The 5% Pivot for First Time Buyer, Osei Downes

It’s only fitting that as a StepLadder Dream Squad member, I’m also an aspiring first time buyer. For a long time, my wife and I have had a solid plan about how to achieve our dream of home ownership. But as COVID-19 hit, and mortgage lenders removed their high loan-to-value products from the market, the 5% deposit we’d been striving to save was no longer enough.

After a momentary panic, I decided to dig deep and tackle this challenge head on, and whilst it’s still a bit further away than I’d like, we’re back on track with a new plan to reach our goal.

Our original plan

Wanting to break out of the London rental trap as newlyweds we were looking for a home where we can start our family. So ideally 2 - 3 bedrooms, costing a maximum of £325,000 and with good transport links to work. With these requirements there were a few areas that worked for us - Streatham, Croydon, Kent and Essex. 

Pre-COVID, many lenders were happy to offer a 95% mortgage, meaning we would only need a 5% deposit. So that was our goal, and we’ve been working hard with our savings to achieve this. 

By the start of April this year we just about reached that 5% mark and were starting to seriously think about which area would work for us. Getting to this was a real sense of achievement and it was so exciting to be able to start turning our dream into a reality.

We’re pretty level-headed people and really wanted to find the best area and house over time, rather than rush into something immediately. Which is lucky! Because then lockdown hit and rushing was no longer an option. 

While we waited to see what the dreaded Coronavirus had in store for the country, we kept moving forward as much as we could, choosing to use this time to speak to a mortgage broker to get a ‘mortgage agreement in principle’ so that we could confirm how much we could borrow. 

And then the ball dropped………

Our mortgage broker said that if we had started the process 3-4 months ago we would have been fine as lenders were accepting 5% deposits, but now we would need double the amount as they’re only offering minimum 90% mortgages until further notice.

Honestly, this was crushing news and disheartening after all our hard work.

But we picked ourselves up quickly, remembering why we were doing this, digging deep to adjust our goal and go back to the drawing board with our plan.

Knowing that we now need double our original deposit, and not forgetting that we will also need money set aside for new furniture, solicitor fees, surveyor fees, moving costs etc. We made the following changes:

    1. We reduced our budget to £250,000, meaning we needed a £25,000 deposit rather than £32,000. So we needed to save up roughly another £10,000 to be ready.
    2. We locked in Essex as our top destination. Houses are much more affordable there than other areas we were considering and it has great connections into London.
    3. We started looking at ways that we could supercharge our savings alongside our monthly income. I’ve never been more grateful to be surrounded by all the experts at StepLadder!

Our plan to pivot

My wife is a solicitor and I have design skills, both of which seem to be in demand. Depending on what you are hired to do you could earn anything from £10 - a couple hundred pounds. So alongside the day jobs, we decided to jump on the side-hustle bandwagon and put ourselves onto freelancer websites such as Fiverr, where we could get some extra income by doing one-off tasks over the weekend. 

Every little helps so hopefully this will give us a little boost. Our aim is to generate £3,000 over the next 6 months which we could add to our deposit.

I'm a hustler by nature, and now it’s time for the family to see that firsthand! Considering we’ve saved half our deposit on our own already we’re hopeful we’ll be able to smile nicely and get a couple of thousand pounds from parents, grandparents, aunties and uncles. We’ve also asked for straight cash gifts from family members who are enquiring about what we would like for our birthdays etc. Our aim is to try and get up to £2,000 from family support.

Finally, and most importantly, we’re using StepLadder to put away the remaining £5,000 ourselves through a Circle. We know that joining a Circle will give us the discipline to stay on track with our extended goal, and hopefully we’ll get to help and motivate other people at the same time.

Osei Downes

Head of Partnerships at StepLadder

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