What a difference a year can make! I’m full of pride and relief as I write to you all from the chaotic comfort of my new home, surrounded by boxes and DIY-stuffs. I’m here to tell you all, that as promised, buying your own home against a number of odds is absolutely possible.
Last year, I wrote about my 5% Pivot to keep my home buying dreams on track. As Covid hit, and mortgage lenders removed their high loan to value products from the market, suddenly the 5% deposit I’d almost saved was nowhere near enough.
And whilst these mortgages are coming back now, I would still encourage you all to read my top tips as you save for any size deposit, and see how you can boost what you’re already planning for.
And thankfully, a year of working hard, saving hard and making small sacrifices means that I managed to get what I wanted and I can impart some wisdom on the next part of the journey - how to actually buy a house!
No one teaches you this stuff at school. And most stories you hear about it being complicated and convoluted are true. So stay tuned, and let’s see if we can help.
How to save for a house deposit
My wife and I set ourselves a 3 year goal to be able to save for our house. First top tip - figure out the amount of money you will need, unless you win the lottery it’s not going to happen quickly! So start early, set a realistic plan, and manage your own expectations around it.
Year 1 - we saved separately, and honestly, we didn't get that far! So we set out a more serious plan and had an aim to save £28k over the next two years. Overwhelming, yes. But not impossible. We both joined StepLadder, which helped us stay disciplined and removed the temptation of dipping into the pot for Friday night takeaways. Seeing the results from this gave us the confidence to continue putting money aside each month, even after our Circle had finished.
By Autumn 2020, we had reached our target through our savings, including what we had raised with StepLadder and getting a little help from family.
Knowing we were on track, we spoke with a mortgage broker during our savings period to get an idea of how much we could afford and began to research properties within this price range.
How to work with an estate agent
Home ownership is the dream, but house hunting is definitely not!
It’s that part of the process which should be really exciting - envisioning your future life and exploring new areas and your personal style. But with this stage comes the estate agents...
Unfortunately they have a reputation for a reason, and it’s the most annoying and frustrating part of the experience - if you get a bad one it can really knock your confidence.
Estate agents have the ability to make an extra commission if you use their mortgage broker, so they will often recommend that you speak to their mortgage broker first. I already had a mortgage broker in place, along with a mortgage-in-principle. Knowing this, many estate agents said they would not let me view homes unless I spoke to their broker first, and they would continue to try to hustle us.
One went as far as to call my wife separately, saying that I had agreed to use their broker, and began to get her applying with them without me knowing. Another told us on the day we had three viewings booked with them that he would not show up unless we speak with his broker first, bearing in mind that this was a Saturday and we were travelling for over an hour to the location…
My advice here is to be strong and don't let them hustle you! If they are pushing it, then I would not do business with them - there are plenty of houses on the market, so find one that’s being represented by an agent who will look after your best interests.
That said, I also promise you there are great agents out there! I was fortunate enough to find a really helpful estate agent at Haart. They were super responsive all the time and really helpful. They also didn't try to force their mortgage broker on us!
Choosing the right home
Like most good dreams, we started with months of window shopping (online), getting a good idea of what prices most houses would go for and what sort of thing was in our price range.
Doing this also allowed us to spot a few homes that were listed for a very long time, usually because there was no interest, which means that you could have luck putting in a lower offer. Often you'll find some houses being re-listed but under different estate agents; watch out for this. Luckily, the property market has been booming since the first lockdown, so the daily obsession with Rightmove and Zoopla was worth it.
Once we had a list of 20 that looked good, we began to shortlist to our top 10 that we should go and visit. I would recommend spending at least 30 minutes to take a good look at each house and take pictures or videos to remind yourself once you've left. After viewing all the houses, we then shortlisted the ones we like to our top four, where we arranged a second viewing.
Always do a second viewing! You’ll be more level-headed as the initial excitement will be tempered. Go at a different time of day, with a list of practical assessments - will your furniture fit, and does that matter; are any improvements aesthetic or structural; what’s the condition of the outside as much as the inside.
Coming back also lets the agent and the seller know that you are serious about the property. We brought a family member along to give us a more experienced perspective given we’d never done this before!
Making an offer - eeek!
After deciding which house was for us, we made an offer. We went below the asking price initially, and there was a little bit of back and forth, but finally, the third offer was accepted.
When making an offer, my advice is that don't go ridiculously low as they won't take you seriously. Also, be aware of what's going on in the property market. At this point, the government had just announced the removal of stamp duty, so it was pretty competitive, and there were many others interested in the property, so we could have lost the property if they thought we were playing games, which isn't worth saving the extra £5k on the house price.
How to speed up the mortgage process
We updated our mortgage broker, and they began the process immediately. This step was relatively easy compared to what I've heard others go through. In total, our mortgage took around three weeks to complete. But my advice is not to use this as a usual case study! But there are plenty of things you can do to make it go as quickly as possible, and the main one is to simply get prepared! Prep everything that they could possibly ask for in advance so they have access to it. Unsure of what this is - they should be telling you during your mortgage-in-principle discussions.
You can imagine how much time is lost pulling documents together and sending them back. For example, you could lose three days from the lender contacting the broker, the broker contacting you, you digging up the requested doc, you sending this back to your mortgage broker, and they send it back to the lender.
This happens quite frequently for multiple documents, for example, recent payslips, marriage certificates, identity documents and more.
In this situation, it's best to have everything they could ask for stored in an online drive and give your mortgage broker access. This radically speeds up the process. By this stage, you should also have appointed a solicitor to facilitate the exchange of the property. This might be the longest stage as there is a lot of back and forth communication between you, your solicitor, the seller and their solicitor.
There’s only one thing I can advise here - patience!
The big move.
Once you have completed your property, you are free to move in! And we just have.
Depending on your circumstance, you might want to move straight in or continue staying at your current address and use the time to fix up the place so that it is ready to be moved in. We were not keen on paying rent alongside our mortgage, so we left as soon as the property was ready.
If you are renting and want to do this, you should give your landlord notice as early as possible and arrange a rolling contract to leave the month that you expect to complete.
We didn’t buy a new build, so the house needed to be redecorated. This was one of the downsides to moving in immediately as we were living in our home and decorating and our stuff being all over the place. This was only the case for two weeks, we were happy to live like that for a short period, and it was worth not paying an extra month's rent. We also redecorated ourselves during the evenings and on weekends to save cash. If you have the money available, you could hire someone to paint and do some DIY around the house, but we preferred to try it ourselves!
It's important to remember that you will not be able to do everything immediately. We only focused on the areas that we were going to use the most, excluding our bathroom, as we plan to save towards getting a new one. We plan to renovate the rest step-by-step over the next few months and save towards buying some new furniture bit by bit.
Rome wasn't built in a day.
Buying a property is arguably one of the hardest things you'll ever do. But once you start this journey, it gets easier. You begin to understand personal finance more and more - edging you closer to financial freedom. And it doesn't stop there; investments, savings and properties are all at your fingertips - regardless of your financial situation, you can do it.
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Head of Partnerships at StepLadder