches and other such stresses and hopefully pleasures from buying a house.
We’ll do the basic background, moved in with the parents so rather than spend money on rent we could save like crazy for a nice new build property – and save like crazy we have done! We got married last year and instead of going on a honeymoon we started saving, not as romantic but we wanted a first house.
Saving went well, if you think about what you do and don’t need to buy, set yourself sensible goals and budgets then its possible to save quite quickly, even little amounts add up.
Help to Buy ISAs.
After the wedding we both invested the maximum in opening a HtB ISA, £1200 which is £1000 initial deposit and first month of £200, then once a month a maximum of £200 can be added. The idea being that when you purchase your house the government will give a bonus of 25%, and having 2 first time buyers means we can both have one. Free money, yes please!
Since opening these, the government has also created a lifetime ISA which works along the same way but can be used for a house purchase or pension purchase, but with some caveats such as the money has to be in there for a year before you get the bonus, plus redemption fees if you take money out/close it and don’t use it for a house/pension. Your initial deposit can also be larger meaning you can get larger bonus at the end of the year, but no good for us due to timelines etc.
In addition to the HtB ISA, we’ve also been saving so additional money each month. Plus I setup a small but effective standing order to take £10 out of my account each week and put it into the savings account, at the end of the month I’d then top it up to make a round number – odd but seeing a number like £290 meant I wanted to round it up to £300.
Buying a new build means waiting for plot releases, different companies do things in slightly different ways. We had earmarked a plot and house type and the potential release date was October 2016…..but the site plan was updated to remove some less popular, harder to sell building types and make better use of the space – it also meant some more of the house type we wanted and in a better location (garden wise).
We’d been told that the plot we’ve been wanting was being released the following week and with a guide price, yes the price had gone up a little but well within our budget.
Mortgage Agreement in Principle. (AIP)
Time to complete one of these, show we are serious and get an idea of what we could potentially borrow…….15 minutes of form completing, working out outgoings, existing credit card debit, loans, HP agreements etc and it’s submitted. A few nerve-wracking moments of watching the spinning circle (time slows down at this point) and an agreement in principle was ours.
– Now a little note on this, this is not a guaranteed get a mortgage card, this is a set of simple checks based on details you have provided and some assumptions, it gives an idea of what you could be loaned by that provider and if they would be willing to lend to you.
It also means it’s not a go to jail, do not pass go card either, many providers score things in different ways, think of it as a mini credit check.
So the day arrived, across to the show house we went and 20 minutes later we had reserved our plot with a non-refundable deposit.
Making a mortgage appointment.
Off to the bank above and an appointment is made for a couple of weeks time, basic details taken including the details of the AIP above, simple and done within 5 minutes.
Mortgage Advisor Introduction Phone call.
A quick call from our advisor to introduce herself, confirm appointment times, how much we’d like to borrow and some details on what we need to bring to the appointment.
Then another call to ask a couple more questions.
And another to ask who the builder was.
And then another call, but not good news…….
Yes we have saved hard, gone without a honeymoon, gone without a holiday, made sacrifices on buying things, going out and such like all to maximise our deposit and costs – we were proud, we had a 10% deposit saved and enough to cover all legal expenses, stamp duty, moving costs etc.
Halifax like many other lenders require a larger deposit on new build properties (15% on a house, 25% on a flat) unless those properties are built by a select few builders (probably the big names in the industry such as Redrow, Persimmons, etc) – but this isn’t that common knowledge, it’s not stated on their site, it doesn’t flag up and tell you when you do an AIP, or use a mortgage calculator. Some small print in the AIP merely says some building types require a larger deposit – my logic would be older properties or properties built on or near certain areas such as flood plains. Not a brand new, energy-efficient home with a new 10 year guarantee on it!
Apparently a result of the bank crash and tightening of lending criteria – I understand why, but it also makes it harder to buy a house!
(For clarity, a new build is any property that is newly built or less than 2 years old)
Where do we go?
At this stage panic had set in, what the hell do we do? We’re talking another 6 months of saving here, we just don’t have extra money lying around.
Options? What options?
90% mortgages on new builds are few and far between, the rates aren’t great and the term is generally short, paying over the odds for something that is outside our control just doesn’t seem fair, but it is an option. This would of course mean that other plans may be placed on hold, including our planned but delayed honeymoon.
Help to Buy?
I’ve created a separate blog regarding Help To Buy Wales as a few people have asked about it, the new blog is Here (opens in new window).
So this is where we are now, awaiting a decision from HtB – if this is a no, then I’m not sure what next.
Solicitors and Conveyancing.
The legal side of things, they take care of searches, process the payments, handle HtB ISAs etc, make the payments between all the parties legal departments (eg lenders and sellers), collect relevant government fees such as stamp duty and make sure everything is signed and sealed so to speak.
From what I’ve found, basic costs (not including stamp duty and extras such as dealing with HtB ISAs or gifted deposits) come in around £800ish – this is for a purchase only, buying and selling will attract more costs as will extras, and then of course stamp duty on top.
Today we went through all the quotes and decided whom we are going to use, there were a variety of pricing for the same set of services which for us (not including stamp duty) range from £1100 to £1400.
Still not heard from HtB Wales but hopefully we’ll hear something tomorrow.
Good news today, after many emails, documents being sent through and details being confirmed/updated we’ve been given a thumbs up from HtB Wales. That means a 20% deposit which should make the bank happy. Next stage, awaiting more paperwork and full mortgage application following the AIP.
Yep more paperwork came yesterday, this time from the solicitors – it’s a shame there isn’t some sort of centralised system where the same details can be taken without being duplicated again and again – So another set of forms to fill in with regards to the purchase, plus details of our deposits including where we got them from and how we got them (In case we are criminals and are laundering money).
Plus a visit to the bank to sort the mortgage out, so now waiting for things such as valuation etc.
Lets talk valuations.
These are a must when buying a house and the come in 3 flavours.
Valuation Report – Basic and cheapest of the 3, it’s a valuation and pretty much nothing else, no survey, no report on defects or problems – Ideal for a new build!
Valuation and Survey – More expensive but does survey the property too so should bring up any issues, defects and problems etc.
Building Survey – The most expensive as it’s a full building survey but oddly doesn’t include a valuation so you need to pay for the basic valuation report too!
It’s been oh so quiet for the past couple of weeks whilst we waited for the valuation to be completed by the surveyors and then to have a mortgage offer sent through, so far so good.
The next few weeks will be (hopefully) confirming the relevant dates for at least Exchange and maybe even completion (Who reckons we can be in before Christmas?) and then visiting the site to complete the customer specification form for the internals to be done and then the all important kitchen design day!
So the past week has been very busy in the world of house buying, last week was a tile choosing day, which was good then at the start of the week a few questions from the solicitors about various things, then the November budget was announced with a surprise at the end – Stamp duty for first time buyers abolished for properties under £300,000…………and yes, we qualify! That’s a tidy saving, which will help towards carpets.
A couple more questions of the past few days, proof of savings etc (again to show we aren’t money laundering!) and today half a tree arrived in the post – Copies of the various searches, copies of contracts, boundry plans, details of what happens at exchange and completion etc and a CD with even more documentation (a forest of trees if printed!).
And now various documents to sign and return.