After years of squirrelling money away into investments to build a house deposit, I’m proud to report that I made it on to the property ladder at the age of 31. However, I feel like I’ve aged 10 years in the process.
Buying a property is the most stressful thing I’ve done. It was more anxiety-inducing than my experiences at the hospital waiting for my beloved daughter to be born, and tops the worry I feel watching Manchester United, the football team I support, this season.
But it was all worth it just to see the look of sheer delight on my daughter’s face when she saw her new room for the first time. It was one of the proudest moments of my life. We now have a house we can call our own.
I managed to land a property that met most my pre-requisites: a well-presented “ready to move into” two-bed freehold house, with stairs and a decent-sized garden that is relatively close to my daughter’s primary school and within commutable distance of my workplace.
My house-hunting journey had a happy ending, but the number of twists and turns along the way left me feeling emotionally whipsawed. Having lived in my new home for two months, I feel I’ve recovered enough to reflect on the experience and identify a few lessons that might help others on their journey to home ownership.
How I did it
My south-east London home cost £360,000. I have a large mortgage as the Bank of Mum and Dad wasn’t available to me, so I had to save for the hefty deposit required, and then some extra to fund the costs associated with a home purchase, off my own dime.
Investing was a significant contributing factor, accounting for more than a third of my house deposit. I started investing from the age of 23, initially putting around £200 a month on average into an investment portfolio pegged as my house deposit fund.
I’ve been fortunate enough to receive an uplift in my pay and bonuses throughout my career. I uprated my investment contributions on each occasion to bolster my deposit-building efforts, while maintaining a good quality of life.
While sacrifices are typically required to build a deposit, I didn’t want to completely eradicate my social life and not go on holidays to get on the housing ladder – especially in my twenties. I struck a balance that worked for me. The key was to maintain the discipline of investing regularly and increasing contributions in line with rises in my income.
I also invested through a Lifetime ISA, which applies a 25 per cent bonus from the Government for every £1 saved up to £4,000 every tax year. I made a conscious effort to max out the £4,000 Lifetime ISA allowance to benefit from the maximum annual bonus of £1,000 from the Government. I managed to get £6,000 of “free money”, which turned into £9,000 because of my investment choices.
In all, it took me the best part of eight years of investing to build an ample enough deposit to buy a house.
Making an offer
Searching for a property in the worst year for mortgages following the return of high interest rates and in an area where demand far exceeds supply, proved challenging. I explored this aspect in my previous column. So, imagine the delight I felt when I found a house that looked better in reality than it did in the pictures after months of trawling through various property portals and signing up to countless estate agents’ newsletters.
I had viewed seven properties before finding my Goldilocks house – it just felt like home. But I didn’t want the estate agent to know out of fear they’d strike a hard bargain if my keenest was known, so I maintained a poker face. I was informed that the owner was looking for a quick sale as they had already committed to buying a property. I used this knowledge to my advantaged when negotiating the price and managed to knock off £15,000 from the asking price.
That’s tip number one: don’t be afraid to make an offer below the asking price – within reason. Insulting offers risk offending the seller and could potentially lead them to terminate negotiations. Equally, if you don’t ask, you don’t get.
The elation I felt after having my offer accepted was quickly overshadowed by the magnitude of it all. Even though I had done extensive research into the local property market, viewed several properties, and, crucially, felt impressed by the house, I questioned my judgement. I was reassured by homeowners I know that the feeling was part of the process.
Conveyancing and surveys
I ended up hiring a solicitor my broker recommended for conveyance. I didn’t take his word for it though and I checked out the competition and made my decision based on price and reviews – that’s tip two.
While there is no legal requirement to commission a survey when buying a property, I couldn’t live with myself if I unearthed a major issue. The survey can also be a useful bargaining tool – tip three.
There are three different types of surveys from basic to comprehensive. I went for the middle option, the Homebuyers’ report, because the property was in a good condition as it isn’t that old; it was built in the 90s. Peace of mind set me back £415, which is a modest amount considering the cost of the property.
The survey flagged some minor inconveniences, which I tried to use to claw back £1,000 from the purchase price. But having already accepted £15,000 below the asking price, the seller wasn’t having any of it. Fair enough.
Mortgage market hokey-cokey
The period leading up to the completion of the sale saw something of a hokey-cokey in the mortgage marketplace, with lenders pulling deals shortly after launching them and replacing them with cheaper ones amid an improving outlook on interest rates.
I had a mortgage deal agreed, but with most lenders you are not fully committed to a rate or product until you complete. Naturally, I wanted to secure a cheaper deal. I managed to do so twice.
My broker flagged the first cheaper deal, and I spotted the second – a perk of trawling through financial data as part of my job as a personal finance expert. The second deal knocked £70 off my monthly repayment – or £840 a year, which could easily fund a holiday.
I came desperately close to securing an even cheaper rate. I was literally one day off from getting it. To secure the cheaper deal, my solicitor would have had to transfer the funds the lender had already released and get the new contract signed by both parties. I was told that the process would put me at risk of not completing in time, which would have left me liable for financial penalties for breach of contract.
I don’t understand the requirement for the money to return to the lender for the new contract to be agreed, as the amount borrowed didn’t change. The cheaper deal would have wiped £90 off my monthly repayments. It annoys me thinking about it, but I decided to be like Elsa and “let it go”.
The lesson here is that it pays to do your research to see if you can get a better deal – even if you are in the finishing stages of a house purchase.
There is a lot to consider when buying a house – that’s why it can be stressful. I’m glad it’s all over, and now that I’m on the property ladder, I’m in the process of reworking my finances to meet new financial goals – but that’s a story for another day.
Myron Jobson is Senior Personal Finance Analyst at interactive investor