Owning your own home

Cheers, that makes sense.

I'll speak to my surveyor and see what he can do (and do some bouncing above it).

Thanks. From what I’ve read, I’m now inclined to think about slate or some nice big quarried stone tiles.

I like the idea of concrete but concerned about issues with sealing it.

Need some herd wisdom on what to do: I’ve been in the process of buying a new build using the Help To Buy equity loan scheme for the last few months. We’re really close to be able to exchange, but now I’m shitting myself that property prices are gonna decrease over the next year or so. The property developer is pushing HARD to complete ASAP, so much so that they’re offering to pay my next month’s rent.

Do I carry on, withdraw, or attempt to renegotiate price? Argh!

Your choice is more: proceed or walk away.

Price negotiations won't make a huge difference, if the market collapses you'll be in negative equity whatever happens. They're afraid of you walking away... they probably want to make money on the ground rent, service fees, and other contractual things. A few % difference in price is just nothing in the grand scheme of things.

Ask yourself these questions: If Help To Buy did not exist in the future would you be able to buy? Are you able to afford the mortgage and costs should only 1 of you be working? Are you happy to live there for a good amount of time (a decade or more)?

If the answers are No, Yes, Yes... proceed. If it's Yes, No, No... withdraw. Any other variation of answer probably needs more nuanced thinking and seeing how your gut instinct feels.

Only really a problem if you think that you’ll lose your job and can’t pay for the mortgage

If house prices go, say, 33% down you will have much bigger problems to worry about.

That said I would be extremely relaxed about exchanging contracts right now. You’ve got some leverage when previously you had none.

Pretty much this ^^

Just for a bit of comparison, my wife a I bought just after the brexit vote, we knew a few people who put off buying (and still haven't bought) and warned us about doing the same. Our decision to buy was that we knew we wanted to start a family and were fortunate enough to get a place we could live in for the next 10 years. The market has pretty much flatlined but for us it didn't matter as we wanted a home, plus we'd have paid around 50k in rent in the 2 and a half years we've been here if we'd stayed in our rented place.

Thanks for the level-headed advice everyone. Re: @Velocio’s questions - we’re No, Yes, Yes.

Excellent points around rent. I made the mistake of adding up how much I’ve spent on rent since moving to London, and it made me want to cry.

I’m leaning toward proceeding I think. Plus, there’s space for more bikes, which should be reason enough.

After some house-buying advice if possible please and will be making a donation to the forum (which I try to do anyway) for the pleasure because some of the advice is incredible that I read on the forum. My dad isn’t too clued up on all of the renting out and mortgage intricacies that I will explain below, I don’t like discussing it with colleagues and none of my friends are on the property ladder yet.

I turned 22 this week and work as a graduate in Derby at a big engineering company. Not sure what I want to do career wise 100%, but I have an economics degree from a decent uni. Also not sure where I want to live and I’ll come on to this later, but my company have other UK sites/offices in Bristol and London.

Since starting in Sept 2019, I have lived at home (happen to have got a grad job in my home city) with cheap rent. With living frugally, cheap rent at home, joining bonus, lifetime ISA 25% top up, 50% of my income saved each month and past savings (worked since I was 16), I should have 15k saved myself by the summer towards a deposit. Could get a 5-10k interest free loan for a few years off my dad or grandparents if needed. I think I can borrow 150-160k (HSBC AIP). So 180k is the max house price I could get which is fine for a decent 2 up 2 down in a nice area close to the city centre, train station and work. Here is an example https://www.rightmove.co.uk/property-for-sale/property-78197860.html. Rough mortgage payment £720 + £120 bills is affordable for me, and I could rent a room to a grad mate for £400-450 ish. I don’t need to do this, but I probably would do. 170 grads started on my intake so definitely a market for it and renting it out if I didn’t live there. I know people who pay £500 for a room in a 5-person house in a worse area.

I am desperate to not live at home but don’t want to pay a landlord £500 to live in a shared house in a worse area. Derby is not special, a lot of my home mates live elsewhere now, none of my uni mates live here, city centre isn’t great, not a lot going on, quite Brexit and tory. I am keen to avoid never leaving Derby but will stop digressing and bring it back to house rather than life advice.

Questions I have:

1. Is it a bad idea to buy a house in an area that I might only be for 2 more years?
   
2. Is it bad to buy at the top end of your budget?
   
3. If I get a mortgage and move out of Derby, can I keep the house and rent it out – or do I need to sign up to a special type of mortgage (that would presumably be more expensive as riskier)? If I move, it would be to London or Bristol (slim chance abroad but open to it), where I wouldn’t be able to buy anything decent for 5 years+ (if ever). Hopefully I would be able to let the Derby house out at a profit whilst building equity. How does this work with council tax too if I am renting a room in say Bristol or London?
   
4. What are the fees like for exiting a 5 year fix 2 years in if I need to go from residential mortgage to buy-to-let?
   
   

Covid-19 wise (not trying to sound selfish mentioning this and have had mates lose their jobs this week. I am very lucky to still be working, and it is a shit situation for all) it is really hitting my company but given Friday’s announcement and the company’s different arms, hopefully we can survive, and my job will be safe. Wouldn’t do anything house wise until this was certain. I think there will be a lot less houses changing hands, house prices will fall with the recession, but that it could be a good time to buy cheap with the uncertainty and 0.1% base rate.

Cheers

Sorry another question - is it a bad idea to buy a project/shed as a first house? Much bigger physical house and more original over the green, for 20k more, than needs a lot of work doing for example (this one is out of budget but 2 bed versions in this state exist) https://www.rightmove.co.uk/property-for-sale/property-69197196.html

You cant borrow money that easily for the works and more than likely bank will value it way less

1. No, as you have identified you have a market to sub-let / have lodgers from.
   
2. No, because your future circumstances usually improve and what is top of budget today isn't in 5 years, 10 years, etc. Also with interest rates where they are you'd be silly not to take advantage.
   
3. Yes, but it works out in your favour to some extent... just get a 2-3 year fixed rate now and when that expires re-mortgage as applicable if your circumstances change. Everyone re-mortgages when the fixed term expires.
   
4. Huge... 1-5% of the total loan value, fix for the term you're guaranteed to stay for.
   

@amey cheers. I do remember the mortgage advisor I spoke to saying it needs to be inhabitable, kitchen and not be a new build, which this isn't. 1st link is a much better option I think.

@Velocio thanks very much.
#2 - hadn't even thought of this. Should get a pay rise in a year when I finish the grad scheme.
#3 - what do you think from a business case point of view? I hate the idea of living month to month in say London, only being able to invest a few hundred in a stocks and shares ISA, paying 30-40% of my salary in rent building and no equity in a house at all.
#4 - thanks. Will do lots more research on this but early stages and this thread was a good place to start. Whatever I get I think I'll do a 2 year fix as I'll be in Derby for at least 18 months from purchase of property. Don't know beyond that. Interest rate will be around 1.5%

Looks like that second house is probate, make an offer, the larger garden and extra bedroom is worth it. The family may just want the money. Stretch yourself now and it will get easier later, and maybe it would more comfortable to share a 3 bed house than a 2 bed. More room. That back garden must be 60 feet, I reckon it's definitely worth the extra £20k personally.

As long as that’s structurally sound it looks like a great house. Access to the park will be a huge plus when you shift it

Also know Derby, do you really want to live in such a nice area? You can pay far less in some of the slightly less desirable or further out areas or get more for the same money if you don't mind being much further out but still close to work assuming you work at RR. Can understand wanting to be close to town as I am further out but go out in Notts mostly and getting to/ from the station is a ball ache.

@greentricky Lived in Derby for 22 years minus 3 at uni and pretty set on chester green, around Otter Street/Arthur Street or just off Kedleston road. From chester green, 10-15 min walk to town, 2-3 mile bike to work, 20 min walk to train station and quite a nice area. Where were you thinking? To be fair, don't know littleover, mickleover and those areas very well. Currently at my dad's down the a6 towards Belper and don't like being that far away from town or work. Takes me 50 mins to drive home 9 miles, 35-40 mins cycling.

@spindrift @kboy will likely be gone by the time I am ready to pull the trigger. Amey made a good point. Would need like 20-30k up front to do any building work, new kitchen, decorate, furnish, electrics, plumbing surely?

Littleover is nice, was thinking south of the city Chellaston, Alvaston, Shelton Lock etc. but you won't be walking in to town and yeh traffic in Derby is horrible.

You should just get this https://www.rightmove.co.uk/property-for-sale/property-77504113.html
and stack cheques and let your grad mates buy the house for you while you build up a second deposit for somewhere less affordable i.e. not Derby.

Well you're in a great position for your age so one thing I would say is you absolutely don't have to rush in to anything. Whether you buy a property that needs work or not depends whether you have the time and money but also whether all that work will give you what you want? I would lean more to just having a nice place with very little to do and just get on with enjoying life and then see where life takes you, plus if after 12 months you decide you want to shoot off somewhere it'll be far easier to rent out than a half-finished project.

I went to uni in Derby and lived there for about 6 years, a lot of my best friends still live there so I'm quite fond of the place plus you've got the peaks on you doorstep so there are definitely worse places to live. Also anything you buy around darley Park should be a decent investment (but I don't think anyone can predict anything in the current climate)

I know nothing about derby but it is pretty much always on homes under the hammer. All the time.

Second also for not rushing into making any decision. And don't take too long a fix, two years is fine. The country is fucked for the next few years and you don't want to tie yourself into anything long term. Be flexible.

Personally I wouldn't rush into this and certainly not at the moment.

There's a reasonable chance that we may see some drop in prices coming up and that could make remortgaging to a buy to let deal difficult.

My, entirely unqualified, advice to someone thinking of buying a house at the moment is only buy if you'd be happy living there for five years plus to see out any short term disruption.

Added to that it's worth considering that letting out a second property isn't the money maker it used to be. Tax breaks are slowly being eroded and stamp duty on a second property can be hefty.

Edit: This should have been a reply to @bobble

@So_Gewürzt_it_hurtz cheers. I am in 2 minds, definitely leaning towards just moving in and making a few adjustments. Having said that, got mates here, my dad is retired as is his group, my uncle and aunt are too (all local) plus got hands from my teammates in the rugby club for help if I go for a project. And I could stay in my current house as long as I need whilst it gets done.
Definitely agree with the area around Darley Park and the peaks. Not sure when you were last here but all the mills have been done up and there's a gym, bike shop, bar and more there now

@aggi @princeperch thanks both. Won't rush (not ready until June time anyway), been sold on a 2 year fix today and will track house prices closely until June to reduce chance of buying something and coming into negative equity

With the tax point - would be the only house in my name for the foreseeable and then I would rent an additional room in a different city (London/Bristol). So only owning one home, does that make a difference?

From a tax perspective you'd actually be better off keeping a room in your house, keeping all your post going there etc, and then using the rent a room scheme as the rent you get from the lodger would be tax free up to 7k (I think)

You rent the whole house out and don't maintain a room there yourself it's tax return time and that will be painful.