Business

Property Diaries: How I Bought My First Home

Stressful, agonising and frustrating… just a few of the terms used by those describing the process of buying their first home. But would they do it again? Absolutely. Our second property column investigates

By Hannah Karpel

12 July 2021
S

ome 63% of households in England owned their own homes in the two years from 2016 to 2018, according to a home ownership report published by the government last year. Households in the Black African (20%) and Arab (17%) ethnic groups had the lowest rates of home ownership.

As house prices surge and wage growth slows, home ownership for those in prime working ages – in their 30s and 40s – has plummeted. A report by the Office for National Statistics has revealed that a third of this group in England were renting from a private landlord in 2017, compared with fewer than one in 10 in 1997.

Making the decision to buy your first home is likely to be one of the biggest of your lifetime, and a goal that can sometimes feel distant – especially since the pandemic. But whether you see your first purchase as a future investment for your children, for your own financial security or as the first in a portfolio of house flips, it is important not to dive in head first but to understand the process and its expectations in advance.

In March earlier this year, Chancellor Rishi Sunak announced that the current stamp duty holiday in England and Northern Ireland would be extended to 30 September to prevent the risk of properties falling through as a result of delayed time on mortgage approvals during the pandemic.

Sunak also announced a new home ownership scheme for first-time buyers that would see the government guarantee 95% mortgages to help people on to the property ladder – one of our first-time buyers featured below has benefited from this scheme.

The Producer

“Next time I buy an apartment, I’ll demand more information about the hidden legal costs.”

Age when bought first home: 35

Industry: Freelance Producer

Annual Salary: Approx £32,000

House Price: £345,000

How much was your deposit? £100,000

Deposit provided by: Parents

Type of mortgage: Solo

Postcode: E10

How much is your mortgage repayment per month? £770 per month

What bank did you get your mortgage approved from? Santander

When you’re working as a freelancer without financial security, buying a property can feel out of reach. But with parents helping with the deposit, The Producer was able to make it happen in Hackney, east London.

During the pandemic, The Producer applied for her own mortgage on a 30-year term with Santander and was able to secure her £345,000 apartment. Next time she buys a property, The Producer says she will “demand more information”, specifically when it comes to solicitors as she discovered that there were “hidden costs” further down the line. Despite the stressful process, The Producer describes her achievement as making her feel “lucky and secure”.

The Renovator

“I bought a Victorian house for £345,000 that is a doer-upper – I’ve been told it will be worth £60,000 more in three years’ time”

Age when bought first home: 31

Industry: Public Sector

Annual Salary: £39,000

House Price: £345,000

How much was your deposit? £100,000

Deposit provided by: Dad’s pension

Type of mortgage: Joint

Post Code: N9

What is your current mortgage interest rate? Fixed for three years at 2.7%, and we've just remortgaged with Barclays at a new rate of 1.4% based on a loan to value rate of 95%

How much is your mortgage repayment per month? £1,200 per month

Which bank did you get your mortgage approved by? Barclays

The Renovator purchased a Victorian mid-terrace, two-bedroom, one-bathroom house in Edmonton, north London that was a do’er-upper.

“We have a Barclays Springboard mortgage, which is where a parent puts the equivalent of a 10% in an ISA that they can't touch for three years and, as long as you keep up payments for three years, they get that deposit back plus interest.”

“Barclays also gives you a 100% mortgage – we weren't keen on this so my parents gifted us 5% to reduce our mortgage to 95% over 25 years. So we had £34,500 in the Barclays Springboard ISA and around £15,000 as a deposit.”

The initial mortgage rate when The Renovator bought the property three years ago was fixed for three years at 2.7%, and she has just remortgaged with Barclays at a new rate of 1.4% based on her loan to value rate of 95%. She has been told that her house could increase in value by £60,000 over the next three years. In hindsight, The Renovator admits that she would like to have considered another area.

The Londoner

“I bought an ex-council flat for £320,000 to live near my family in south-west London – the average house price was way out of our reach.”

Age when bought first home: 34

Industry: PR and Communications

Annual Salary: £70,000

House Price: £351,000

How much was your deposit? £35,100

Deposit provided by: Joint with partner

Type of mortgage: Solo

Post Code: SW18, Wandsworth

What is your current mortgage interest rate? Fixed for three years at 2.14%

How much is your mortgage repayment per month? £1,216.16

What bank did you get your mortgage approved from? Nationwide

“It was important for me to be a home owner, especially because of the money spent on rent. I’d love to say it’s one less thing to worry about but, almost two years on, we now want to move into a bigger place. At least we have got our foot on the first rung of the ladder,” explains The Londoner.

With her family just around the corner, she bought an ex-council property that was a probate sale for £351,000. She secured a solo 30-year mortgage with Nationwide based on her annual income of £70,000.

“The biggest issue we had was location and house prices. I’m a Londoner and my family live in south-west London, but the average house price was way out of our reach.”

The Freelancer

“I feel guilty that I didn't do it solo and buy my £250,000 house without any help, but I’d still be renting at 33 if that were the case.”

Age when bought first home: 27

Industry: E-commerce/Marketing

Annual Salary: Freelance – £30,000 on last tax return

House Price: £250,000

Deposit provided by: Family

Type of mortgage: Joint

Postcode: E18, South Woodford

How much is your mortgage repayment per month? £800

Which bank did you get your mortgage approved by? Barclays

The Freelancer bought her first home – a maisonette in South Woodford, east London – for £250,000, together with her husband and with financial support from her father.

“My father gave me the deposit, so I feel very lucky – I'd never have been able to buy a property without his help.

“I feel guilty that I didn't do it solo but I’d still be renting at 33 if that were the case,” admits The Freelancer. The Freelancer, along with her husband, was able to secure a 25-year mortgage on their first home with Barclays.

Now growing out of their maisonette, they are ready for an upgrade. She says: “I am buying now and, from our experience, I am so much more on it and am constantly chasing the solicitors to check progress.”

The Graduate

“It took seven years to save up for the deposit on my £232,000 apartment in east London – and that was with the help of my parents.”

Age when bought first home: 27

Industry: Fashion Production

Annual Salary: £24,000

House Price: £232,000

Deposit provided by: Self and Parents

Type of mortgage: Joint with a friend

Postcode: E2

How much is your mortgage repayment per month? £1,200

Which bank did you get your mortgage approved by? Santander

At 27 years old it took The Graduate seven years to save for a deposit with the help of parents on her £232,000 east London apartment with two bedrooms and one bathroom.

Earning an annual salary of £24,000 working in fashion production, The Graduate split the mortgage with a friend and the mortgage provider (Santander) agreed to lend four times their joint salary for a term of 30 years. “I feel proud,” says The Graduate after taking her first steps on the property ladder.

The Target Setter

“We had to knock down walls and swap rooms to get our £450,000 house how we wanted it. If I did it again, I would borrow more money for renovations.”

Age when bought first home: 31

Industry: Tech Sector

Annual Salary: £85,000

House Price: £450,000

How much was your deposit? £100,000

Deposit provided by: Partner

Type of mortgage: Joint

Post Code: E8

What is your current mortgage interest rate? Fixed rate for five years, 10 years ago

How much is your mortgage repayment per month? £1,000

Which bank did you get your mortgage approved by? Yorkshire Bank

“We were so relieved when we purchased our first property because it is such a milestone in life, but at the same time we felt slightly trapped because it is a big commitment for a long time”, admits The Target Setter.

Ten years ago, The Target Setter purchased her first property for £450,000 with her partner. The three-bedroom house in east London was “run down” and needed work.

“We knocked down some walls, swapped the kitchen and bedroom and fully redecorated as well as adding a new loo and a utility room,” she says.

Together they put down a £100,000 deposit and secured a 25-year joint mortgage with Yorkshire Bank on a five-year fixed rate. When the mortgage was approved, The Target Setter’s annual salary in the tech industry was £85,000.

“It was stressful to navigate for the first time when everything was new. If I did it again, I would borrow more money and have more flexibility for renovations”.

Do you want to share your property diary? Get in touch here

The Short Stack

Financial transparency is key to understanding how to get onto the property ladder and in managing expectations.

By Hannah Karpel

More from Business
Join Our Newsletter
Sign up to our Daily Newsletter where we curate the best news stories from around the world. You’ll also have early bird access to our events, discount codes from our favourite brands and our culture round up of what to read, watch and listen to. Sent every morning to your inbox. No Spam.