London Mortgages
Discussion
Fellow londoners,
I'm currently paying £110/wk rent on a small flat in Pimlico shared with a mate who pays the same.
Therefore between us we're spending over £11k over the next year.
I'm in the position of being able to put a downpayment down on a mortgage and work out repayments that are the same as i'm currently paying. Therefore instead of £11k to Mrs Landlord, its £11k paying off a mortgage
Sooner the better i feel.
However, my current work is only for another year then i don't know for definite if i'll be in london. At the moment its probably 80% certain that i will be living in london for a good few years.
I like Pimlico, and my brother lives in Chiswick so these are the areas i would initally be looking at (east and south london are no good as i need easy access to M4/M40).
Would it be wise to buy a place in Pimlico, Hammersmith, Chiswick etc? A small flat for say £200-250k.
Would the initial starting costs make it financially unwise and i would be better off paying rent for another year and see where i am in a year. But then that could go on and on for years. I'd prefer to get a mortgage asap but don't want to get screwed.
What is the stamp duty limit?
Any other suggestions for a first time buyer in London?
Much appreciated
Rico
I'm currently paying £110/wk rent on a small flat in Pimlico shared with a mate who pays the same.
Therefore between us we're spending over £11k over the next year.
I'm in the position of being able to put a downpayment down on a mortgage and work out repayments that are the same as i'm currently paying. Therefore instead of £11k to Mrs Landlord, its £11k paying off a mortgage
Sooner the better i feel. However, my current work is only for another year then i don't know for definite if i'll be in london. At the moment its probably 80% certain that i will be living in london for a good few years.
I like Pimlico, and my brother lives in Chiswick so these are the areas i would initally be looking at (east and south london are no good as i need easy access to M4/M40).
Would it be wise to buy a place in Pimlico, Hammersmith, Chiswick etc? A small flat for say £200-250k.
Would the initial starting costs make it financially unwise and i would be better off paying rent for another year and see where i am in a year. But then that could go on and on for years. I'd prefer to get a mortgage asap but don't want to get screwed.
What is the stamp duty limit?
Any other suggestions for a first time buyer in London?
Much appreciated
Rico
HI Rico
Just read your post. In MHO I would suggest you keep renting. 2 key reasons, 1st you may not stay in London for long (you say 80% chance), and renting gives you flexibility, and 2ndly the market has gone very soft in last few weeks since two hikes in interest rates. I am a property developer and am not buying at the moment as I see prices coming down a bit. Over the next couple of years, sure they will go up, but if you need to sell to move, you may take a loss. RE areas, both Pimlico & Chiswick are great - just personal choice re where you work & want to live. Stamp duty - free up to £60k (some areas its free up to £150k), 1% upto £250k, 3% from £250,001 to £500,000 and 4% from £500,001+.
Trust this helps.
Charlie
Just read your post. In MHO I would suggest you keep renting. 2 key reasons, 1st you may not stay in London for long (you say 80% chance), and renting gives you flexibility, and 2ndly the market has gone very soft in last few weeks since two hikes in interest rates. I am a property developer and am not buying at the moment as I see prices coming down a bit. Over the next couple of years, sure they will go up, but if you need to sell to move, you may take a loss. RE areas, both Pimlico & Chiswick are great - just personal choice re where you work & want to live. Stamp duty - free up to £60k (some areas its free up to £150k), 1% upto £250k, 3% from £250,001 to £500,000 and 4% from £500,001+.
Trust this helps.
Charlie
Charlie,
Many thanks for your advice. I've learnt all about stamp duties and other interesing mortgage facts over the last few weeks. Kinda fun really.
The current plan is to still go ahead as the 20% chance of not living in London will entail living at the family home and working near Oxford. This is looking less and less likely.
The market is looking a bit slower, however i'll be keeping this flat for 5 years before moving on (or at least keeping this flat for 5 years, whether i live there or not depends) I know lots of younger uni friends in london who would be more than happy to rent it from me if i were to move, thus the mortgage repayments won't suffer.
As i'm keeping the flat for 5 years does this change your advice? Would the slowed market recover and grow to an extent that this initial slowing won't matter to me?
Many thanks again,
Rico
Many thanks for your advice. I've learnt all about stamp duties and other interesing mortgage facts over the last few weeks. Kinda fun really.
The current plan is to still go ahead as the 20% chance of not living in London will entail living at the family home and working near Oxford. This is looking less and less likely.
The market is looking a bit slower, however i'll be keeping this flat for 5 years before moving on (or at least keeping this flat for 5 years, whether i live there or not depends) I know lots of younger uni friends in london who would be more than happy to rent it from me if i were to move, thus the mortgage repayments won't suffer.
As i'm keeping the flat for 5 years does this change your advice? Would the slowed market recover and grow to an extent that this initial slowing won't matter to me?
Many thanks again,
Rico
What you should consider is the Repayments, if you need to move out.
£250k Flat = £12-1400 pcm on a mortgage with a decent deposit, plus £100-£150 pcm counciltax! thats a £23-26k salary ALL on its own.
Its not always that 'easy' to find 'decent' lodgers..
unless you have some garunteed prospects, or can afford to write off £26k a year, and STILL live elsewhere... then its a pretty risky venture...
but like any risky venture, they have the chance to work out.
You should also consider, for the first 10 years or so, 99% of what you pay off will be the interest itself, so even when you come to sell up in 5 yrs, you wont have 'earnt' much on the house, aside from Appreciation (if any!)
You might consider an interest only mortgage, this will help reduce your costs a little, but then you need to realise that the Tax Man will take his cut of any 'profit' you make from renting the property (if you manage to!)
GL
£250k Flat = £12-1400 pcm on a mortgage with a decent deposit, plus £100-£150 pcm counciltax! thats a £23-26k salary ALL on its own.
Its not always that 'easy' to find 'decent' lodgers..
unless you have some garunteed prospects, or can afford to write off £26k a year, and STILL live elsewhere... then its a pretty risky venture...
but like any risky venture, they have the chance to work out.
You should also consider, for the first 10 years or so, 99% of what you pay off will be the interest itself, so even when you come to sell up in 5 yrs, you wont have 'earnt' much on the house, aside from Appreciation (if any!)
You might consider an interest only mortgage, this will help reduce your costs a little, but then you need to realise that the Tax Man will take his cut of any 'profit' you make from renting the property (if you manage to!)
GL
Jamie,
Thanks for the post, but you know we've bought the flat. We've had it checked over by a few fellow city people and its commonly agreed we've paid about £30k or more under what its real market value is, for the simple reason its unfurnished at present and i'm a good haggler
I have no problem with finding tenants. I conservatively estimate i know about 200 people in the city who are looking to rent on a yearly basis due to contacts through university.
Also, the mortgage repayments are just £90 more a month, than what my flatmate and i are currently paying.
Council Tax isn't an issue as we're both still students. Obviously it will be an issue in a years time, but we'll both be earning.
Many thanks for your time in posting.
Oh yeh, when are you buying me that pint?
Rico
>> Edited by rico on Tuesday 3rd August 23:56
Thanks for the post, but you know we've bought the flat. We've had it checked over by a few fellow city people and its commonly agreed we've paid about £30k or more under what its real market value is, for the simple reason its unfurnished at present and i'm a good haggler
I have no problem with finding tenants. I conservatively estimate i know about 200 people in the city who are looking to rent on a yearly basis due to contacts through university.
Also, the mortgage repayments are just £90 more a month, than what my flatmate and i are currently paying.
Council Tax isn't an issue as we're both still students. Obviously it will be an issue in a years time, but we'll both be earning.
Many thanks for your time in posting.
Oh yeh, when are you buying me that pint?
Rico
>> Edited by rico on Tuesday 3rd August 23:56
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