The ups and downs of the market-place HOUSE BUYING Buying a home is usually the largest single investment any- one makes in a lifetime, but in many cases less care is taken than when shopping around for a car or even a pair of shoes. Over the last decade there has been a rush into home-owner- ship as people have been afraid of losing out during the great price surges of the 1970s. More recently single people, of both sexes, have represented the major force in. the house buying market as greater affluence and a shortage of suitable rented accommodation has convinced them of the merits of owning their own.house or flat. Certainly the whole process has become less daunting and the money more freely available than probably at any other time. But just because the process has been made easier there is no reason to throw away caution when house hunting and shop- ping around for a mortgage. For the first-time buyer, making the initial hesitant steps on the home ownership ladder can be the most exciting, depressing, frustrating and an- xious experience encountered. And for the second and third time buyers the whole exercise is filled with danger and disaster at every turn. It is now more than three years since the banks made their first appearance in the general mortgage arena. For a number of reasons, not least that they had more money than they knew what to do with, the banks became extremely willing to lend money for house buying. If the banks did nothing else they simplified the whole process of obtaining a mortgage. All you had to do was pick up a telephone, chat to the mortgages manager, fill in a form and hey presto you were given a mortgage subject usually only to a valuation. Gone were the days of grovelling and pleading with a building society manager who seemed to shake his head more often than he nodded. And very quickly the banks had grabbed a 30 per cent slice of all new mortgage business. Unfortunately the banks' enthusiasm for mortgage lend- ing seems to have evaporated somewhat and most of them impose restrictions of o.ne kind or another. Today a buyer is back on the streets trudging between his bank and building society to see who will give him a mortgage. While building societies have been lending record amounts, the present boom in the market has imposed restrictions which may well lead to a mortgage famine. Certainly reports from some estate agents indicate that queues are starting to form in some parts of the country, and brokers, solicitors and in- surance companies are coming back into their own., - lowest average and highest costs quoted for secondhand house, fulty owner occupied, with registered freehoid tile Source: WooWlch Building Society. For the first-time buyer the initial step is to establish how much a building society or bank is prepared to lend you. The rough rule of thumb guide is still between 21/4 and 2'/2 times your annual gross salary and if you are buying with a friend or spouse then a year's income of the other person will usually be taken into account too. You must also establish what per- centage of the valuation price they will lend. In these less generous days the maximum appears to have slipped from 95 per cent, or even 100 per cent in some cases, to about 85 per cent to 90 per cent. Building societies still tend to be very conservative and are cautious about what types of property they 'will lend on. While they recognize that one bedroom flats and houses make useful starter homes for young single people they prefer two bedrooms because it will be easier to resell later. Once it is established how much you can spend, the gruelling and often depressing, house hunting starts. To make life easier try to decide roughly where you want to live. If it is outside the area you know well then spend some time exploring in order to get a feel for the place, fixing in your own mind which streets or roads are better than others. No matter how specific you are an agent will simply hand you a list of properties which more or less covers your price range. Never be afraid to look at properties which may at first appear more expensive than you can afford - prices are usually negotiable and you may be able to talk the bank or building society manager into lending more money. If vou are buying a flat then be careful of the not-so-hidden extras like service charges and rates as well as utilities. In central London service charges can range from between ?15 to ?80 a week depending on the block. Viewing properties for the first time gives most people a distorted perspective of the house or flat. Obviously with some you walk in through the front door and you want to buy it but that shouldn't prevent you from keeping your eyes open for obvious defects which will cost money to rectify. It is advisable to employ a surveyor to examine any house or flat you intend to buv. Less than one in 10 buyers do so and it can cost them dear. Surveyors charges relate to the purchase price but an average house or flat will cost you about ?150 in survey fees. There is a certain amount of preliminary work you can do yourself. Is there a shortage of electric points in each room? If so it may indicate that the property has been rewired on the cheap and may need further work. Is there a smell of dampness from cupboards under the stairs or the cellar? Do the floorboards move under the carpet when you walk across the room? Do the walls look out of line and is the pointing crumbling away outside? Are Baron Phillips Property Correspordent there slates or tiles mnissing froin the roof? To save yourself some money it is always worth discovering which surveyor the building society or bank is using for its valuation and ask him to undertake a fulll structural sur-vey on your behalf A word of warning: a valuation is only that The surveyor is basically checking that the property on which you have applied for a mortgage exists and is of the size you stated on your application form. He only assesses its value at the time he visits the premises. It is not a survey and it is always advisable to instruct him to survey the property fully. Once you have decided on the property to buy then the frustration and the expenses begin. Generally a solicitor will be needed to undertake the legal aspect of your purchase. Con- veyancing charges are about 1 per cent of purchase price. This will vary a little and it is always worth contacting three or four solicitors and ask them for quotes. Your other major expense will be stamp duty if the property is above ?25,000. This government tax is levied in bands: ?25,001 to ?30,000 will be 0.5 per cent of the entire price, ?30,001 to ?35,000 at 1 per cent, ?35,001 to ?40,000 at 1.5 per cent, ?40,001 and above 2 per cent. For anyone moving from a ?45.000 home to a ?60,000 one all these expenses add up to a considerable sum. According to statistics released by the Wool- wich Building Society recently it would cost a fam-ily as much as ?4,000 to make such a move although savings of up to 40 per cent could be made by not using an estate aeent to sell vour existing home and employing the services of a conveyancing firm to undertake the legal work. Some vendors may feel that in a rising market as at present an auction is the only way to get the best market price for their home. If you decide on this course of action then be prepared for extra expenses such as brochures, leaflets and general advertising to ensure a good attendance at the auction. All types of property go under the auctioneer's hammer these days and prices can start as low as ?25,000 depending on age, condition and location. From a purchasers point of view buying at auction can be a trickier affair. You must have done your homework - such as surveys and arranging the finance - before vou go into the auction room and never be tempted to go over your limit. Remember when the gavel descends you are contracted to buy. The ups and downs of the market-place Costs of buvinci a house