House Purchase Post: Part 1

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So much to write on this, so I’m just going to talk about the money side of buying my house first.

Bloody ‘ell, BTL

The plan had originally been to sell my buy-to-let (BTL) flat to fund my house purchase. However, my flat is caught up in the cladding polava and unless I wanted to make a massive loss by selling it to a cash buyer, that route was closed to me.

So plan B was to attempt to remortgage, to release some equity.

Alas, the lender valued my flat at a big fat ZERO as it did not conform to the new fire safety regulations.

To pile on more financial stress, the service maintenance charges on my BTL for the past year have trebled, to pay for a Waking Watch.  Although I believe a new fire alarm system has now been installed resulting in the WW no longer being employed, I have yet to see what the final bill will be to ensure that my flat will fully comply with regulations and secure the coveted EWSI certificate which will allow me to sell the property. I have already been advised that us leaseholders will not qualify for full government rebate, so await with dread on how much more I will have to pay.

Since I couldn’t release any equity, I had no alternative but to accept the loan from my parents and dip into my Future Fund.

The BTL has been a good investment but I will very likely be selling it – receiving rental income isn’t part of my FIRE plan. Assuming prices haven’t plummeted for such properties in the area, the equity I get from the eventual sale should repay the family loan in full and might even fill the hole that has been made in my Future Fund.

“Dead Pledge“

As per a comment I made on Monevator’s recent post which suggested that making payments on a mortgage was a form of saving, it was with some trepidation that I took on board the biggest debt of my life (on my own) at an age when many are (or close to being) mortgage-free.

At my age (the wrong side of 50), the length of the mortgage term was restricted – I certainly wasn’t offered 30-year deals!

As I went through the application with the mortgage advisor (which was all done online and over the phone, versus the face-to-face interview at the building society which I had for my first mortgage, armed with paper copies of my bank statements and payslips!), I was surprised at how much I could borrow on my own.

Some would say ‘get the biggest house/mortgage you can afford’ with these (current) low interest rates, but since I’m still aiming for FIRE, I was mindful of the size of the mortgage payments. I didn’t want to feel like the mortgage was a noose around my neck, it needed to be affordable and I needed to be comfortable with it.

So in the end, my budget didn’t cater for the biggest house I could get and I ended up with a mortgage with a LTV (loan to value) of 64%, which gave me affordable repayments and a bit of spare which I will need to split between saving for FIRE and a fund for future ‘house renovations’.

There will be some who will think that the deposit I made should have been smaller, that I could have invested the extra cash and made the most of investment returns. I did consider that but knowing me, it would have just caused me both investment stress and stress over higher mortgage payments so I did what I did for better peace of mind.

Anyway, I’m on a 2-year fixed repayment mortgage, 1.25% interest. It makes my mind boggle that the interest rate for my first mortgage over 20 years ago was 8% – let’s hope we never see those kinds of numbers again!

My mortgage term is 22 years so I’ll be in my early 70s when it’s paid off (earlier of course if I make overpayments).

How do I feel about carrying such debt into my old age?

I didn’t feel comfortable with it at first but it’s likely that when my DB pension kicks in at age 65, the 25% lump sum can more or less clear the balance of the mortgage, so I will have options when the time comes.

My mortgage payments will be more than what I am paying my parents for living in their house but at least my utility bills will be lower, which will provide some offset. However, until my parents sell their house, I will be paying 2 lots of bills but I chose to do this rather than be caught in a chain.

My savings rate will unlikely to ever reach its previous dizzy heights but I’m resigned to this – I think if I can achieve a savings rate of around 10%, I will be happy with that until things settle down cost-wise. Need to be smarter with some of my expenses and hope that the stock markets continue to do their thing for my portfolio.

Other House-Buying Costs

I wasn’t planning to get my property during the stamp duty tax holiday so I didn’t join the frantic and desperate race to try to complete before the end of July, although there had been a chance to complete before the end of September to pay a reduced amount. Sadly, this didn’t happen (the seller and then my solicitor were on holiday so three weeks were lost) so it was with a grimace that I paid out over £7k in stamp duty – ouch!

With some time on my hands before I move in, I decided to get all the rooms redecorated/painted, new carpet, floor tiles and fitted wardrobes.

Getting people in to do all the work during such a busy period has been a right pain and the labour costs have not been cheap – I feel like I’m just bleeding cash and will be so glad when it’s all done.

I do have an actual moving in date set but still so much to do (and pay for) before that happens but at least things are moving forwards.

 

32 thoughts on “House Purchase Post: Part 1”

  2. Congratulations and well done, enjoy your new home. I can’t believe though i this day and digital age having your solicitor and vendor go on holiday puts the whole process back 7 weeks, there is definitely room for improvement in that process.

    Missed you on Friday !
    See you soon
    Cath

    • Thanks TS – there were other factors too, aside from the holiday and it all added up to the delay!
      I missed going to the meet up and look forward to catching up in the new year!

  3. Congratulations Weenie. I hope you’ll be very happy in your new home.

    Getting the redecorating out of the way up front is smart, helps your mind settle on a lower perception of the “new normal” operating costs, plus avoids having to move all the furniture multiple times!

    Good luck with the move.

  4. Congratulations on your new home.
    It’s important to be happy and secure at.homr. What happens after 2 years though? Do you have an interest rate rise risk?

    Here in Germany a rate of 1,1% fixed for 15 years with LTV 80% is possible.

    • Thanks Steve.
      After the 2 years, if I do nothing, I will be charged at the lender’s variable rate, which is currently 5.89%. At this point, I would look to try to secure another fixed rate deal.
      That’s a sweet deal, 1.1% fixed for 15 years!

  5. Congratulations on completing the purchase, Weenie!!

    I’m sure it will be worth the wait and having a nicely refinished home to move into is a great feeling So much easier to get all the decoration down when it’s empty

    Sorry to hear about all the hassle you’ve had with your BTL flat. I took a quick look at the Waking Watch – hopefully for that money it’s not just some students wandering around looking at their social media

    Look forward to hearing more about your new abode!

    • Thanks John and yes, it will be worth the wait, having everything done while it’s empty.
      Ref the Waking Watch, I heard that a few months back, there was a small fire and apparently the WW didn’t know about it as they didn’t report it, so who knows…

  6. Well done weenie and glad you found a way to make the numbers work out. As you say, things will be a bit tight for a while but will ease up when you are free to sell your BTL property.

    Looking forward to part 2…god luck with the move!

  8. Congratulations Weenie! You’ll be feeling all cozy in your new space soon 🙂 I wish we had ripped out all of the flooring and changed it before we moved into our last UK place, it’s so much easier than trying to do it once you’ve moved everything in.

    Good luck with the move!

    • Cheers SN – there was some flooring upstairs which I didn’t change and I hope I don’t regret it (I couldn’t squeeze it into my budget!).

  10. Congratulations! I wish you all the very best for the move to your new home – what a milestone.

    It’s super-scary when you’ve just completed on a house purchase: the mortgage seems enormous (and feels like it stretches on forever) and all financial normality is suspended. But I bet you’ll be surprised by how quickly you’ll settle into a new financial routine, and that mortgage will start to look much less daunting.

    I reckon that, once you’ve found your new financial equilibrium, you’ll start to chip away at the mortgage alongside investing (I bet you’ve already been playing with the mortgage overpayment calculator 😉 ). So you’ll likely get it paid off many years ahead of schedule.

    On the BTL side of things, you have my sympathy. It will get sorted, just hang on in there.

    • Thanks Jane!

      Haha, you know me too well, I have indeed already been playing with the mortgage overpayment calculator 🙂 However, need to devise a plan so I can overpay and balance that with continuing to save/invest for my FIRE.

  11. I think of your flat and it reinforces my feeling that I never want to hold a property under the English leasehold system. Good luck with sorting out and selling the flat.

    • Thanks dearieme.

      I believe changes are being considered by the government regarding leaseholdings on properties but sadly, unlikely to be apply retrospectively to existing leaseholders.

  12. Great to hear that things are nearing a conclusion and with a bit of luck you’ll be able to take up residence in the new Palace in time for the festive season, and finally relax a bit and put your feet up on the big day. If you’re doing your next post around that time dare i say it you might title it ‘The Ween’s Speech’!
    Also, how big is the garden? Hopefully plenty of space for a nice veg patch for some gyo. You’ll need to get busy with the fork and trowel to try and offset that 10% savings rate a bit!
    Good luck with the last few bits of the move. Almost there.

    • Thanks KC.

      Haha, ‘The Ween’s Speech’, hilarious :-D! If only I could be so organised and get a post sorted out for then!

      The garden is a manageable size but veg will need to be grown in pots and troughs which is fine. I can’t wait to be setting up my little greenhouse!

  13. Congrats on completing and happy new home.

    I’ve been in my house for 5 months and my old budget has gone out the window. Plus thousands on electrics, guttering, tree surgeon, etc etc. Ive given up on anymore Tradesmen for the time being, it’s a cost nightmare! Im in the South East, we’re the same age. My deposit was 52% and my mortgage 18 years (5yr fix at 1.29%). Like you I preferred a bigger deposit and less debt and its nice to see the mortgage go down every month. I’m aiming to clear it in about 8 years vs I’m not sure how much longer I can stand corporate work, or it can stand me!

    Hope you settle in well!

    • Thanks Starla.
      Oh tell me about it – while one of the tradesman was working in the loft, he spotted that I needed a roof repair, so I’ll need to get that sorted too. My sister pointed out lots of things which are mostly cosmetic so that can all wait!
      I’m fortunate that a couple of my friends are in the trade, so I did get ‘mates’ rates’ but that can only go so far!
      That’s a great mortgage deal you have – I’ll have to be in the hunt for a decent one in 2 years’ time.
      All the best with clearing yours in 8 years!

  14. Congratulations…I’m pleased things are moving forward for you 🙂

    With all your planing and Fire…ing I’m sure that mortgage will be long gone before your 70s, or at least be almost negligible anyway 🙂

  15. Congratulations Weenie!

    In time to enjoy Christmas in a new home knowing it’s yours and start the new year in a good place. Great news!

    Like others, I am sure you will be paying down the mortgage and getting those figures and FI fund back on track.

    Looking forward to the next update with you living in the house.

    • Thanks SparkleBee.

      Yes, the plan is to pay down the mortgage, although it might take a bit of time to sort out the finances first!

  16. Hey weenie, that was an interesting read thank you for the update. I can understand your mixed feelings throughout the process to be fair. On a positive note though, how is the new property? Is it feeling like home? How’s your first Christmas feeling in your nice new home . TFJ

  17. Hey TFJ

    I haven’t moved in yet, it doesn’t even feel like my house, just a place I’ve been visiting and doing stuff to! It might take me a little while to settle in but yes, it will be good to have Christmas in my new home!

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