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Welcome to Maren Talks Your Money, the personal finance edition of Meron Talks Money and these bonus podcasts we talk about the best strategies for making the most of your money. I'm Maren Zumset Web and with me senior reporter and author of the Money Distilled newsletter, which is brilliant. Do sign up. John Steppeck Hi, John, Hi, ma'am right. We are doing a housing series at the moment and we have got a really great guest on today. We are
speaking with Anthony Emerson. Anthony is the director of mortgage brokers Trinity Financial, London based firm specializes in bespoke mortgage advice and Anthony is here today telling us all the things that they don't tell you about buying your first home. Hi, Anthony, thanks for joining us today.
Hi, and thank you for having me.
Okay, so here I am. I'm a young person. I've been thinking about buying my own home forever. I enjoyed saying I'm a young person. That hasn't happened for a while, but you know there was a day. So here I am. I'm a young person. I've been saving up I've built up a deposit. I've been you know, nagging my grandparents. My parents, They've all handed over a couple of grand here or there. I've finally got enough. I know what I'm looking for. I've been dragged around the place by
a state agent. Possibly I should have used a buying agent, but there'd be a different podcast. And I've found the place I want. I'm pretty excited. What happens now.
Now is the time that you really have to start drilling down and deciding on exactly what mortgage product you want to do, exactly what kind of loan size you
want to take. I think too many people, when they're focusing on trying to go and buy a house, focus on all of the costs up friends, and they try and find out how much they can borrow, how much that would cost, which is fine, but they should use that as just a guide, and then once they find the that they want, that's the point at which they need to have a conversation with their mortgage broker or if they've gone to a bank, direct their bank to
sort of say, well, what is your plans with this house, what do you want to do with it? How much money do you want to spend on it. Let's look at your deposit. Can we borrow a little bit more and hold back some of your deposit to facilitate those works?
What kind of rate do you want to have? Because until you know the property you want to buy, you don't know what you want to do with it, and you also don't know how you'd like to finance it and do work, etc. So it's at this point now when you found a house that you want to buy, that you will now know more about it and you can make a better choice as to the products and the mortgage that you take out.
Yeah, there are also a lot of costs that people don't necessarily think of when they're looking for a house. They think, oh, you know, I've got a deposit of thirty thousand pounds, the house cost two hundred thousand pounds, etc. Look at it like that, and they're not necessarily taking into account how much they're going to have to pay in stamp duty, how much their survey is going to cost them, what they're paying the estate agent. These other things that are cash costs right.
There are I mean, you've got to pay your conveyancer to do all their searchers and to do the conveyancing process. The surveyor needs to be paid for to at least have a basic mortgage survey. A lot of the times nowadays, the lenders are trying to give you a free survey as a bit of an incentive to take up their policy rather than somebody else's. But if you want to have a more detailed server or need even have eyes on the survey that the bank conducts themselves, you need
to facilitate some sort of money for that. Now, there are generally three types of survey levels. You've got a basic mortgage survey, you've got your home buyer survey, and
you've got a full structural survey. To do a full structural survey and only really advocate that on a house where it's a freehold house where you own the entire property, because there's no point in doing a full structural survey on a flat because the surveyor won't have access to all of the other points of the property to be able to do the inspection. That can only inspect within the walls of your property and maybe the communal errors
and maybe do a visual from outside. So I think if you're buying a flat, nothing more than a hound by a survey would probably be recommended.
Do you think surveys are worth it? Because I've bought a few homes in my lifetime, and what I have found is that even the best surveys miss lots of things, and there's also absolutely no comeback whatsoever as far as I can see from the stuff being missed. And then most occasions have been better off getting a friend who was a builder. They come around, kick the tires, make sure it wasn't subsiding into the street, and then just
go ahead with the basic kind of mortgage survey. Is that a typical experience because it looked to be like a waste of a couple of grand.
It can be, to be honest with you, because the survey reports are incredibly caveated to say, maybe I couldn't see all of the subfloor, so therefore I'm not entirely sure as to whether or not there was dry rot or any of those things that they might not have seen. And it's incredibly hard to fully inspect a property where you don't have access visually or otherwise without drilling holes
and sending down cameras, et cetera. To be able to do all of those things but there are quite a few people who don't have the skills or indeed the knowledge to be able to walk around at property and spot issues. We do property day in and day out. We've come across everything under the sun. If I walked into a property, I'd have a very higher educated viewers to exactly what those problems might be than your first time buyer who's never ever done that sort of thing before.
So the survey could give you a little bit of a guide as to where problem areas might lie, but further investigation is always needed. So they would say, the electrics look like they are quite dated, should probably get an electrical inspection done. The plumbing looks like that there might be some issues. You should probably have a drain inspection done. There's areas of timber and damp. You should probably have a timber and damp specialist come and do it.
So the value won't give you a cost and a guarantee that is the problem and this is how much a cost to fix because they don't provide that service. So they always recommend you to go and have more investigation with those specialists to be able to know is
it worth it to certain people? Yes, because of the fact that if you don't know what you're looking at, and you walk in and you go buy a property and you find out that the electrics are shot and the plumbing's not up to scratch, it could cost you a significant amount of money and you might have had that flagged. Yes, they missed some things, but I think that's just a human problem. And also certain properties don't allow you to inspect all areas.
What's your view on the idea of getting a mortgage and principle first before you actually hunt down the house, so that when you get to that today, the seller knows that your genuine in these areas, I.
Think it's definitely worth doing. I think if you're going to go down the road of trying to buy yourself a house, surround yourself with the right people, get yourself a broker, get yourself a solicitor that we'll be able to help and advise you on it, and then do all the fundamentals first so that you have no surprises coming down the track. You know, speak to the broker, lay out all of your information so that you know
how much you can borrow. You know where some of the problem points might be in the way that you're paid and the structure of your bonuses. We have problems with people believing they can borrow when they're getting restricted stock units as part of their bonus package. Finding out too late that you can't actually use that might mean that you've wasted all that time and effort searching for
a property that you can't fundamentally affward. So then we always suggest that people check their own credit report, get a copy of that to be able to provide to the broker to say, these are all the debts that I've got, because that credit reference agency is what the lender is looking at, so there's any surprises on that the lender is going to be able to see them, and then go and get yourself in agreement and principle for generally the highest possible purchase price that you could
afford giving your income in your deposit situation. At least then you know where your ceiling is and you can come in and find the property that is underneath that, and you should then have no surprises. The agreement and principle is always done with one lender, in particular the lender that will probably give you the highest possible loan amount. But when you find the property you want to buy. That's the point at which you will know more about
how you want to structure that loan. How much money might do you want to hold back from your deposit to maybe do a bathroom refurbishment because the property needs it. Whereas being able to borrow that money at the outset and hold back some of your deposit to facilitate that work might be worth you doing. Now, that might mean you change leaning to value, and it might mean that you change product, but it might be worthwhile for you to do that because you can enjoy the house more.
And then we'll advise on people to be able to sort of get that agreement principle, find your property product that you want to be put into, and then we start the application again. It might be the agreement prints with that lender in particular. Then the full application, survey, mortgage offer over to the solicitor to push to get you to the point of exchange where you finally have some knowledge that you've secured that house or flat.
What should you expect during that process? So you agree a price, you get to your mortgage done, you get to exchange. What happens next.
So once you've reached exchange you generally confirm with your solicitor your solictor LEO is worth the vendor solicitor, and between the two of them you agree an exchange date
a completion date from the point of exchange. Now, if you're in a chain where there are a number of different properties all linked together, you buying the first time buyer generally is the first step in that chain, and then after so that every other house moves on the same day, everyone in that chain needs to be able to agree the completion date, unless, of course, one of those people are willing to sell the house and move into rented accommodation or go live with family, or whatever
it might be. Once everyone's finalized that date, you agree it your exchange, You pay your five ten percent over to your solicitor, and you are then at the point where you've secured that property up until the point of exchange. The vendor or you could walk away with no redress to the other party after exchange, there are penalties if
you walk away for whatever reason. From a mortgage point of view, you just need to make sure your mortgage offer is still valid until after the point of completion is expected to happen.
And typically Howlong's an author are valid for on.
A purchase or a remortgage. A new mortgage offer is generally valued for six months, but when you get given the offer, there will be a date on that offer that will state the valid period of that offer. And it's something that just definitely needs to be put in everyone's diary.
So before the actual exchanges was horror stories all over the place on both sides about being dizumed, gazunders etc. So someone who's been through this process over and over, you've got any tips for us on how to avoid that kind of nasty surprise and the negotiation process.
Unfortunately, there is no real way of stopping the gazumping gazundering. It's very very poorly taken by all parties other than the vendor because they're generally getting more money. But if somebody has made a viewing on a house and the vendors even allowing viewings to continue, it's a sale market where if somebody comes in and offers you a higher price, you can by all means take that price. It is a problem with the UK buying system because it takes
so long. There could be massive shifts in the economic stability of the country between the points of agreeing a sale and actually completing. So that process allows for renegotiations
to happen, but their renegotiations happen for different reasons. You could find a property that you have your inspection done on it, and you find out that there is a problem with the roof, and therefore you might want to get some more detail on that, and you might want to renegotiate the price because of the fact that the roof has got some issues. Up until the point of exchange.
All of that sort of stuff can happen, and there also might be a change in your circumstances, right because a person might lose their job in between, not be able to afford it, and they might want to pull out. So it works both ways. But gazumping is not a pleasant experience for anyone involved.
No, I mean, just to be clear. And Scotland the system is different, so again you're locked in a much earlier period. But what's talk about the system in England and wheels here. But yeah, from that, so we get exchange and then we get completion and you move in and that shoe. You're happy, everything's done. Is there anything else in the process that you'd like to highlights being an area things often fall through or mistakes are made.
I think one of the difficulties is when you buying in a long chain, you reliant on a number of different third parties to all agree, and to get human beings to agree is difficult with lesser numbers, but when you get a lot of people involved, it can be rather tricky to get that done. One of the things that we see a problem with is land registry delays, slowing things down. When somebody has bought a house, some land registry delays or up to a year two years long.
So if somebody bought a house cash, has renovated it and is trying to sell it within a six month period, it's highly unlikely that it would even be properly registered on land registry. That could cause a problem. If somebody has carried out extensive works to the property, have they got the right permissions? Have they got the right warranties? Those things are sometimes overlooked by people who have just decided while I'm doing the renovation myself, therefore these things
aren't applicable to me. But when you come to sell the property, that person wants some sort of sureties that things were done right and then you have the right warranties in place, and that can cause extra costs because they might need to go and get a retrospective warranty. Extra delays, extra costs for you as a buyer because your solicitor and now has to do these extra pieces
of work. So they're not huge sort of things, but there are little niggling problems that can protrap that sort of completion period.
Great well, thanks Gaing I and I really appreciate your team, and I think hopefully I should give them everyone a bit of view of the painful process of buying a housset. It doesn't have to be painful, you'll tell us that.
Thanks for listening to this week's Maren Talk to Your Money. If you like us show, rate review, and subscribe wherever you listen to podcasts. Also be sure to follow me and John on extraor Twitter at Marinus w and John unders Sport stepech. This episode was produced by Summersidi and morosesandam sound designed by Blake Maples. Special thanks of course to Anthony Emerson. Questions and comments on this show and all our shows are always welcome. Our show email ismerinmoney at Bloomberg dot Net.