Buying your first home, for most of us, will be one of the most challenging and exciting experiences.
Through conversations with friends and colleagues, home ownership is still essential to those aged between 24-35. According to research, the average age of first-time buyers is between 31-33 in England, but some do it earlier.
Did you know that buying a home is one of the most expensive things you will do in your life?
My experience
My first purchase was both daring and opportunistic. I was 27 years old, engaged to be married and focused on owning my first place. At the time (November 2015) I only had £4,000 in savings and had enormous wedding costs coming up. At this point, I am sure you are thinking about how can he buy an apartment with only £4,000 in savings. Read on to see how.
Together with my fiance, we viewed a new build apartment in South Ockendon and another in Purfleet. The first property was outside of my affordability, but the second was within, which was great. My salary at the time was £31,500. The only issue I had with the one in Purfleet was that it was far from a station.
My dear mother helped me find a one bedroom apartment in Barking, which was near two stations. I immediately thought that was an excellent place to start as it was close to a local park and had excellent commuter links into London (Crossrail and Underground). In my mind, I was sold, so I decided to ditch the new build flat in Purfleet.
As exciting as the prospect was, reality then hit me like a bucket of cold water over my body while in a deep sleep. I only had £4,000 in savings which was significantly less than what I needed to complete the purchase.
On my £31,500 salary at the time, the Bank was willing to lend me an amount which was five times my income. This worked out to be on or around £153,000. The remainder was my 10% deposit at £17,000 to make up the full purchase price.
Below shows a breakdown of costs involved in completing the transaction:
Purchase price £170,000
Deposit £17,000
Valuation £355
Legal Fees- £2,472 (included stamp duty)
Mortgage fees £495
Initial service charge £300
Total required £20,662
With £4,000 in savings and £20,000 in costs, I thought, I was entirely out of my depth. However, my mother had other plans, she said "Son, just get on with it, the money will come". I reluctantly put in an offer for £170,000 which was accepted to my surprise. So now I had to rise to the challenge of putting together the deposit and closing costs.
In times of crisis, my tendency pushes me to become analytical, so I took the time to analyse my outgoings, reduce my monthly spend and maximize my savings. I was fortunate to be living at my Mum's house at the time, which meant I could practically save all of my salary.
Do not be ashamed of being at your parent's home; however difficult it may seem.
The things I looked out for when buying a property
Firstly, I made sure my wife-to-be was happy with the location and the property (brownie points gained, lol). Without her consent, it would not have been worth it.
I inspected the property to ensure that there were no apparent signs of structural damage or damp. Most people opt to instruct a chartered surveyor to carry out a home buyers survey. As the apartment needed modernization, I saw it fit to take photos to help me come to a conclusion of the work I would need to carry out.
I looked at previous sold prices in the area to ensure that I was wasn't overpaying for the property. In this case, the property was a bit lower than market value, which meant that there was a lower risk of the property being overpriced mat valuation stage.
We reviewed the report on title produced by the appointed solicitor, which highlighted all legal constraints that needed to be taken into account. I was interested in knowing how much the service charge was and whether ground rent is payable. To my delight, the service charge was relatively low, and no ground rent was payable.
Throughout the whole process, I kept on running the numbers to ensure that I was not putting myself in a financially disadvantaged situation by taking on too much.
Purchasing the property and getting the keys
The solicitors had done their part, mortgage offer was in place, so now I was biding my time to save my deposit .
After six months, I received an email from my solicitor, confirming the buyer was ready to complete. I had all of my deposit saved and was ready to go, which was great. The contracts were then exchanged between me and the seller (Vendor).
Exchange of contracts is the point of no return
I received a call from the agent and solicitor to say that the property purchase had completed and I could collect the keys. My fiance and I collected the keys together, and we were buzzing off the excitement of our new journey as first-time owners.
The process to purchase the property started in November 2015 and completed in May 2016. As they say, the rest was history.
The refurbishment
We decided to change the flooring, paint all the walls, get a brand new bathroom and replace all the light fittings.
I purchased the bathroom suite (Jacuzzi tub included), toilet and hand wash basin from an online auction called John Pye actions suggested by an uncle. My friend and I drove to Manchester to collect the items, and I saved a huge amount of funds in the process.
Learn to find ways to save money on your appliances by looking at auctions.
Between my wife, Mum, brother and uncle, we were able to refurbish the whole property ourselves without relying heavily on handymen. My brother and I learned so much from our Mum, and she is the handiest lady, I know.
You will note that the whole process of refurbishment involved so many people in my family. Make sure you lean on your support system during this period.
Here are some photos of the journey
Before ( you may spot my then-fiance doing her part)...
Just a bit after...
And finally, for those who didn't believe me when I said we bought a brand new Jacuzzi bath from an auction at an excellent price.
Disclaimer: I would suggest that you consult professionals for works relating to electrics and plumbing.
Key takeaways
Establish your budget by consulting a qualified mortgage broker. (Banks can sometimes lend up to five times your annual salary).
Try to establish all the costs you need to complete the purchase upfront.
Instruct a competent solicitor.
Consider getting a home buyers survey which is carried out by a qualified surveyor. They will be able to identify any glaring issues with the property.
Read the report on title and be sure to ask your solicitor as many questions as you can muster
Enjoy the process of becoming a homeowner.
You are not Alone
To my amazement, it took 6 months to complete the transaction, which in my opinion was a miracle as it bought me time to save the majority of the deposit from my £4,000 starting point. I also received support from my Mum and brother. Remember that you are not alone in this process. Typically it takes 3-4 months to complete the purchase of a home.
My view is that there is always a solution to solving the home ownership puzzle.
Depending on your income/savings, you could consider utilising Help to buy or shared ownership.
Key lessons
Just go for it! I read a great book called Feel the fear and do it anyway written by Susan Jeffers (Purchase by clicking here). The book summarizes my newly adopted state of mind.
Be mindful of the power of intention as there is power in instigating. Do not take that for granted.
You're never too young or too old to get onto the property ladder, just get on it.
Disclaimer: These are only my personal views and should not be considered as advice. Please rely on your own research when wanting to make an informed decision.