How I Bought My Home

I apologise, this blog is about three years too late since I jumped on the property ladder. In fact, I’m even flirting with the idea of cashing in and upgrading to a new place… I say cashing in but Brexit has been the kryptonite to the housing market so prices haven’t moved since. Anyways, I’ve been seeing a whole bunch of YouTube videos and Twitter threads from people who recently bought properties explaining their journey and it made me realise that I never really discussed my own journey. Okay, I did write the First-Time Buyers Guide way back when but I guess that was more light-hearted and didn’t really give much explanation on the actual process. And judging by the amount of incorrect information people are sharing these days, I thought it’ll be a good opportunity to provide some insight. Don’t get me wrong though, there’s umpteenth ways of getting onto the ladder.. thankfully I went down the more traditional route.

First things first, you’ve gotta get your money up. Money is truly the answer to most of life’s problems lol. And before we get into the deposit, let’s take a focus on salary. The average salary for a full-time worker in the UK is roughly £36k so if you’re planning on buying on your own like I did, you’ll need to be earning around this ballpark or upward. Of course there is the Help-to-Buy and Shared Ownership schemes which make things slightly easier but regardless, what you earn is key. Before I delved into the house hunting process, I needed to know how much a mortgage provider could lend me i.e. a Mortgage in Principle (MiP), more or less a statement confirming the maximum loan I was eligible for. It allowed me to guesstimate roughly the price range of properties I could consider. If your dream home is £500k but your MiP valuation is half that, my friend please humble yourself or get a sugar daddy/momma to sponsor.

Rule of thumb; a mortgage provider will offer you between 4 – 4.5 times your salary i.e. if you’re sitting on £30k, a lender would probably offer between £120k – £135k… you’ll have to make up the difference. Once you know what you’re eligible for, the onus is on saving as much as possible. In my opinion, this is the hardest part of the process. Saving for a deposit requires a lot of discipline, taking me nearly four years in the process. My monthly salary could comfortably afford the monthly repayments but stumping up that initial deposit is the killer (for more savings tips, go to my Managing Your Money blog). And when you start the savings process, yeah you could only aim for a 5% deposit but that’ll mean your lender has to borrow you more hence will charge higher interest as a result. I personally saved up a 20% deposit but anything from 10% onwards is a good shout.

A property purchase will probably be amongst the costliest purchases of your life so you’d wanna ensure it ticks most, if not all of your boxes. Location wise; make it make sense! Being two hours away from everything is not cool at all. I had to factor in work, public transport and other general amenities, it all makes a difference. Property Type; beware of the leasehold trap – says the man currently in a lease myself. Most flats or apartments nowadays have a lease agreement which means that you may purchase the property… but you won’t own the land on which it’s built upon. Meaning you have the right to occupy the property for as long as the lease is valid. Traditionally leases lasted for 999 years so it wasn’t much of a concern but nowadays, 125 years is becoming the new norm. And although that may seem a long time, let the lease go anywhere near 90 years and your property value will plummet dramatically. It’s not all doom and gloom though, I personally bought a leasehold flat as they’re typically more affordable and less responsibility in regards to repairs and maintenance which definitely eases the pressure.

After months of research, I finally found my ideal property.. and made an offer. I searched for similar properties around the area to gauge if my offer and their asking price were aligned. Of course it’s tempting to undercut the asking price but if it’s a popular property, there may be a number of willing buyers ready to match or even trump your offer. I’d avoid a bidding war especially if it exceeds the amount you’d ideally like to spend. Definitely stretch that little further for your dream home but you’ve gotta keep your wits about you and remember, even if your seller initially accepts the offer there’s always the risk of gazumping. This quirky term is when another buyer makes a higher offer for a house where an offer had already been accepted. This is very much underhand tactics and is actually banned in Scotland. As frustrating as it is, if this does happen to you, resist the urge to get into a bidding war.

Once my bid was accepted, I had to liaise back with my mortgage provider. When negotiating a mortgage, my lender asked me to share my last three months’ worth of banking statements to review. I knew this was the process so I had to do sleight of hand and make sure my finances were looking impeccable. I’d suggest if you’re a casual gambler or a multiple subscription type of person, ease off that a while. Your lender will scrutinise your monthly outgoings to assess your affordability so stuff like that won’t bold well. They want you to pay off your mortgage more than you realise! Customer defaults and repossession of housing is a costly process which a lender would ideally like to avoid. Beyond this, you should also get a property surveyor involved although my lenders provided this as part of the service. Independently they’ll generally set you back between £600 – £1k. The surveyor will provide you with a detailed report of the condition of the property including any structural problems or advised alterations. As important as this is, only 20% of people actually get a professional property survey ahead of buying a home.

Now onto the most frustrating part of the process… the solicitor! Solicitors are essentially qualified lawyers who specialise in property purchases. They’ll handle all the legal jargon and provide you with ‘regular’ updates regarding the process. Their role ranges from handling contracts, carrying out council searches, transferring property funds and ultimately providing legal guidance. Where my frustrations lied was that my solicitors were quick to pitch for my custom but when I was bagged, their communication became a bit lax which only added to my stress. I very much got onto their cases, even turned up at their offices once or twice to get things moving! I paid roughly £1.5k for their services so I felt I had every right to chase up and bombard them with as many questions as I felt necessary. I wanted to feel comfortable about the process and it’s ultimately their job to facilitate that.

After all the hoo-ha and waiting around, eventually I got to the ‘exchange contracts’ stage where you’re pretty much legally obligated to buying the property and required to exchange 10% of the agreed purchase price to the sellers account via your solicitor. I was notably informed that if I were to pull out for whatever reason at this stage, I’d forfeit my deposit. Pull out game VERY weak as you can imagine! From point of exchange, the property is more or less your responsibility, so I’d advise taking out home insurance which is generally a demand of the lender before facilitating the mortgage anyways. I also agreed a completion date with the seller… who am I kidding, it was pretty much forced upon me but I didn’t dispute it. Settled for a weekday ‘cos banks can be quite unreliable transferring huge funds on the weekend. Once the completion date arrived “boom”, the remainder of the property cost was transferred via my solicitor and I was officially a homeowner! …wait, you thought I was done lol? I also had to pay solicitors fees as well as the stamp duty cost. Stamp Duty is tax levied upon a property for reasons I have no idea why.. isn’t the cost of buying a house enough! There are many stamp duty calculators floating around online but if you’re a first-time buyer with a property valued at under £300k, you’ll be exempt from paying this tax.

And there you have it, my one-stop guide to purchasing my place. Despite all the research I did, the house-buying journey was far from plain sailing. I did the majority of the process independently and perfected the art of learning on the job. As nice as it is to be a homeowner, I could write a blog equally as long when it comes to the maintenance of one. Social media tells us we should move out by 18 years old but in reality the average age of a first-time buyer in the UK is about 30! It’s a very British mindset to own your own place; in continental Europe renting and moving from one place to another is very much the norm. Owning a property is a huge investment which requires great responsibilities but ultimately very rewarding, good luck to anyone embarking on the process. And remember, I’m still accepting house-warming gifts three years on so don’t be a stranger, 65” tv’s aren’t gonna pay for themselves.

Joe