Wednesday, 7 November 2018

Top Tips on Becoming a Home Owner




I am not entirely sure if being a home owner, I notice things in the news a lot more regarding house prices and the struggles of getting yourself onto the house ladder or if it is just a coincidence. Not going to lie, I’m constantly on Zoopla to see if my house has gone up in valuation, always sad when it has gone down in price – not that I am moving on anytime soon, it is just addictive.

It has been two years since we picked up the keys and took that first step through the front door of our own house. I still have to pinch myself that I am a home owner, I am aware that it isn’t that easy and not everyone is as fortunate which is so sad!

I am extremely fortunate that I was able to buy my first home at the age of 23, me and my other half worked our backsides off and missed out on a lot of socialising with loved ones to save. It was a huge learning curve but I believe this is where I got my first grey hair from as the process was far from easy, if things could go wrong then they did.

Being a young home owner, I wanted to do a series of blog posts that gives you an insight into how we managed to own our home but also the difficulties we found and top tips to help you along the way. You could be bored and just not read on but if I help just one person out there then I will be happy.



Here goes...

We knew that we couldn’t afford to purchase a house the “normal” way but after visiting a new build estate in our local area we discovered that there were two other routes we could take when buying a house.

Shared Ownership
This is something we were already familiar with due to family members previously taking this route. There were a set number of houses on the estate we fell in love with that were given to our local council to sell. Now the Shared Ownership scheme is great for first time buyers, you have a choice of different percent of your mortgage to own. We had the choice of owning 50% of the mortgage or 75% of the mortgage and then your deposit will vary and the amount of mortgage you are paying out on. The council will own the rest which can be bought back from the homeowner or you may decided that you will never buy back the rest.

There are downsides to this, if you want to move on then you will need to buy back the rest of the mortgage which is pretty pricey, so keep that in mind. Also if you wanted to do work on the building like taking out a wall, adding a garage or extension, you would need permission from the council.
We didn’t take this route in the end purely because we couldn’t save the right amount of deposit we needed which was a shame.

Help To Buy
This scheme is much more popular and is more well known. With not being able to go through the Shared Ownership’ route we were relieved that there was another way more suited to our financial situation where we could still afford the house we fell in love with, which at that point was a show home and our house was technically rubble at that point.

Help to Buy is fantastic, it is a scheme run by the government to help first time buyers get onto the property ladder, without this we would not be in our house today we would probably still be renting.
All we needed to do was to put down a 5% deposit and the government would put down the rest which is bloody amazing but there is a catch which I will discuss a little later. For us, it wasn’t the monthly mortgage payments we would need to fork out on as we were used to paying rent on our flat, it was in fact finding that huge lump sum to pay out the deposit!

Now, because we put down a small deposit (which did turn out to be quite a bit more than everyone anticipated in the end due to cock ups by the bank society we have our mortgage through) it meant that our monthly payments would in fact be slightly lower. We were in fact only paying out an extra £50 a month more on the mortgage for a three bed terraced house with two car park spots and a lovely garden than what we did the two bed flat. I know we had extra bills on top but it was a no brainer for us.

Here is where I talk about that catch ... after paying off your mortgage for four years, on the fifth year, the monthly payments will increase as you need to pay back a percentage to the government for what they leant you with the deposit.



Deposits
This is the daunting part and the part you wave all your money goodbye. In reality, it isn’t so scary looking back. For me I always wanted to own a home, someone once said to me ‘always own a home, never own a car’ and that really stuck with me. There’s a lot of value and money in property but with cars, they lose valuation as soon as you take your brand new car off the forecourt of the garage.
Our life changed quite quickly after both securing full time jobs and it was clear that we would be moving out of our parents a lot earlier than expected. More because Martyn lived an hour and 20 minutes away from me, with the way jobs worked out he ended up moving and it was only fair we both had our own space so we started to rent.

Because of this, we had a short space of time to start saving for a deposit. Now we always knew we wanted to buy a house together but we didn’t realise it would happen as soon as it did. This meant buying a house the “normal” way was out of the window, so going down the Help to Buy route was the only way.

We moved back in with my dad which meant we were saving £400 a month on rent and the extra on bills to put straight into our savings. However, this only happened once we knew we had a mortgage in principle (more on that later).

Martyn’s mum had then discovered Martin Lewis the Money Saving Expert and he was discussing the help to buy ISA. From doing our research we took the plunge and each opened up an account with a local building society. You must put in £1200 for the initial payment to set it up and then each month you will need to transfer up to £200 a month, for every £200 you put in the government will give you a bonus of £50. It is quite complex and you will need to research this more yourself as the amounts you put into the account has changed since we did this.

If you cannot afford to do this just by yourself, set the one account up and both put money into it. You must have a sum of £1,600 in the ISA before you can claim the bonus from the government. This is automatically done and the money can only be used for the funds consolidated at the completion of the property transaction.

Do not confuse the ISA with the scheme; they are two completely different things. If you choose to buy a house without taking on any of the above schemes, you can still do the Help to Buy ISA – AMAZING!

I’m going to sign off the first instalment here as I am about to go onto mortgages and this is quite a lengthy process, so I don’t think it would be right to bore you any longer.

Alice xx


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