The nervous wait to exchange....

[GhostlyPea]

Personally it feels like a bit of a risk, but that's my nature, others would see it as not a big deal. If you pulled out, whats your position on finding somewhere else? Will you suffer further costs if you dont find somewhere within a year (i.e. storage costs, increased rent or other commitments)? Also don't forget, Stamp Duty will come back some time earlyish next year so although you may have to spend more now, not paying stamp duty saves you money

- GP

 

[Robi]

Personally it feels like a bit of a risk, but that's my nature, others would see it as not a big deal. If you pulled out, whats your position on finding somewhere else? Will you suffer further costs if you dont find somewhere within a year (i.e. storage costs, increased rent or other commitments)? Also don't forget, Stamp Duty will come back some time earlyish next year so although you may have to spend more now, not paying stamp duty saves you money

Our mortgage deal expires Feb 2021 and HSBC no longer offer that product, so we'll either have to find another house immediately (unlikely) and complete before Feb, or apply with another lender if there are even any suitable mortgage products available at the time (thanks to the pandemic).

No further costs as we're renting with a rolling contract which will continue for the forseeable. Also no stamp duty because we're both first time buyers with a budget well under £500k. The only thing we stand to lose is the money paid to date for the survey, searches and any conveyancing, probably £1000-1200.

 

[HungryHippos]

Are you sure the extension is properly re-doable within that £24K drop? if so it doesn't sound like a terrible idea. You can even reasonably rebuild it how you want (possibly even add a utility room or something?

 

[Robi]

Are you sure the extension is properly re-doable within that £24K drop? if so it doesn't sound like a terrible idea. You can even reasonably rebuild it how you want (possibly even add a utility room or something?

The surveyor stated it's an average of £1500 psqm for a new extension and another contractor said around the same on the phone. We are still waiting for formal quotes but the second contractor seemed to indicate that a full rebuild excluding kitchen would come in at around £20k, which seems to be in the region of what the other contractors were saying the rule of thumb was per square metre.

Yes, we'll still need to factor in a kitchen on top of that £20k, but the kitchen was at the end of its life anyway and we hated it, so it was going to be replaced regardless.

If the contractors come back with figures well in excess of £20k, we'll be pulling out because it'll take too long to save or we'll have to take on even more debt, the latter we're especially not willing to do.

 

[Robi]

Speak of the devil, the second contractor has come back with a formal quotation and even CAD drawings - coming in at £25,535.33. This quote is a for a new shell structure plastered and ready to go. Electrics, plumbing and new kitchen excluded, except for isolation of the varying utilities. The build would include all legal paperwork and certification to show building compliance. Email signed off with "my opinion is still the same – I think the house is fantastic and has fantastic potential".

Once you factor in a kitchen it's going to be circa £30k minimum, which leaves us around £20k short at this exact moment in time.

I believe this includes rebuilding the foundations, which is essentially the worst case scenario, so it may come in cheaper if the foundations are actually suitable.

 

[GhostlyPea]

Im not sure Id want to have that and the work haning over my head. Lets say somehting else goes wrong (Car, roof, windows or whatever), do you have savings to deal with it? If it pushes it back then it could be a long time or never. Pretty negative view but I wouldn;t want it hanging over me if I couldn;t afford it from the outset

- GP

 

[Buffman]

Speak of the devil, the second contractor has come back with a formal quotation and even CAD drawings - coming in at £25,535.33. This quote is a for a new shell structure plastered and ready to go. Electrics, plumbing and new kitchen excluded, except for isolation of the varying utilities. The build would include all legal paperwork and certification to show building compliance. Email signed off with "my opinion is still the same – I think the house is fantastic and has fantastic potential".

Once you factor in a kitchen it's going to be circa £30k minimum, which leaves us around £20k short at this exact moment in time.

I believe this includes rebuilding the foundations, which is essentially the worst case scenario, so it may come in cheaper if the foundations are actually suitable.

So your seller has knocked 24k off for you for a bodged extension that you then have to pay 25k + say 6k for a kitchen for? Doesn't sound like you're getting mich return on this.

Also i believe they wont actually give you a mortgage larger than the price paid for the property i.e. Theyll only give you the 250ish k

Thus if you don't have the capital available it doesn't sound appealing, unless you have a lot to gain from it (particularly nice house/area?). Would it be worth more once you've done it up?

Having lived in a house which needed renovating before, id walk away unless the house has a USP. If you're a first time buyer you've got plenty to gain after April if there is no further stamp duty savings (likelyhood market will stagnate or go down - currently its high)

 

[HungryHippos]

If you pay full price I think the solicitor can arrange to return £24K back to you out of the sale, which should alleviate concerns with the mortgage. Best to check that with the solicitor though.

It's not ideal though and as above it does put you out of pocket, but it's unrealistic to expect them to sort it prior to sale.

 

[Robi]

Im not sure Id want to have that and the work haning over my head. Lets say somehting else goes wrong (Car, roof, windows or whatever), do you have savings to deal with it? If it pushes it back then it could be a long time or never. Pretty negative view but I wouldn;t want it hanging over me if I couldn;t afford it from the outset

That's obviously a worry, but we'll have an emergency fund ready for unforeseen issues such as a boiler failing or leak in the house, but saving for the extension would still hang over our heads until resolved.

So your seller has knocked 24k off for you for a bodged extension that you then have to pay 25k + say 6k for a kitchen for? Doesn't sound like you're getting mich return on this.

Also i believe they wont actually give you a mortgage larger than the price paid for the property i.e. Theyll only give you the 250ish k

Our mortgage advisor confirmed that HSBC will not allow us to keep the original deal at £274k if the price was dropped to £250k.

Thus if you don't have the capital available it doesn't sound appealing, unless you have a lot to gain from it (particularly nice house/area?). Would it be worth more once you've done it up?

Having lived in a house which needed renovating before, id walk away unless the house has a USP. If you're a first time buyer you've got plenty to gain after April if there is no further stamp duty savings (likelyhood market will stagnate or go down - currently its high)

As a result of the change to the mortgage deal and the fact we can now use my Help to Buy ISA bonus (as it's £250k), we'll have an extra £11k capital available. Unfortunately this still leaves us a good £20k short of what it will cost to build a new extension and fit a kitchen. So in answer to your question, no we do not have the capital available and it will take some time to gather it (12-24 months at least).

It is a nice house and it's in a lovely area close to local amenities, schools and transport links, but it does not have a USP. It's like any other semi in the area with an extension.

If you pay full price I think the solicitor can arrange to return £24K back to you out of the sale, which should alleviate concerns with the mortgage. Best to check that with the solicitor though.

It's not ideal though and as above it does put you out of pocket, but it's unrealistic to expect them to sort it prior to sale.

Obviously a question for our solicitor in the morning, but how does that work? I understand the concept of it, but does that not cause issues with the lender? The house isn't worth £274k but we pay £274k regardless, then £24k is held back and paid to us directly after settlement?

 

[HungryHippos]

Obviously a question for our solicitor in the morning, but how does that work? I understand the concept of it, but does that not cause issues with the lender? The house isn't worth £274k but we pay £274k regardless, then £24k is held back and paid to us directly after settlement?

Check with the solicitor if it's possible. The mortgage valuation has come back in at £274K so they seem willing to lend that much, and if you were to go ahead you at £274K you'd be accepting the single skinned extension with no planning etc.

All this does is pays you back the £24K required to make good the work after the sale, if the solicitors agree it then it should be iron clad (aka they can't not do it). From the lenders POV the house will either have the existing extension, or you'll be fixing it which can only add some value.

 

[GhostlyPea]

That's obviously a worry, but we'll have an emergency fund ready for unforeseen issues such as a boiler failing or leak in the house, but saving for the extension would still hang over our heads until resolved.

Our mortgage advisor confirmed that HSBC will not allow us to keep the original deal at £274k if the price was dropped to £250k.

As a result of the change to the mortgage deal and the fact we can now use my Help to Buy ISA bonus (as it's £250k), we'll have an extra £11k capital available. Unfortunately this still leaves us a good £20k short of what it will cost to build a new extension and fit a kitchen. So in answer to your question, no we do not have the capital available and it will take some time to gather it (12-24 months at least).

It is a nice house and it's in a lovely area close to local amenities, schools and transport links, but it does not have a USP. It's like any other semi in the area with an extension.

Obviously a question for our solicitor in the morning, but how does that work? I understand the concept of it, but does that not cause issues with the lender? The house isn't worth £274k but we pay £274k regardless, then £24k is held back and paid to us directly after settlement?

All this sounds more and more like I'd be walking away at this point.

- GP

 

[Delvis]

I'm having a mare at the moment, due to things being pre chosen, not explained properly and various conversations that haven't been passed on we now have bathroom tiles we simple do not like :/

Trying to sort it, but it's not looking great

 

[HungryHippos]

I'm having a mare at the moment, due to things being pre chosen, not explained properly and various conversations that haven't been passed on we now have bathroom tiles we simple do not like :/

Trying to sort it, but it's not looking great

New build? how tied in are you if so?

 

[mid_gen]

Obviously a question for our solicitor in the morning, but how does that work? I understand the concept of it, but does that not cause issues with the lender? The house isn't worth £274k but we pay £274k regardless, then £24k is held back and paid to us directly after settlement?

It's called an allowance. I arranged a £1500 one on my sale. It's really only for small sums for last minute expenses/costs. I very much doubt you can put 24k through as an allowance.

 

[Robi]

Check with the solicitor if it's possible. The mortgage valuation has come back in at £274K so they seem willing to lend that much, and if you were to go ahead you at £274K you'd be accepting the single skinned extension with no planning etc.

All this does is pays you back the £24K required to make good the work after the sale, if the solicitors agree it then it should be iron clad (aka they can't not do it). From the lenders POV the house will either have the existing extension, or you'll be fixing it which can only add some value.

Solicitor confirmed it was possible, but HSBC will not agree to it. The house price would have to be renegotiated to £250k and then lending based on our LTV. The only option would be to take out a home improvement loan 6 months from completion, but this is only possible if we have a minimum of 20% equity in the house. If house prices drop due to the pandemic we could be in a situation where HSBC will not provide the loan and we're stuck with a bodged extension + a kitchen we hate.

Too risky with far too many unknowns involved. I think we're done.

It's called an allowance. I arranged a £1500 one on my sale. It's really only for small sums for last minute expenses/costs. I very much doubt you can put 24k through as an allowance.

Looks like you were right!

 

[HungryHippos]

In your shoes then I don't think you'd have much choice but to pull out then?

 

[Robi]

In your shoes then I don't think you'd have much choice but to pull out then?

Correct. The estate agent knows that now and by the sounds of it the sellers were expecting it.

Money and time down the drain, but at least when we do find the right house, we'll go into the process with realistic expectations and our eyes open from this experience.

Oh well, back to Rightmove.

 

[HungryHippos]

I think with these kinds of things sometimes it's just fate, you'll probably wind up with something better. Once the stamp duty measures end you may even get something a bit cheaper.

 

[Buffman]

Correct. The estate agent knows that now and by the sounds of it the sellers were expecting it.

Money and time down the drain, but at least when we do find the right house, we'll go into the process with realistic expectations and our eyes open from this experience.

Oh well, back to Rightmove.

Sounds unfortunate that mate, but on the flip side it wasnt worth you expending the time, capital and money to only improve a home at a circa £1 in to £1 out ratio is how i would look at it. Means you get nothing out of the time and effort, risk, stress etc involved.

Also, shouldnt you change your help to buy ISA to a LISA? You can put more in it (4k/year) and buy homes up to 450k.

 

[GhostlyPea]

Correct. The estate agent knows that now and by the sounds of it the sellers were expecting it.

Money and time down the drain, but at least when we do find the right house, we'll go into the process with realistic expectations and our eyes open from this experience.

Oh well, back to Rightmove.

Sorry to hear that, however I think it's probably the right call

- GP