On the move

As the property market emerges from the doldrums, the streetwise are getting a move on. Simon Read and Ken Welsby introduce a special five- page report on how to join them
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The Independent Online
Estate agents love to talk up the market-place, and always claim that the next property boom is "just around the corner", but the latest evidence suggests that the housing market really is moving out of the doldrums.

Figures released by the Incorporated Society for Valuers and Auctioneers reveal that the time taken to sell a property has halved in the last 12 months. In the first three months of 1996, it took an average of 14 weeks from the time someone put their home on the market to the time they moved out. Six months ago that had been cut to 11 weeks; now, according to the ISVA, it takes an average of just seven weeks to sell a property.

House prices are on the increase in much of the country, with the average price having risen by 7.2 per cent over the year, according to the Halifax's latest property prices survey. But the boom is restricted to London and the south east, with London prices up 4.5 per cent on average in the first three months of the year. Elsewhere, the picture is mixed, while in the north, house prices in fact fell by 0.9 per cent in the first quarter.

Prices are rising more quickly in some sought-after areas because there are too few new properties coming on to the market.

Brighton and Basingstoke, for instance, are both showing upward signs, according to the Nationwide building society. In Brighton, prices have increased by 6.1 per cent over the year and 6.5 per cent over the quarter, while Basingstoke has seen prices rise by 12.4 per cent over 12 months, and 7.2 per cent over three months.

The average price of a house in Brighton now stands at pounds 64,588, according to the Nationwide, while in Basingstoke the average price is pounds 77,811.

Geoff Holden, a surveyor with Parsons Son & Basley, of Brighton, reports that while "the heat seems to have gone out of the market, prices continue to creep upwards, reflecting the continued scarcity of property in all price ranges".

For prospective buyers, this means that finding the right property at the right price is going to get harder and harder - and matching your precise requirements with what's available may prove to be well-nigh impossible.

Location remains a strong factor in deciding the price of properties; that's one reason why many buyers move to the suburbs - or even far beyond - in the hope of finding the ideal property at a price they can afford.

But there can easily come a point when the added cost of commuting outweighs the saving made by moving out of the city - to say nothing of the time and effort involved. What is the cost of a season ticket, and station car parking? Will you be happy adding an hour or more to the beginning and end of every day?

It's crucial to work out what you can afford - and how much you can borrow - before spending a lot of time house-hunting.

Lenders, scarred by their exposure to borrowers with negative equity, are less likely these days to lend you ridiculous earnings multiples. But with lenders allowing people to borrow up to three times their annual salary, most people should be able to find a home that meets their needs.

If you are buying jointly, your partner's income will be added to the equation; put the highest earner up first, so that you can borrow as much as possible. Of course, it's silly to over-borrow - so make sure you know exactly how much the repayments will be for any particular loan.

There are 100 per cent mortgages available, but the bigger the deposit you have, the better mortgage deal you can get. Borrowing less will also mean lower repayments.

The other decision to make is what kind of mortgage to choose. There are various schools of thought extolling the virtues of a simple repayment mortgage against an interest-only loan linked to an investment product. The former guarantees that you will pay off your debt within the mortgage term, while the latter relies on your investment growing enough to cover the debt. Expert advice can help you make a decision, but sign nothing until you understand exactly the pros and cons of each.

There are other costs to consider when calculating how much you can afford. Removal and legal costs will, of course, need to be factored into your calculations - but the pain may be eased if you are offered cash back or another contribution by your mortgage lender. But it could be a mistake to choose a mortgage purely on the basis of a cash offer.

Your solicitor will send a statement showing the amount needed for completion, a week or so in advance. This will cover both your personal equity in the house - the part not covered by the mortgage - the charges, and, of course, the fees for the work involved.

If money is tight and you are known to the solicitor, you could ask the solicitor not to include the fees in the "completion monies" but to bill you at the end of the month - by which time you will have collected another salary payment.

There are ongoing costs in addition to the monthly mortgage payments. If you have a repayment or PEP mortgage, you should make sure that your life assurance is enough to pay off the loan. This will ensure that, if the worst happens, your partner will not be forced to sell up and have to start searching for a new home. Life cover is normally part of the package with endowment policies.

You should also consider a mortgage protection policy that will help with mortgage payments if you should fall seriously ill or be unemployed. Remember that state benefits for mortgage-payers are far less generous than they used to be. And, of course, it's essential to have buildings and contents insurance - so that you are covered if, literally, the roof falls in. Many lenders try to sell you their own insurance deals - but you may find it worthwhile to shop aroundn

Taking the pain out of house purchase

Look closely at your finances and talk to lenders to work out what you can borrow and what you can afford - they may not be the same

Check out the mortgage deals before you commit to a lender; you will usually have to pay the valuation fee with your application

If the property is more than 20 years old, arrange for a chartered surveyor to provide a report on condition or full structural survey

Instruct your solicitor. Agree when and how you will pay the deposit on exchange of contract and the rest of the purchase price

If the survey reveals problems - take professional advice. You may want to negotiate a price reduction to pay for remedial work

When you get the formal mortgage offer, sign and return it without delay to ensure that your solicitor will have the money on time

Don't forget to arrange final utility bills at your old address - and arrange supply at your new one

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