Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Welcome to Maren Talks Your Money, the personal finance edition
Speaker 2: of Meron Talks Money and these bonus podcasts we talk
Speaker 2: about the best strategies for making the most of your money.
Speaker 2: I'm Maren Zumset Web and with me senior reporter and
Speaker 2: author of the Money Distilled newsletter, which is brilliant. Do
Speaker 2: sign up. John Steppeck Hi, John, Hi, ma'am right. We
Speaker 2: are doing a housing series at the moment and we
Speaker 2: have got a really great guest on today. We are
Speaker 2: speaking with Anthony Emerson. Anthony is the director of mortgage
Speaker 2: brokers Trinity Financial, London based firm specializes in bespoke mortgage
Speaker 2: advice and Anthony is here today telling us all the
Speaker 2: things that they don't tell you about buying your first home. Hi, Anthony,
Speaker 2: thanks for joining us today.
Speaker 1: Hi, and thank you for having me.
Speaker 2: Okay, so here I am. I'm a young person. I've
Speaker 2: been thinking about buying my own home forever. I enjoyed
Speaker 2: saying I'm a young person. That hasn't happened for a while,
Speaker 2: but you know there was a day. So here I am.
Speaker 2: I'm a young person. I've been saving up I've built
Speaker 2: up a deposit. I've been you know, nagging my grandparents.
Speaker 2: My parents, They've all handed over a couple of grand
Speaker 2: here or there. I've finally got enough. I know what
Speaker 2: I'm looking for. I've been dragged around the place by
Speaker 2: a state agent. Possibly I should have used a buying agent,
Speaker 2: but there'd be a different podcast. And I've found the
Speaker 2: place I want. I'm pretty excited. What happens now.
Speaker 1: Now is the time that you really have to start
Speaker 1: drilling down and deciding on exactly what mortgage product you
Speaker 1: want to do, exactly what kind of loan size you
Speaker 1: want to take. I think too many people, when they're
Speaker 1: focusing on trying to go and buy a house, focus
Speaker 1: on all of the costs up friends, and they try
Speaker 1: and find out how much they can borrow, how much
Speaker 1: that would cost, which is fine, but they should use
Speaker 1: that as just a guide, and then once they find
Speaker 1: the that they want, that's the point at which they
Speaker 1: need to have a conversation with their mortgage broker or
Speaker 1: if they've gone to a bank, direct their bank to
Speaker 1: sort of say, well, what is your plans with this house,
Speaker 1: what do you want to do with it? How much
Speaker 1: money do you want to spend on it. Let's look
Speaker 1: at your deposit. Can we borrow a little bit more
Speaker 1: and hold back some of your deposit to facilitate those works?
Speaker 1: What kind of rate do you want to have? Because
Speaker 1: until you know the property you want to buy, you
Speaker 1: don't know what you want to do with it, and
Speaker 1: you also don't know how you'd like to finance it
Speaker 1: and do work, etc. So it's at this point now
Speaker 1: when you found a house that you want to buy,
Speaker 1: that you will now know more about it and you
Speaker 1: can make a better choice as to the products and
Speaker 1: the mortgage that you take out.
Speaker 2: Yeah, there are also a lot of costs that people
Speaker 2: don't necessarily think of when they're looking for a house.
Speaker 2: They think, oh, you know, I've got a deposit of
Speaker 2: thirty thousand pounds, the house cost two hundred thousand pounds, etc.
Speaker 2: Look at it like that, and they're not necessarily taking
Speaker 2: into account how much they're going to have to pay
Speaker 2: in stamp duty, how much their survey is going to
Speaker 2: cost them, what they're paying the estate agent. These other
Speaker 2: things that are cash costs right.
Speaker 1: There are I mean, you've got to pay your conveyancer
Speaker 1: to do all their searchers and to do the conveyancing process.
Speaker 1: The surveyor needs to be paid for to at least
Speaker 1: have a basic mortgage survey. A lot of the times nowadays,
Speaker 1: the lenders are trying to give you a free survey
Speaker 1: as a bit of an incentive to take up their
Speaker 1: policy rather than somebody else's. But if you want to
Speaker 1: have a more detailed server or need even have eyes
Speaker 1: on the survey that the bank conducts themselves, you need
Speaker 1: to facilitate some sort of money for that. Now, there
Speaker 1: are generally three types of survey levels. You've got a
Speaker 1: basic mortgage survey, you've got your home buyer survey, and
Speaker 1: you've got a full structural survey. To do a full
Speaker 1: structural survey and only really advocate that on a house
Speaker 1: where it's a freehold house where you own the entire property,
Speaker 1: because there's no point in doing a full structural survey
Speaker 1: on a flat because the surveyor won't have access to
Speaker 1: all of the other points of the property to be
Speaker 1: able to do the inspection. That can only inspect within
Speaker 1: the walls of your property and maybe the communal errors
Speaker 1: and maybe do a visual from outside. So I think
Speaker 1: if you're buying a flat, nothing more than a hound
Speaker 1: by a survey would probably be recommended.
Speaker 3: Do you think surveys are worth it? Because I've bought
Speaker 3: a few homes in my lifetime, and what I have
Speaker 3: found is that even the best surveys miss lots of things,
Speaker 3: and there's also absolutely no comeback whatsoever as far as
Speaker 3: I can see from the stuff being missed. And then
Speaker 3: most occasions have been better off getting a friend who
Speaker 3: was a builder. They come around, kick the tires, make
Speaker 3: sure it wasn't subsiding into the street, and then just
Speaker 3: go ahead with the basic kind of mortgage survey. Is
Speaker 3: that a typical experience because it looked to be like
Speaker 3: a waste of a couple of grand.
Speaker 1: It can be, to be honest with you, because the
Speaker 1: survey reports are incredibly caveated to say, maybe I couldn't
Speaker 1: see all of the subfloor, so therefore I'm not entirely
Speaker 1: sure as to whether or not there was dry rot
Speaker 1: or any of those things that they might not have seen.
Speaker 1: And it's incredibly hard to fully inspect a property where
Speaker 1: you don't have access visually or otherwise without drilling holes
Speaker 1: and sending down cameras, et cetera. To be able to
Speaker 1: do all of those things but there are quite a
Speaker 1: few people who don't have the skills or indeed the
Speaker 1: knowledge to be able to walk around at property and
Speaker 1: spot issues. We do property day in and day out.
Speaker 1: We've come across everything under the sun. If I walked
Speaker 1: into a property, I'd have a very higher educated viewers
Speaker 1: to exactly what those problems might be than your first
Speaker 1: time buyer who's never ever done that sort of thing before.
Speaker 1: So the survey could give you a little bit of
Speaker 1: a guide as to where problem areas might lie, but
Speaker 1: further investigation is always needed. So they would say, the
Speaker 1: electrics look like they are quite dated, should probably get
Speaker 1: an electrical inspection done. The plumbing looks like that there
Speaker 1: might be some issues. You should probably have a drain
Speaker 1: inspection done. There's areas of timber and damp. You should
Speaker 1: probably have a timber and damp specialist come and do it.
Speaker 1: So the value won't give you a cost and a
Speaker 1: guarantee that is the problem and this is how much
Speaker 1: a cost to fix because they don't provide that service.
Speaker 1: So they always recommend you to go and have more
Speaker 1: investigation with those specialists to be able to know is
Speaker 1: it worth it to certain people? Yes, because of the
Speaker 1: fact that if you don't know what you're looking at,
Speaker 1: and you walk in and you go buy a property
Speaker 1: and you find out that the electrics are shot and
Speaker 1: the plumbing's not up to scratch, it could cost you
Speaker 1: a significant amount of money and you might have had
Speaker 1: that flagged. Yes, they missed some things, but I think
Speaker 1: that's just a human problem. And also certain properties don't
Speaker 1: allow you to inspect all areas.
Speaker 2: What's your view on the idea of getting a mortgage
Speaker 2: and principle first before you actually hunt down the house,
Speaker 2: so that when you get to that today, the seller
Speaker 2: knows that your genuine in these areas, I.
Speaker 1: Think it's definitely worth doing. I think if you're going
Speaker 1: to go down the road of trying to buy yourself
Speaker 1: a house, surround yourself with the right people, get yourself
Speaker 1: a broker, get yourself a solicitor that we'll be able
Speaker 1: to help and advise you on it, and then do
Speaker 1: all the fundamentals first so that you have no surprises
Speaker 1: coming down the track. You know, speak to the broker,
Speaker 1: lay out all of your information so that you know
Speaker 1: how much you can borrow. You know where some of
Speaker 1: the problem points might be in the way that you're
Speaker 1: paid and the structure of your bonuses. We have problems
Speaker 1: with people believing they can borrow when they're getting restricted
Speaker 1: stock units as part of their bonus package. Finding out
Speaker 1: too late that you can't actually use that might mean
Speaker 1: that you've wasted all that time and effort searching for
Speaker 1: a property that you can't fundamentally affward. So then we
Speaker 1: always suggest that people check their own credit report, get
Speaker 1: a copy of that to be able to provide to
Speaker 1: the broker to say, these are all the debts that
Speaker 1: I've got, because that credit reference agency is what the
Speaker 1: lender is looking at, so there's any surprises on that
Speaker 1: the lender is going to be able to see them,
Speaker 1: and then go and get yourself in agreement and principle
Speaker 1: for generally the highest possible purchase price that you could
Speaker 1: afford giving your income in your deposit situation. At least
Speaker 1: then you know where your ceiling is and you can
Speaker 1: come in and find the property that is underneath that,
Speaker 1: and you should then have no surprises. The agreement and
Speaker 1: principle is always done with one lender, in particular the
Speaker 1: lender that will probably give you the highest possible loan amount.
Speaker 1: But when you find the property you want to buy.
Speaker 1: That's the point at which you will know more about
Speaker 1: how you want to structure that loan. How much money
Speaker 1: might do you want to hold back from your deposit
Speaker 1: to maybe do a bathroom refurbishment because the property needs it.
Speaker 1: Whereas being able to borrow that money at the outset
Speaker 1: and hold back some of your deposit to facilitate that
Speaker 1: work might be worth you doing. Now, that might mean
Speaker 1: you change leaning to value, and it might mean that
Speaker 1: you change product, but it might be worthwhile for you
Speaker 1: to do that because you can enjoy the house more.
Speaker 1: And then we'll advise on people to be able to
Speaker 1: sort of get that agreement principle, find your property product
Speaker 1: that you want to be put into, and then we
Speaker 1: start the application again. It might be the agreement prints
Speaker 1: with that lender in particular. Then the full application, survey,
Speaker 1: mortgage offer over to the solicitor to push to get
Speaker 1: you to the point of exchange where you finally have
Speaker 1: some knowledge that you've secured that house or flat.
Speaker 3: What should you expect during that process? So you agree
Speaker 3: a price, you get to your mortgage done, you get
Speaker 3: to exchange. What happens next.
Speaker 1: So once you've reached exchange you generally confirm with your
Speaker 1: solicitor your solictor LEO is worth the vendor solicitor, and
Speaker 1: between the two of them you agree an exchange date
Speaker 1: a completion date from the point of exchange. Now, if
Speaker 1: you're in a chain where there are a number of
Speaker 1: different properties all linked together, you buying the first time
Speaker 1: buyer generally is the first step in that chain, and
Speaker 1: then after so that every other house moves on the
Speaker 1: same day, everyone in that chain needs to be able
Speaker 1: to agree the completion date, unless, of course, one of
Speaker 1: those people are willing to sell the house and move
Speaker 1: into rented accommodation or go live with family, or whatever
Speaker 1: it might be. Once everyone's finalized that date, you agree
Speaker 1: it your exchange, You pay your five ten percent over
Speaker 1: to your solicitor, and you are then at the point
Speaker 1: where you've secured that property up until the point of exchange.
Speaker 1: The vendor or you could walk away with no redress
Speaker 1: to the other party after exchange, there are penalties if
Speaker 1: you walk away for whatever reason. From a mortgage point
Speaker 1: of view, you just need to make sure your mortgage
Speaker 1: offer is still valid until after the point of completion
Speaker 1: is expected to happen.
Speaker 3: And typically Howlong's an author are valid for on.
Speaker 1: A purchase or a remortgage. A new mortgage offer is
Speaker 1: generally valued for six months, but when you get given
Speaker 1: the offer, there will be a date on that offer
Speaker 1: that will state the valid period of that offer. And
Speaker 1: it's something that just definitely needs to be put in
Speaker 1: everyone's diary.
Speaker 2: So before the actual exchanges was horror stories all over
Speaker 2: the place on both sides about being dizumed, gazunders etc.
Speaker 2: So someone who's been through this process over and over,
Speaker 2: you've got any tips for us on how to avoid
Speaker 2: that kind of nasty surprise and the negotiation process.
Speaker 1: Unfortunately, there is no real way of stopping the gazumping gazundering.
Speaker 1: It's very very poorly taken by all parties other than
Speaker 1: the vendor because they're generally getting more money. But if
Speaker 1: somebody has made a viewing on a house and the
Speaker 1: vendors even allowing viewings to continue, it's a sale market
Speaker 1: where if somebody comes in and offers you a higher price,
Speaker 1: you can by all means take that price. It is
Speaker 1: a problem with the UK buying system because it takes
Speaker 1: so long. There could be massive shifts in the economic
Speaker 1: stability of the country between the points of agreeing a
Speaker 1: sale and actually completing. So that process allows for renegotiations
Speaker 1: to happen, but their renegotiations happen for different reasons. You
Speaker 1: could find a property that you have your inspection done
Speaker 1: on it, and you find out that there is a
Speaker 1: problem with the roof, and therefore you might want to
Speaker 1: get some more detail on that, and you might want
Speaker 1: to renegotiate the price because of the fact that the
Speaker 1: roof has got some issues. Up until the point of exchange.
Speaker 1: All of that sort of stuff can happen, and there
Speaker 1: also might be a change in your circumstances, right because
Speaker 1: a person might lose their job in between, not be
Speaker 1: able to afford it, and they might want to pull out.
Speaker 1: So it works both ways. But gazumping is not a
Speaker 1: pleasant experience for anyone involved.
Speaker 3: No, I mean, just to be clear. And Scotland the
Speaker 3: system is different, so again you're locked in a much
Speaker 3: earlier period. But what's talk about the system in England
Speaker 3: and wheels here. But yeah, from that, so we get
Speaker 3: exchange and then we get completion and you move in
Speaker 3: and that shoe. You're happy, everything's done. Is there anything
Speaker 3: else in the process that you'd like to highlights being
Speaker 3: an area things often fall through or mistakes are made.
Speaker 1: I think one of the difficulties is when you buying
Speaker 1: in a long chain, you reliant on a number of
Speaker 1: different third parties to all agree, and to get human
Speaker 1: beings to agree is difficult with lesser numbers, but when
Speaker 1: you get a lot of people involved, it can be
Speaker 1: rather tricky to get that done. One of the things
Speaker 1: that we see a problem with is land registry delays,
Speaker 1: slowing things down. When somebody has bought a house, some
Speaker 1: land registry delays or up to a year two years long.
Speaker 1: So if somebody bought a house cash, has renovated it
Speaker 1: and is trying to sell it within a six month period,
Speaker 1: it's highly unlikely that it would even be properly registered
Speaker 1: on land registry. That could cause a problem. If somebody
Speaker 1: has carried out extensive works to the property, have they
Speaker 1: got the right permissions? Have they got the right warranties?
Speaker 1: Those things are sometimes overlooked by people who have just
Speaker 1: decided while I'm doing the renovation myself, therefore these things
Speaker 1: aren't applicable to me. But when you come to sell
Speaker 1: the property, that person wants some sort of sureties that
Speaker 1: things were done right and then you have the right
Speaker 1: warranties in place, and that can cause extra costs because
Speaker 1: they might need to go and get a retrospective warranty.
Speaker 1: Extra delays, extra costs for you as a buyer because
Speaker 1: your solicitor and now has to do these extra pieces
Speaker 1: of work. So they're not huge sort of things, but
Speaker 1: there are little niggling problems that can protrap that sort
Speaker 1: of completion period.
Speaker 3: Great well, thanks Gaing I and I really appreciate your team,
Speaker 3: and I think hopefully I should give them everyone a
Speaker 3: bit of view of the painful process of buying a housset.
Speaker 3: It doesn't have to be painful, you'll tell us that.
Speaker 2: Thanks for listening to this week's Maren Talk to Your Money.
Speaker 2: If you like us show, rate review, and subscribe wherever
Speaker 2: you listen to podcasts. Also be sure to follow me
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Speaker 2: unders Sport stepech. This episode was produced by Summersidi and
Speaker 2: morosesandam sound designed by Blake Maples. Special thanks of course
Speaker 2: to Anthony Emerson. Questions and comments on this show and
Speaker 2: all our shows are always welcome. Our show email ismerinmoney
Speaker 2: at Bloomberg dot Net.