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First time buyers - Help

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  • First time buyers - Help

    Hi,

    We are looking at our 1st house and are in a position to buy it almost (we think)

    But there are a few things we need some advise on.

    1. I used to be a contractor and have recently got a perm job at the same company so we can buy a house.

    I was a contractor at this company since November 2011 and I was made perm on the 1st of May 2012

    Will this be ok with the banks? eg. with the 3month proof of wage etc...

    2. Solicitor, stamp duty, surveyor fees. How are these usually paid, with cash from savings or added to the mortgage? and much would these cost on a 130k house?

    Thanks for the help

    Mac

  • #2
    Re: First time buyers - Help

    Hi Mac, I'm a first time buyer too and have just gone through the process of securing a mortgage and solicitor. Be prepared to spend a bit of time on paper work over the next few weeks! My advice in repsepct of your first query is to speak to a mortgage advisor at the bank. It is quite possible that different lenders may require different proof of income. For example, at HSBC where our mortgage is, people employed permanently for less than six months had to provide a letter from their employer stating that they were permanently employed, not on a probationary period and what their salary was. Your HR department should be able to help with references like this. Once you've identified a mortgage deal you're interested in (money supermarket is good for this) then call the lender to explain your circumstances and ask what proof they would require.

    Regarding your second query, you'll need to have the money available for your solicitor's fees, stamp duty, survey and moving costs - not to mention your deposit! Most lenders will require a minimum of 10% deposit but at least 25% for the best interest rates. None of this is covered by your mortgage. Also (sorry to add to your woes here) but you may also be charged a mortgage arrangement fee by your lender and you'll need to pay the lender's valuation fee too. These last two things can be added to the mortgage, but that means you're effectively borrowing more money from the lender and paying it back with interest. Might be the right option for you though if you don't have lots of spare cash up front (our mortgage arrangement fee was £999 and valuation fee £127). Some lenders offer special 'first time buyer fee-free deals'. Beware these offers - most will be charged at a higher interest rate over the life of the mortgage.

    Example: HSBC offered a fee-free 5-year fixed rate deal with an interest rate 0.2% higher than the one with the £999 up front fee. Doesn't sound like much of an increase, right? Over the 5-year life of the mortgage, we would have paid an extra £2,000, so do the maths before you commit to something.

    Solicitors can give you a quotation if you ring them with the details of approximate house purchase price. You can use the Law Society website to find ones near you. It will depend on the value of the property, but I would estimate around £800 in legal fees, plus your stamp duty, which is worked out at 1% of the purchase price for a £130k house, so £1,300. However, do keep in mind that stamp duty is not payable for properties valued at less than £125k, so you could buy somewhere a bit cheaper and save yourself a bit of cash this time! Best of luck with your search.

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