09/11/2013 Your Money

house`buying. It is still complicated, and buyers are always

under Russia to borrow as much as they can. We have got some tips to

guide you through that. `` buyers are always under pressure.

Hello and welcome to Your Money, taking a special look this week at

how to buy a house, and how much you can afford to pay.

Stressful, confusing and more than a little bit jacket. The whole

business of buying a home can be baffling, but we have some simple

tips to get you started. And, how much can you really afford to

borrow? Interest rates would stay this low for ever. The experts are

here to tell us how to protect yourself from rising borrowing

costs. And, thousands lost their money when

high`street shops went bust and stopped taking gift vouchers. Can we

trust them this Christmas? The help for home buyers from the

government, plus tea money from the bank of England have perked up the

housing market. On Friday, one house`builder said its order book

was the best in years. Earlier in the week, a rival builder said its

private sales had jumped 45%. Two housing market experts are with me.

Welcome to both of you. Jane, has there been a rush of sales spurred

on by the cheap money and the government guarantee? Yes,

definitely. We have had buyers ringing us for all sorts of

reasons. People are getting these two schemes confused, but also

because they are worried that prices will start to rise to do next year,

and if they don't jump on the wagon now, they will lose the chance. Not

for nothing is this help to bite scheme nicknamed the hindrance to

buy. Kate, the chartered surveyors trade body this week said some

things never change. One in three people who want to buy a home for

the first time have no idea where to start. The first base to start is

that you have got to understand that, although we talk about

averages and house prices going up on average, the whole market is now

made up of these tiny pockets. You could take one postcode and have

prices going up for two bedroomed flats, prices going down 43`bedroom

homes, and so on. The first thing you have got to do is understand

what is happening to the local market for the specific property you

want to buy. Secondly, advertise a property. So you advertise it for

?200,000, in my be overpriced. Really, you should look to see how

much those houses are actually selling for. You can go on all the

portals and find sold prices. If you find a house you really like, you

can pretty much find out what that vendor paid for it, and that it's

fantastic information. Understand the difference between the asking

price and what you might actually have to pay. Is there really much

leeway for negotiation? I know people going through this process

right now, looking at the price, thinking that price is ridiculous,

but they really wanted and there are so many other people chasing it.

With property, there is always the emotional side of really wanting to

live in that side, and the sensible head, if you are not sure about

paying that price. I have to say, I have always backed off if I think

the house is too much money. Never paid too much. There is a house

price ceiling on every road. Rarely is that ever broken over a period of

time. Check to see what the highest price achieved for a house on the

road, and try hard not to go over that. If you do, you need to be in

that house for some period of time to make sure you can always afford

to stay there. Up to ?125,000, you don't have to pay any stamp duty at

all. You would be looking at costs of 1% ` 2% of the value of the

property. From there up to ?250,000, you are paying 1% in stamp duty.

Above that, you are looking at about 6% of the value of the property.

Always remember, you has to pay your deposit at exchange to make sure

that goes ahead. A lot of people forget that, and it might be ?40,000

you have to put into the bank account of the solicitors. Just a

quick thought on where to get a mortgage will stop some estate

agents will offer a mortgage through the agency, but often that is not

the best deal. Estate agents that work with mortgage advisory firms

come they often own them. Estate agents are often on commission, and

you will find that often they are not wholly independent. They will

miss out on a lot of the smaller building societies that can perhaps

do the niche deals that some first`time buyers need.

With house prices going up, you might feel under pressure to get as

big a mortgage as possible. It might feel affordable now because

borrowing costs are relatively low, but what happens when, and it is

when not if, interest rates go back up again? Higher gas and electricity

bills, the cost of running the car, higher food rises, they have all

stretched many family budgets. Even a small rise in Bank of England

interest rate could leave 30,000 households seriously behind with

their mortgage payments. That means those who had fallen behind would

owe an average of ?700. How much is too much when you are

taking on a mortgage? Most first`time buyers want to know how

much they can borrow, not what they can comfortably afford. The best

thing to do is look at how much you can borrow, look at your budget,

find out what is comfortable and affordable, and then say this is how

much you can borrow, not just spend the maximum that you can. It is all

about affordability. Absolutely. The BBC have got a great mortgage

calculator. I checked at the moment whether people can afford the

mortgage levels at 7%. That is the kind of long`term rates we have seen

in the past. 3% is not a standard rate. It feels strange to be talking

about the possibility of the Bank of England putting up England ``

interest rates. It probably won't happen for a couple of years, and

mortgage rates have not been influenced by the Bank of England

rate for some time. Fixed`rate money comes from sources other than the

Bank of England. That is why your mortgage may not be affected by the

base rate. Any movement in bank base rates will be relevant for sum. Is

there a danger in fixing your rate now that may become too expensive in

a couple of years time? For most people who want to avoid

full ability in the market, fixed rates are still a good idea. It is

unlikely they will fall a lot further. If they did, we can

calculate if it is worth paying the early redemption penalty. Fixed

rates are still the best way forward if you want to set this out. All

this talk about people falling into debt with their mortgage, just

because you are behind with your payments does not necessarily mean

you will lose your home. A lender is obliged to sit down with their

customer and work out a plan. It is not in any one's interest to have a

glut of repossessions hit the market. So the best advice seems to

be that if you are in debt with your mortgage, you must talk to your

mortgage lender. The first rule is talk to your mortgage defend Klay

lender before you default. You could always rent out a room tax`free.

There are lots of ways that you can help yourself through difficult

times if you are having trouble with affordability. And it is in the

mortgage lender's interest to keep you. Yes, and there are rescued

steams available `` rescued schemes. The Thames water demand for higher

bills has been flushed down the toilet. They had wanted an extra 8%

on bills next year. ?29 in real money. The cost of running its

business has gone up. The watchdog said Thames Water had to stick to an

earlier smaller price rise. If you look at `` live outside London, the

next round of price rises for all the water companies comes in in

2015. If you have lived abroad in the last three years, you won't be

able to get a mortgage from the nationwide.

It has changed its rules and says you must have been resident in the

UK for the last three years to get a home loan. It says it needs the rule

to keep its new computers happy. Have you loaned money from the

Co`operative Bank? If so, it you will decide its fate. They will give

details of the latest rescue plan shortly. If you want to vote on it,

you have until the 29th of November to do so.

Barclays Bank says it will move four of its branches into the low`tech

billing macro local Asda supermarket. Cash and check machines

can be used while the supermarket is still open.

Just seven shopping weekends left till Christmas. That is the reaction

that you want on the day, isn't it? Did anyone ever look that happy when

they opened and envelope when they found vouchers inside? Are they ever

safe to buy? Like it or not, Christmas shoppers

are already out. As they examine those seasonal temptations, there is

a reminder that last year delivered one or two less welcome surprises.

When HMV, Blockbuster and, it collapsed, for a while at least,

their gift vouchers became worthless. In the in the case of

Jeffords, thousands of customers who had vouchers were left out of

profit. Some did eventually receive compensation in the form of free

gifts, but there is still no guarantee that your money is safe.

As a result, some campaigners want a change in the law. This lady set up

a website to try and get voucher money ring fenced. Any retailer

going bust would then have to honour those vouchers. If I give you ?10, I

expect to be able to spend ?10. Not be told that actually your voucher

has expired, you can't use it, and by the way, we have just gone bust

as you definitely can't spend it. Amongst the options now being

considered to protect consumers is that idea of ring fencing voucher

money, or extending the consumer credit act. Either idea would be

painful for retailers. As far as the business is concerned, all these

options are quite difficult to administer, and they are also quite

costly. Taking cash flow out of a business in the current economic

climate is difficult. At the moment, customers with gift cards come near

the bottom of the list of creditors. They are amongst the least likely to

get their money back. Those representing the industry wanted

changed. Consumers are currently at the mercy of administrators. There

is no guarantee that consumers can get their money back? No guarantee,

but if a retailer goes under, that is down to the administrator. Most

customers should be fine, but they are being warned to be careful about

where they buy their gift cards. One thing you can guarantee is that

we will bring you the gift of news all week long on the Your Money

pages of the BBC News website. You can follow us on Twitter. Back again

next week, see you then, thanks for watching us today.

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