If you asked me a few years ago anything about deposit, mortgage or credit score, I would open my eyes wide and I’ll be like..erm what? I had no clue what some of the terms meant, neither I was interested in becoming a homeowner.
It all changed now. I left my university and moved to a rented flat. Despite that I like my little apartment, of course, I dream about my own. After I have finally managed to pay off my overdraft and I am now making my steps toward owning a home. I started researching slowly and getting my head around things like what I need exactly to be able to own my home. I have posted a few months ago a girl’s guide to a property ladder where I have talked you through all available schemes to become a home owner. Perhaps, you remember my post about the reality of living in a rented apartment where I talked about how it really is to be renting. Since then, my circumstances slightly changed. I was working then as a full-time interior designer on a graduate salary and now I just work from home.
Despite that I am more on a survival stage rather saving, I know that once I get back to a full-time job as an interior designer, ( perhaps on a better salary than graduate) I will be able to start saving ( and read here my girl’s guide to saving money. I have learned now, how to switch on saving mode which was my biggest sin, plus once I start selling my stuff on eBay and Preloved, hopefully, will be able to start saving even more.
I have now made a list of all things I need to know to become a homeowner. For me, it’s all first steps so don’t worry, I am not that smart pants lady who got her home and share bits, I wish, though. I am slowly preparing myself for it, with you. So girl, you can think to become a homeowner too 😉
So, I wanted to share with you what I have learned so far.
- Checking your credit score. This is something I had no clue about it before. I have recently learned what credit score is. Basically, it’s a number from 0 to 999 which is defined by banks and lenders for you. The higher the number the better, so 999, for example, shows that you are an excellent potential borrower. Most companies will charge to check this and you can do it for free on ClearScore. However, you have to check your credit report and make sure your rating are well too. If your score is low you have ways of improving it by making sure you don’t miss any payments but there is a lot more to it and you can check various ways how to improve your credit rating with MoneySavingExpert.
- Start saving. No deposit- no home. Depends on of the scheme you decide to take your mortgage you have to have your savings of at least 5%, 10% or 20% of the house price. I have talked already how to save money on food and you can just check my post how to save up money in general (link in 3rd paragraph) You can start saving by Instant Cash ISA scheme or Help to Buy ISA, read carefully best cash ISA post to decide which is best for you.
- Repairs/improvement. Think of your budget and living cost as well as how much mortgage you will be paying. Don’t forget you have to pay bills and while renting you get all repairs by your landlord. Here you have to be prepared for any accidental damages, or your electricity bills as well as your usually spending. Prepare a list of your spendings and a good practice is to keep a diary for at least 3-4 months writing down all your spendings to see where your money goes. ( this will also help cuts). Before you move in you will need money for decorating and repairs unless you taking a brand new home but still, you want to paint that wall pink, don’t you? and paint cost money.
- Sign up to a government scheme. Government and companies want to help us a little and created several schemes from rent to buy, shared ownership and more so read my girl’s guide to a property ladder where I explained these schemes more. (again link in 2nd paragraph)
- Rates. You also have to know there a difference between fixed and adjustable rates and which is better for you.
- Pre-approved. It’s good to know whether you actually be able to get a mortgage so you can get now pre-aproned which means if you get an evaluation of your financial situation. Having that letter from a lender (bank for example) will help sellers to accept your offer.
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Such a great post Anna. My husband and I were renting for a very long time and didn’t think about buying a property until a few years ago..We live in the Isle of Man and house prices are pretty high, so we thought it was out of our reach! We decided it was time to look into it, so we started saving, we cut back on things, didn’t go out as much, moved in with in-laws for 2 years and managed to save for the deposit! I must say it is hard work if you don’t get help but it is doable! Good luck 🙂
I am seriously saving just because I cannot wait to have my own place and design everything the way I want!! even though it is a bit hard , I believe there is no better feeling then owing your place! Thanks for sharing this fantastic guide xx
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owning a property in the uk is like a dream specially when young, everything is just so expensive!!! those tips are very helpful to start considering!
It’s great you’re thinking of getting on the house ladder. I’ve got my on apartment and I’m already thinking of moving to a house. Hope to be able to do it soon.
I would love to own a property once I graduate, but it’s so unrealistic, unfortunately! Shame it’s so expensive here in the UK
I started on the property ladder when I was 24, Still haven’t paid off my last mortagage though!
Great post Anna!
I remember thinking exactly this just a few years ago. In fact, at the start of 2015 I still had debt from funding myself through university (on top of student loans) and I was barely making enough each month from my job to survive, and house-buying seemed an incredibly long way off. However, I was incredibly lucky to get several well-paid freelance projects which yes, ate up all of my spare time, but allowed me to finally pay off the bank loan, and the overdraft. Of course then I was looking at ten years to save enough for a deposit – it was so depressing, given I was already over 30!
I had been encouraging my boyfriend (now husband) to focus on paying off his debts too, so we could save together, and in the middle of the year he managed it too! We were resigned to a lot of scrimping and saving.
Then his father became very ill, and he wanted to move to Yorkshire to be near him. I was prepared to rent, but his parents said that if it helped, they would lend us a deposit. This was so unbelievably kind of them, as they are not super rich, and I realise how incredibly lucky we are. I had always known my own parents couldn’t help out, so a loan like this seemed like something that happens to other people, not us! We decided to see how much we could get a mortgage for and got an advisor (which I absolutely recommend for a first homebuyer, it made everything so simple and was NOT expensive at all), and it turned out we could borrow a lot more than we thought! But we were sensible and decided to set ourselves a max budget of £125k when looking, to give us enough spare income to pay back the loan, and also to have money to renovate and continue to save. We very quickly found a house we could turn into our perfect home, with 4 bedrooms, in a great location, and our offer was accepted immediately! Two months later we had the keys! So in a matter of 4 months, I went from imagining myself buying a house in 10 years, to owning one! I know this miracle won’t happen for everybody, BUT you never know how your circumstances might change, and in the meantime, start saving so you can be ready for any opportunity!
I can’t wait for you to buy a house either – I know you will do simply beautiful things with it! I hope people think the same about ours! xx