09/11/2013 Your Money


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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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