First Time Buyer - Looking to sell after 5 years

Durrow29

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I am a first time buyer looking to get a mortgage. I expect to be approved for a 250k property. I am looking at a 2.65% 3 year fixed rate.

I intend to sell the property in around 5 years and build on a site I have. I expect I will build a house costing 300-325k.

  1. I may end up buying a new build and taking advantage of the 10% FTB grant
  2. I may spend a lot less than the 250k I was approved for
The main reason I dont build now is I dont want the hassle of a new build and a few other reason I dont need to get into.

Questions I have.
  1. I have no clue about purchasing a house what or where can I find out the key things to check.
  2. What are the pitfalls of buying now and intending to build a few years later. I am aware I might lose my first time buyers grant.
  3. Will getting a 150k mortgage now and needing maybe a 300k mortgage in 5 years cause me any issues? 20% deposit wont be an issue.
 
Don't see any major problems with your plan. Except to say, things might not go to plan!

The following is more general FTB advice.

If you can, call upon your parents or someone of a similar generation to help in the house viewing. Another set of eyes / different viewpoint is invaluable.

Try and find a property where you can add value; but be wary of taking on too much work.

Be prepared to put the time and labour into it; the first bit of painting or wood work you do will be messy but you'll get better. Hire professionals for plumbing & electrics.

Ask all the relatives for any unwanted curtains, rugs, sofas, bed frames. Buy a wet & dry vaccum cleaner & learn how to sew (if you can use power tools you can use a sewing machine; the reverse is also true).

If you have spare bedrooms - rent them out; you can earn up to 14k a year tax free. After two years you could have a nice chunk paid off your mortgage.

If you decide to get tenants, anticipate the pinch points. Buy two washing machines (they can be stacked), a covered outdoor drying area and larder fridge.

Good luck!
 
You could try project your financial position in 5 years for the two options and work out how much savings/ equity will you have?

You need to consider that property prices might drop in the mean time, perhaps enough to leave you owing more than the house is worth in 5 years time. Of course if you're paying rent, then it's unlikely they'll drop so far as to wipe out the savings overall.

Also factor in the added overhead of property ownership, property tax, insurance, and maintenance (look out for low houses that won't require much work over the 5 years), and be prudent with anything you do buy for the temporary home.

You will likely have to sell the house before embarking on the build. Don't accumulate too much stuff in the meantime unless storage isn't an issue.
 
Horses for courses; but my advice to family member who is also FTB is to steer well clear of apartments.
 
Thanks for the replies so far. I done some financial analysis on three different properties

250k, 180k and 140k (New Build). Assuming no price drop id expect to 70k equity in the 140k house and around 58k in the other two.

The 140k house seems a no brainer as the interest works out at 190 a month as a 15 year mortgage would suffice. Id expect to pay 750 in rent for that house. The rent it could yield is also likely the same as the other two or very little in the difference. This means renting the house would pay the mortgage if something went wrong.

A couple of questions now

  • 30k difference between the show house and and the other house. They estimate PC costs at 5k. Does 30k seem like a fair price to pay for a turn key house.
  • I reviewed the property register for houses in the estate and worked out the average price a house made in the last two years. The estate agent was a little bit insulted in my research. He said I was wrong. The house next door (identical) cost 138k and the house I am looking at is advertised at 165k. Is the register always accurate?
 
The price of NEW houses on the register excludes 13.5% VAT.

Did you make that adjustment?
 
The price of NEW houses on the register excludes 13.5% VAT.

Did you make that adjustment?

Well this is why I am here to ask questions :) That will help me a lot. I was looking for something like that. Would there be anything else impacting it?
 
If you are looking to sell in 5 years, I would steer you away from a new build.

As a FTB you are generally better to buy something where you can add value.

I gather you are not buying in the Dublin area, so make sure you check out transport links, schools, churches, shops etc. Those things may not be important to you right now, but they will be when you come to sell.
 
I have no real interest in trying to add value as that requires work. If I was willing to put in work id just build now.

My hope was that I have a 10% buffer in how much the house might drop with the FTB scheme.
 
Where would you see the advantage? I would pay 750 a month rent vs 190 a month in interest by buying.

I dont want to come across as wanting to hear what I want to hear.
 
I would pay 750 a month rent vs 190 a month in interest by buying.
You should look at your total monthly cost as well as maintenance, utilities, insurance, property tax etc., Don't forget your legal fees as well and thats x2 if you sell & buy in 5 years time.

If you were interested in buying something to add value & put in some work on it; you'd have a better chance of the property increasing in value in the next five years.

If you buy a turn key property you are losing your FTB and potential Help to Buy grant (or whatever name they are putting on it) to buy a property that may or may not sell for what you pay for it.

If you buy a new property, you can only get your Help to Buy once,, you are paying a premium for it, and like a new car, I believe you need to be in it for more than five years to make it worth your while.

Note: discussion on property prices is not allowed on this site and the above observations are in regards to the relative movement in value on new vs. second hand properties.
 
Ya, those are good points about (maintenance, utilities, insurance, property tax etc).

Now I am just left a little confused. I will keep reading and looking for advice as I go through the process. I may also bump the thread again.
 
Just bumping this. I have viewed a house I like. It is a new build on the market for 165k. I am willing to pay 150-155k for the property. This seems about right based on the property register.

The property is more or less a shell and they will carry out the work once a sale is agreed. The property will include everything with the exception of floors and appliances. I get a decision on colours etc.. I also have the option of some upgrades aswell.

What should my next steps be?

Should I view the property with someone who has a better construction knowledge than me?

I understand I will need a legal firm involved.

Do I need to be somewhat careful in what is agreed in terms of the work done to the house.

The estate agent also said no lower bids would be accepted and said it in a rather stern manner. I find it slightly hard to take seriously when you can see the house next door was sold for 157k.
 
If it's a new build in an estate of new builds then I very much doubt your lower offer will be accepted.
 
Ive looked at the PPR and the majority have gone for sale under that value. Even in recent times.

You are correct though, it was not entertained.
 
I'm open to correction but I have a memory the property price register doesn't include VAT for new builds?

checked and yes that's the case:
[broken link removed]
" If the property is a new property, the price shown should be exclusive of VAT at 13.5%."
 
Well I assume 137k +13.5% is approx 156k. Unless I am once again missing something obvious.
 
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