Kitchen or bust!

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Great news – we didn’t just have David for today, we’ve got him for THREE WHOLE WEEKS (excluding this Friday when he has to go and do something else) and that hasn’t involved either shackling him to the old tying-up rings in the cow byre or bribery with baking!  The bad news is that come the 24th, he will be tied up on a new-build house for at least 6 weeks, so we’ve agreed that we’re all going hell for leather to get the floor down, the kitchen in, the window and door surrounds done, the dado rail installed round the top of the panelling upstairs, the window seats topped off, the fireplace surrounds done and the landing cupboards built.  He’s kindly said he’s happy to come over on a Saturday when he’s working on the new-build if we need him, but I’m hoping that three weeks will be enough to get us mostly sorted.

So July is definitely going to be a very, very spendy month.  David went into Thurso with a big shopping list of wood, so I have to go into Rembrand and pay for that on Wednesday, and this evening I’ve been researching kitchen appliances.  Looking at my rather neglected original budget, I had in £2,000 for all appliances, and I am very proud to say that I’ve come in at £2008.96 including free delivery to the Highlands.  That’s an oven, hob, extractor fan, dishwasher, washer-dryer and fridge freezer, all of them given favourable Which? reviews.  I used Currys PC World via Quidco* (2% cashback!) and they had some on-site discount codes as well, which took £160 off the total.  Very pleasantly surprised that they offered free delivery to my postcode, which generally gets lumped in with Orkney as it starts with KW (Kirkwall) even though it’s on the mainland.

Everything should be turning up on Tuesday 11th.  The plan is that this week David works on the upstairs rooms while Mick and I get downstairs prepped and painted.  Next week David will move downstairs, making sure the floor is laid in the kitchen by the end of the week.  The third week we’ll try and get Dougie in on the Monday for the joint visit and that will be kitchen installation week.  Wish us luck – we’re going to need it!!

Mortgage affordability rules

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Interesting article from the FT about the Bank of England’s overhaul of mortgage affordability rules.

Basically instead of stress-testing applications to 3% above bank rate, lenders must now stress-test applications to 3% above their reversion rate, i.e. their standard variable rate.  For me that means my lender will now have to judge my application against a rate of 7.24% for the residential and 7.99% for the commercial.  I’ve run the numbers myself this evening and we’re definitely okay on the commercial side.  The residential – I don’t know.  I think we’re okay; they told me when I first applied that they’d lend us something like £168,500 maximum (that was taking into account the 0% card payments), but we were capped to £135,000 because of loan-to-value, so I hope that’s enough wiggle room to deal with the extra.

It occurred to me this week that I never rang back the holiday letting agency after they came for their visit last month, and as we get closer to decorating, I thought it might be a good idea to see if they had any tips for me, so I dropped them an email and the rep who’d come out to see me rang me back a couple of hours later to say how delighted she was to be taking on the houses and to have a chat.  Basically there is no fixed checklist to getting a 4* rating (which is what I’m going for) and the house doesn’t have to be completely 4* throughout, a few 3* items, as long as they’re not major items, will not lower us a grade.  Basically for a 3* think ‘Good’, for a 4* think ‘Very Good’.  Tesco crockery is fine as long as it’s Tesco Finest not Tesco Value, as it were.

It does mean I have to rethink my furnishing budget, as my plan of upcycling secondhand stuff is very likely not going to be acceptable.  I’m going to need two leather sofas, a king-sized bed, three 3ft single beds, 3 chests of drawers, 5 bedside tables, 2 wardrobes and a kitchen table and chairs (already have an oak coffee table), along with all the other stuff you expect to find in a comfortable holiday cottage, like a decent television, soft Egyptian cotton bed linen, fluffy towels, pictures on the walls for rooms that don’t have a feature wall (apparently this gets you extra points towards 4*) and everything you might expect to find in your kitchen at home.

First on the very big shopping list though is the kitchen appliances.  I sent Dougie a text the other day, as we passed him on the road and gave him a wave, to check that I was correct in my assumption that I needed to get David to lay the floor downstairs and then I needed him and David on site together for a day along with all the kitchen appliances so that they could talk layout and wiring before David starts installing the kitchen units (and I cannot WAIT for that to happen because they’ve been taking up 80% of my study since October!)

In the meantime, I am plastering on (I’ve nearly caught up with Mick now, just one more wall to go until I’m at a stop because he hasn’t finished the plasterboarding!) and after nearly three months of managing not to plaster my face, the final bedroom ceiling got me!

(The headphones are because I’ve been listening to Rob Dix’s excellent property podcast while I work – check out his website at propertygeek.net)

A tale of two sanders

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I took a break from the plastering today and decided to work on the staircase instead, which meant getting these two out.

And putting the dodgy-looking mask on.

I have no idea what John Angie painted the paneling with, but it’s vaguely rubbery when heated and really doesn’t want to come off.  It’s taken me two sheets of 60 grit on the big sander to get this far.  I was going to paint the whole thing a matt chalk white, but thinking about it, this is the hall, and our doggy guests are going to walk straight in here and have a good shake if it’s raining – so I think I’ll paint the vertical boards and the inside panel of the stair side green to match the front door, then the bannisters and the frame around the stair side panel can be white.  Should show up splatter marks less, and I’ll make sure I do the front wall and inside the front door with kitchen and bathroom paint, so it’s wipeable!

You can see where the woodworm have had a good old munch under the paint.  No active ones, thank goodness.  This will take a little bit of wood filler to smooth out.

In other news, I finished plastering the north bedroom yesterday.  Those little dormer windows that I was insistent we opened up so you could stand in them, have 13 separate joints to plaster alone!

Finances-wise, there’s good news and bad news.  The good news is that the mortgage lender says we can have the mortgage.  The bad news is that we can only do it if we take the commercial holiday one on the same day and use the cash released to pay off the 0% cards immediately?  Why?  Well, when their underwriters looked at the residential application they realised that we were going to own three houses, but neither of the two holiday lets were currently bringing in any income.  They use set figures for each category on their affordability calculator and they took the decision to triple the lines for council tax and utilities (which I could argue is mildly unfair because two of them will be empty, but there you go) and that brought us down on the unaffordable side again while we still have the credit cards.

Of course, Ethel’s isn’t mortgageable yet because (a) it’s still sitting on croft land and (b) it doesn’t have a kitchen or bathroom.  Brian at SGRPID tells me that I should work on three to six months for the sale of the land to complete, and Mick’s taking the first two weeks of July off work so we can blitz the house ready for David to come back and lay the floor and install the kitchen, but the seller is now very nervous about timescales because her decrofting took 14 months and she understandably doesn’t want to wait that long.  I’ve spent the past few days talking to bridging loan companies and brokers, but of the ones that will consider Scotland at all, absolutely none of them will consider a house this far north, so I’m just going to have to cross my fingers and keep hassling the various solicitors.

The other solution would be to pay the cards off, which we could do from savings, but then we wouldn’t have a deposit without mortgaging Ethel’s, so we’re in the same fix.  I did vaguely think about trying to crowdfund paying off the cards by advance selling weeks, but given our quote from the agency was under £15,000 for Ethel’s and we need nearly £50,000, it’s a bit of a non-starter – and I don’t think the agency would be very pleased if I told them all the prime weeks for the next two years were sold!

Finally, we’ve been keeping up with our crofting duties.  Stuart has been up on the hill and cut our peats for us – they look like very ancient library books!

And there are a lot of them.

They’re all laid flat for drying one side now, and when we’ve had a few weeks of sun and wind, we’ll go back up and put them all into a herringbone pattern or stand them up into Stonehenge-type formation to get the other side dry.  They’re pretty big – each slab is about 3 inches thick and just under A3 paper-size.  And they’re HEAVY!

The night before last we got the first big weather-dependent job of the summer done and now have some much cooler ladies 🙂  Just haymaking to go and then I can stop worrying about the forecast for another year.

Inching towards the finishing line

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I’ve been tied up with a big project in my day job, so once again work has ground to a halt, but two bits of encouraging news on the financial front:

  1. The residential lender has been in touch to say the credit reports are back, but because I provided the version of an SA302 my accountant’s tax submission software spits out rather than a proper HMRC one, there’s a slight problem with verifying my income.  I can either write to HMRC and request they produce official ones for me (I can’t just print them off the website because that option isn’t available when your self-assessment gets submitted via accountants’ software) or they can forward my application to their head office for one of the senior lending staff to look at it, and they recommend I take the latter option because “referral route may be quicker on the basis that my head office would be happy to agree” – which sounds promising!  They also sent me a list of valuers on their panel to choose from, so fingers crossed we’re nearly there with this.
  2. SGRPID got in touch to say that the Drawings Office would be visiting on 26th June to survey the house site and garden at Ethel’s in order to prepare the sale plans.  This is amazing news because originally I was told it would be about six months, i.e. October/November.  It may actually now turn out that that side of it is ready before I’ve finished the house.

Anyway, all good incentives to carve out some time to get my overalls back on, and the upside of working flat out on something for the past week (to the extent of starting at 6.15am and closing the laptop at nearly midnight for the last two days) is that the invoice covers a very large chunk of what I need to make from the day job each month, so I don’t need to go chasing around for other work too hard for the next three weeks.

Back on track

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Good news! After a lengthy conversation with the residential arm of the company doing the commercial mortgage, we have a conditional agreement to lend us £135,000 to buy the new house. I have to send them Mick’s payslips, my tax returns and 3 months of statements for all our current accounts, and they want a valuation done because the seller’s surveyor isn’t on their panel, but if we get through that, we’re in the clear. Even better, their 5-year fix rate dropped by 0.1% last week.

With that back on track, I’ve turned my attention back to the plastering, which it seems I’ve now been doing for 2 months. Lesson learned – next time we get one we have to go back to bare walls with, I’m taking £500 out of the budget for lost earnings and blitzing it full-time for 2 or 3 weeks.  I’m working in the north bedroom at the moment and that gable end that gave us problems with leaking is all sealed up.

Pretty hot working up there on Friday morning though!

Glorious day.

And this is definitely a room with a view (pic may be temporarily sideways, but I’m in Glasgow writing this on my phone and can’t fix it until I get home!)  EDIT:  Home and it’s showing as the right way up in the source, but not in the post – weird!

Pete and James have been back to start putting the tin on the barn roof and it’s looking great.

Financial frustrations

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We’ve been on a bit of a hiatus with Ethel’s as my time has mostly been taken up dealing with mortgage companies.  We’ve hit a snag – our current residential lender has decided it won’t port the mortgage after all.

Truth be told, I’m not terribly surprised.  They’ve been closed for new business for years, have a dwindling number of mortgages on their book, but still have to maintain a staff to deal with us.  When I rang them up to go through the process, they kept having to put me on hold to find someone who could clarify points, because it was so rare that they ever had to do this.  To cut a very long story short, they put all the numbers into their computer, crunched it about a bit and announced that we couldn’t port the mortgage because their system said we couldn’t afford it.

Now, I know things changed in the mortgage market in 2014, but we were on a combined income of about £50,000 when we moved up here and they were completely happy for us to borrow £145,000 interest only, with a monthly payment of £737 because our deal of base rate + 1.1% worked out at about 5.5% at the time.  We’re now on a combined income of about £80,000 plus the estimated rental income (call it £20k after expenses) and they’ve told us that we definitely can’t afford the £115,000 outstanding – in fact, the most they’d be prepared to lend us if we ported the mortgage was….

….wait for it….

£32,500!!!!!!  (And no, I haven’t missed a digit off the front of that!)

It’s down to the credit cards, apparently.  They did say that they’d be happy to lend us the full amount if we would let them take 80% of the value of Ethel’s as security as well, but obviously that doesn’t have a title yet, so nothing they could secure against.

I’m now talking to the lender who’ll be doing the holiday let mortgage to see if their residential arm will take on our residential mortgage, as their commercial arm is happy with the credit card situation, but I fear that we may be stumped until Ethel’s is mortgageable.  I just hope someone doesn’t come along and snap up the other house in the meantime.

Sit rep

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The bad news is that the mortgage company liked us but didn’t like the location of the house; they felt it was too remote to make a good holiday let!  I asked our broker to point out that was kind of the point and he sent them a link to this recent Conde Nast Traveler review of the North Coast 500, saying it “may be the best road trip in the world”, but they decided it wasn’t for them.  At this point, the broker said that if we really didn’t want to do it as a normal buy-to-let, he was out of options, so I spoke to a commercial holiday let specialist broker, who said that his fees on such a small mortgage would be uneconomic, but there was only one mortgage company he knew of which would do a loan of that size against a holiday let in Scotland and I should just ring them directly.

Several phone calls later, they’ve indicated they’re willing to lend subject to us putting in a full application and getting written confirmation from a holiday letting agency that our house will make £9,600 a year in rentals net of agency commission.  Several more phone calls and I’m waiting for the local area rep for one of the UK’s biggest companies (just under 20,000 holiday cottages on their books) to get in touch to arrange a no-obligation visit – I think it’s actually the perfect time for her to come and have a look, because I can ask her to assess Ethel’s house as well, and what she tells me will dictate, to some extent, how much money we invest in the furniture.

I’ve also found a very helpful holiday letting forum, Lay My Hat, which is proving to be a fantastic resource for finding out about where to buy good-quality bed linen and towels without breaking the bank, what to provide in kitchens and so on.

Meanwhile, down the road I’m still chipping away at the plastering and after a good 4.5 hour session today, the downstairs is pretty much done.  Mick will sand it down tomorrow (this is his punishment for accidentally putting a tapered edge piece of plasterboard on an external corner, leaving me with an absolute crater to plaster over!) and then it’s just a case of filling in any little holes with a Go Outdoors loyalty card (nice and flexible!).  I’ve started plastering the small bedroom upstairs, but we need to get a few more sheets of plasterboard so Mick can finish off the gable ends in the other two bedrooms before I can do them.  He’ll give Rembrand a ring next week and fingers crossed they’ll be coming west and can bring them out.

Promising news

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Visitors who rent self-catering properties are thought to be worth almost £300m to the Scottish economy.

An interesting article on the BBC website.  The research only covers properties assessed for business rates as self-catering lets, not people doing Airbnb or renting out houses still assessed under council tax.

Some key numbers:

  • 23% of visitors to Scotland rented a self-catering property for at least part of their visit.
  • 32% came from England, with the north-west being the largest regional contributor and London the smallest.
  • Scots renting self-catering properties in Scotland accounted for 30% of the total, while the other 27 EU nations represented only 4%.
  • Most groups were made up only of adults, with children included in 30% of rentals.
  • The average spend on accommodation was reckoned to be £643 per group, totalling £313m.
  • They spent, on average, £245 on travel to and from the property.

That’s not the only promising news today – we have passed the initial affordability checks for the mortgage we need and have now proceeded to a full application for a decision in principle.  If we get that, then things are looking good – as long as they agree with the valuation.  We’ve got a little bit of wiggle room cash-wise, but not a huge amount.

I’ve also heard back regarding buying the land Ethel’s House sits on and the Agreement in Principle should be with me on Monday, but the gist is that I’ll need to pay them £150 for the actual land, plus £280+VAT to their solicitor for preparing and issuing the formal offer of sale, plus £300+VAT to the Drawing Office for them to send a surveyor up to prepare plans to be attached to the offer of sale.  Then I’ll have my solicitor costs on top of that, so it’ll work out about six times the cost of the land for all the paperwork!!  However, this gives the house title deeds and puts it on the Registers of Scotland, making it suitable security for a mortgage, so it’s well worth doing.

Traditional Easter

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Easter weekend and DIY – as British a tradition as toast and Marmite 🙂  We have been no exception, although I had to bow out gracefully today because I’ve pulled a muscle in my back.  We’ve made progress though.

Mick has plasterboarded one of the dormers upstairs.  Originally this was just a flat ceiling, but I wanted it opened up and I’m glad we have, though it’s going to be a git to plaster.

Talking of which, I’ve nearly finished plastering the kitchen – just the sides of the chimney breast and the window to go.  Mick started to sand down the dried stuff, but his lovely new random orbital sander worked for about 15 minutes and then the motor burned out, so that’s going to be a phone call to the place he bought it tomorrow!

While I’ve been plastering, Mick has been plumbing and the shower mixer is now plumbed in and plasterboarded over.  We thought we could hear a drip, but when Mick took the right-hand sheet of plasterboard off, everything was bone dry and we couldn’t hear it any more, which is a bit strange.  We’ve left the plasterboard off for now and will investigate properly next weekend.

Spoils of my last shopping trip – black slate to tile the shower with, a mosaic tile for a border, teal paint for the double bedroom, grey for the living room, platinum for the bathroom (which will have one dark grey feature wall opposite the shower) and sage green for the single bedroom.

Pete’s done an amazing job with the fireplace.  The mortar has faded as it’s dried (the close-up was taken on Friday, the wider angle today) and all he has left to do is clean the stone up and then he can fit the stove.  I’ll be asking David to finish it off by doing a return back to the stone and then a simple wood frame around it, painted white.

I heard back from my friendly mortgage broker on Thursday.  He wants to approach two different lenders and asked me to fill out a chunky form with all our financial information and send it to him, together with Mick’s payslips, my tax returns and copies of our credit reports.  I’ve pulled it all together over the weekend and emailed it over today, so all I can do now is cross my fingers.

Under starter’s orders

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My father used to say that buying a house was like the Grand National in terms of how many fences one had to jump to reach the finish line.  It appears that we only have three in our personal Grand National, but they’re all pretty much Becher’s Brook-sized.

Those of you going, ‘Eh?  What?  Buying a house??’ haven’t missed anything – this time last week we weren’t even considering buying a house, but then an opportunity came up that we knew we would absolutely kick ourselves for missing out on if we didn’t try and take it, and so after a telephone call with my mortgage broker this morning to clarify some points on both sides, we are going for it.

More details of the house once it’s sewn up, but our three fences are:

  1. Can we raise £127,000 on a buy-to-let mortgage?
  2. Can we get a market rental valuation of £650 a month?
  3. Can we borrow back the mortgage reserve on our current mortgage?

I spoke to our lenders this morning as well, and the answer to 3 seems to be a cautious yes.  They’re closed to new business, so need to double-check with the higher-ups that it can be released and also the full amount will need to be within the original lending criteria in terms of LTV, although we should be okay on the latter point – we’re currently under 60% LTV.

So watch this space and please cross your fingers!

Going back to my father – he would have been 84 yesterday, so he was on my mind, and with the Grand National being run last Saturday, I was thinking about a letter he wrote me when I was at university and he and Mum had put in an offer on a beautiful Grade II-listed house in Somerset, with the plan of my grandmother going to live with them there as well.  It only took me a few minutes to find it, despite the current state of my office (it still has an entire Howdens kitchen crammed into it!), and I realised from the date that it was the last letter he ever wrote to me before he died – he was in a serious car accident seven days later.  So in a post about my Grand National fences, here are Dad’s, from 23 years ago, together with the fountain pen he used to write them which I still use every day.