Home owner at 21 : Getting a mortgage and buying our first home

how i bought a house

Part Two

If you haven’t read Part One Click here

(Images at the end for mobile version)

I was sat in my parents conservatory scrolling through rightmove, zoopla and every estate agent site I could find, realising everything on here is still too far out of our budget. This should’ve been the first red flag to say, ‘just be patient and don’t try to rush things,’ but I ignored every single sign that told me that. I’m not a patient person.

We had booked to view multiple houses, some were lovely but the road they were on wasn’t great and I didn’t know how comfortable i’d feel walking around alone at night, others were just giant sink holes portraying our spirits at the realisation of what we could afford. Sometimes the estate agent didn’t even turn up to show us around and other times we were welcomed in by the home owner themselves and had to listen to them waffle on in every room about all the sentimental things that had occurred in each space. Some were three bed and some were two bed, some had a new fitted kitchen and appliances, some were just utter shite and some looked like it belonged to their grandma only a week ago before she’d passed away leaving her entire life inside the house.

We had been to many but realistically none of which we could afford, as first time buyers we were going to set up a help to buy ISA. This means that whatever you save, the government will give you 25% of that amount towards the purchase of your house, however the maximum you can receive is only £3,000 and one thing they don’t make clear is that this cannot be used for the deposit, the solicitors or any type of fees related to the purchase before the exchanging of contracts! So basically its like a little bonus AFTER you’ve managed to buy your house (.gov).

Another option to look into is the Help to Buy Scheme, these are for new builds predominantly. This is where you can pay only 5% deposit, have a 75% mortgage and the remaining 20% will be an equity loan. This is ideal if you have the funds and the monthly income to be able to have a mortgage (and prove it profusely) but haven’t got the spare cash for a large deposit. Bear in mind, the 20% is a LOAN and will have to be paid back, however you do not have to pay it back within the first 5 years. This is probably the best option, but, and this is a big but, you need to have an absolutely impeccable credit score to be able to secure a 75% mortgage.

It sounds so simple, and you probably think, oh well that’s fine because ive never had a credit card, ive not been behind on any bills, I’ll be fine. No. This is false, that credit score needs to be watched and looked after more than your own child. I have never had any credit cards or been in debt, this is a point down to getting a mortgage because if ive never had to pay anything back that ive borrowed how can I prove I can pay back hundreds of thousands of pounds for a mortgage?

Secondly, they go back five years when assessing you for a mortgage, this means any kind of slip up in payments at all in the last five years is under scrutiny. I am talking payments for pretty much ANYTHING. If you are buying with others, all of theirs will be scrutinised also and one tiny slip up could cost you being accepted for a mortgage. If you have a low income, chances are you aren’t going to be accepted for a substantial mortgage because you need to be able to prove you can pay back the monthly costs and still live a comfortable life, you need to prove this for a minimum of 3 months. If you are a currently a student, the likelihood is you wont get a mortgage, they don’t take into account your student loan payments but they assess any income unrelated to student finance (so a student loan is not classed as your income). When assessing how much you can pay back monthly, it is essential you can prove you can pay back what they assess your mortgage to be, plus interest, plus what the government see fit as a substantial living cost for your age/status/job for a minimum of at least 3 months. You will also have to prove you have had the substantial amount for the deposit in your account for this time also. If you work for an employer, proving your earnings requires a minimum of 3 months, however if you are self employed, you need to prove your earnings for a minimum of 3 years (this posed a problem for me), if you work for an agency things can differ from different banks/building societies/mortgage lenders/etc, but the likelihood – like being a student – is you won’t be accepted for a mortgage.

When March came I’d come across a house I knew we could afford, it was a lovely house with an absolutely huge garden. It was within the outskirts of the area we wanted to move to, not too far from either of our parents and was a price that was exceptional for Birmingham prices. We had decided we would probably have to look at a two bed as it was all we could afford but the bedroom sizes were large and there was no obvious faults with the house. I went with my mom to view the house and despite being distracted by the bright fuchsia lipstick the estate agent was wearing, I was in awe of finally being out of the conservatory and on the way to owning this house. Id already moved in in my head and pictured the entire Ikea catalogue inside the rooms. The lady had informed us that the house had fallen through at the last minute, only a week before contracts were being exchanged (that is the final part of buying a house) so she was extremely keen to sell and would most likely accept less than the asking price. She had also completely refitted and refurbished the attic and fireplace/chimney to fit safety regulations and there was a new heating system fitted, so that night we made an offer of £135,000 (asking price was 140k) and she accepted. I popped the pink prosecco and we celebrated in the garden, thinking this was it.

All we had to do now was secure the mortgage. We had just under the 10% deposit (the standard required deposit, but would have the full amount before the contracts exchanged as the process can take months, so that’s a few more months to put more money aside) what more could go wrong?

But as we frantically applied to bank after bank, different loaners and mortgage lenders we were just being consistently rejected due to the fact we had a ‘low credit score’ and the fact that I was currently a student meant I was viewed as a “dependant” (Meaning they viewed me as a non income earner and took this out of johns monthly payments to ‘sustain’ me as if I was his child). Because I am self employed (I work on social media and blogging) this meant that to not be seen as a ‘dependant’ and as a contributor to the mortgage I had to have been earning a high wage in self-employment for over three years, and provide bank statements going back the whole three years to prove this, which of course I did not have, so there I was now a liability.

We were in desperate need of talking to someone who actually understood all of this and why exactly we were being rejected. We’d never missed a council tax bill, never missed a rent payment, had the 10% required deposit, it was literally beyond me why we couldn’t get this mortgage. It felt like the whole banking system was just like ‘nah, don’t fancy giving you a mortgage tbh’, for no apparent reason. Also, just to have this conversation to fully understand what the situation was and what exactly was going on, was going to cost us hundreds of pounds. One thing for sure is I was studying in the wrong field, I should’ve become a mortgage advisor or a solicitor where i can literally charge hundreds of pounds just to simply answer a one sentence question.

Luckily for us, John had a friend who was infact a mortgage advisor (its not what you know folks, its who you know, if ive learnt anything in life its to go out and search for friends in useful jobs like they are cattle! [im joking…kind of..] although not all is helpful because, GAVIN IM STILL WAITING FOR MY INCREDIBLE INSURANCE DEAL HERE! Id have thought id hit the jackpot being friends with an insurance broker…)

Anyway, we went to see johns friend all hopeful he could finally sort this out for us. He was amazing really, he explained exactly what all the technical mumbojumbo meant, what it was all the mortgage lenders were looking at/for and explained the whole process to us like the retards we are. He set us up a credit score account so we could see a full credit report (usually these cost a couple hundred pounds to obtain) but despite his good cup of tea making and cute dogs, the results were still a negative. We went through the credit reports and he showed us exactly what it was that was costing us our mortgage.

Now, let me take you back to what seemed like a great night a year prior, It was my 20th birthday, id met my friends up town and we had got inexplicably drunk, ending up in snobs to dance on the sticky floor and wait for hours to take a piss, after breaking the seal. God knows what the night entailed cause I was so pissed I cant remember half of it, but I know it resulted in having a pump truck on our front garden and many hungover lodgers to indulge in a greasy breakfast the next morning. At some point throughout the night however, john had gone missing (this isn’t alarming, when everyone’s drunk we don’t really pay attention to what’s going on and mixed with the fact john likes to have a wonder when he’s drunk, we often lose him for half an hr or so). So, john had done his usual wonder off on a drunken adventure whilst we were digging into a dirty kebab and being sick over the pavement. The next morning, we were all worse for wear and john came in and explained how somehow his jeans had ripped completely across the crotch, so somewhere along his little escapade he’d managed to entirely rip through his jeans and stumble back home in his boxers. Few eyebrows raised here but the more pressing point was he had a really shit flip up phone (he hadn’t entered the 21st century until he met me, I can safely say) that was something stupid like £5 a month on contract that had gone missing, it had fallen from the pocket in the jeans which had ripped off (seriously john what the fuck happened in that missing half an hr). This was a completely innocent act and we were more upset that it had nice photos on the phone than the phone itself, but now, flashforward a year and a half later we realised that that stupid nokia was the reason we could not get a mortgage.

Staring at us, on the credit report was three red flags of £5 for that ridiculous flip phone. When he lost the phone, he simply got a new one, it wasn’t worth anything but little did we know that in the crossover between registering a new contract (he’d used a pay as you go untill he actually got a brand new 21st century smartphone) we had missed a couple bill payments for that phone. 5 fucking pound. This meant the credit score was too low. This, added to the other strains on why we couldn’t get a mortgage meant we were being rejected for a 10% deposit, 90% mortgage. The only way to be able to get a mortgage on the house we had put an offer for, was by submitting a 15% deposit and receiving an 85% mortgage with high interest rates. Because we’d made the offer of £135,000 , 10% was £13,500, we now needed 15% which would have been an extra £6,750 to make the £20,250. We didn’t have just an extra £7k lying around (rounded up £6750) and therefore had to pull out of buying the house.

The following few days I spent crying and feeling low thinking how we would be stuck in my mom’s conservatory for another 6 months until we could save up enough to buy a house with 15% deposit. But life goes on, I had my surgery booked in for the summer and being at my moms meant they could look after me, the dates passed by that our two little ones would’ve been arriving into the world and we put it behind us and celebrated with drinks instead of moping about in the sauna attached to mom’s house.

We continued to save a minimum of a thousand pounds a month for the following few months and I was becoming increasingly desperate to find somewhere before the summer ended. I began searching along the Birmingham trainline instead of inside the city itself, scouting the outskirts of the West Midlands. I noticed a railway symbol on the map with a purple ‘Z’ right next to it, so I zoomed in to find a house for sale right next to the train station. After a few clicks I found that the train from the station goes directly to Birmingham centre (where john worked) and so I considered the possibility of maybe living a bit further out.

I was a little irrational at the time and hastily booked a viewing, seeing only the cheap price and the fact It was next to a train station going to bham and then had to explain to john that the house was infact over 20 miles away. But we were optimistic and we both decided what would the harm be in going to look at the house?

John booked the afternoon off work and we caught the train, marvelling at the fact we got offered a cup of tea on this train and pointed out the countryside views that were so different to the cityscape of Aston we usually passed on the train home. When we got off the train the house was less than 5 minutes walk from the station, we looked outside at it and thought, okay not really what we wanted but it looks spacious. We then noticed the neighbours. The house was next door to God. We had a few laughs both being atheists, at the irony of living next to a functioning church, but I noticed they sold cream teas in the church café so I was sold. At least God wouldn’t be the nightmare neighbour from hell. We were a bit early for our viewing so we took a walk around the harbouring streets, nosing at the nearby shops and all the real ale pubs offering beers straight out of the keg, made in the brewery that stood less than a mile from the house.

We returned to view the house with an estate agent and there’s not much I can say to be honest, from the minute we walked through the front door, it didn’t disappoint. Yes it wasn’t decorated to our taste, and yes there was work that needed to be done, but it was literally three times the size of the houses we could afford in Birmingham. It was three bedrooms with a bathroom the size of a double bedroom, a large garden and a fairly modern kitchen with an attaching lean to for a utility. We left feeling we had a huge decision to make, walked back up to the town centre (which was 5 minutes away) and had a drink in a local cocktail bar. The price of the house was the lowest we’d found, the size was bigger than some of the £200k houses we’d looked at in Birmingham and most importantly, we could just about afford 15% deposit on this house. However, it was in a town we had never been to before, 20 miles from home.

But to skip to the point, after visiting the town a few times, doing research on the area, meeting the homeowner and crying stressed tears, we made an offer. And the home owner accepted.

Now again, in my head I thought great, we hand over the money, exchange the contracts and collect the keys, done. Nope.

The process took four months. FOUR MONTHS.

There were searches and surveys done for things I didn’t even understand or realise they needed to do, it goes through one solicitor to another and the time it took was just ridiculous. Who’d have thought a coal mining search needed to be done on the property? The searches (which may be more or less depending on your property) were; Local Authority, Water and Drainage, Environmental, Commons Registration, Coal Mining, Land Charges, Index Map Search, Disadvantaged Areas, Chancel Repair and Indemnity Insurance. Like Wtf?? I hope john understood what all these were because I just smiled and nodded and hoped I wasn’t being ripped off. Check Fridays move for the definition of these conveyancing searches. Then there are surveys, which included; A basic valuation, a house buyers report and inspection and a full structural survey (again surveys may vary). Check Fidler for further definitions on surveys.

Did I mention each one of these costs hundreds? Well, yepp. After all the stress of saving up the deposit, securing the house and the stress of coming to every result of the searches and surveys, not knowing if today would be the day we are told we couldn’t buy the house because of various issues (after we had paid hundreds for the tests to be done) we were handed a huge bill. I’m not going to lie, we knew it was coming, but we weren’t prepared for the entire cost of the whole process. The whole process requires (can be more or less depending on the expertise and services you required) the (15%) deposit (most commonly 10%), estate agent fees if the house you are purchasing is listed with an estate agent, solicitor fees, mortgage advisor fees, search fees, survey fees, stamp duty (depends on your circumstance and the price of the property you are purchasing), land registry, VAT (if you are required to pay stamp duty) and the bills required for general home owning for the month you are moving in. (I.e, set up the water, electricity, etc, bills ready to move in).

This is where we set up a direct debit loan to a family member, because without them we could not cover the expense of the solicitors, estate agent fees, surveys and searches and the basic fee’s as well as paying 15% deposit on a house. So we can only thank them for being able to give us that extra cash when we needed it. We pay that back monthly with no interest and do not miss a payment.

I’m not going to share the exact cost of the purchase but I did say I would be honest and transparent and I know a few of you have actually asked for figures on my Instagram. So the total cost of purchasing our first home, with all fees included was in the ball park of £25k.

In August 2017, I was 21 and 7 weeks post op, we collected the keys to our home, camped on the floor because we had no furniture and had a picnic. Since then, very slowly, we have been doing up the house and making it into our home and I love it.

We were able to buy a bed after a month of sleeping on an airbed and being propelled into the air everytime john moved, and then in December we finally bought a sofa, now we are preparing to decorate our daughters room as we welcome her into the world, celebrating a whole year of owning our own property. Progress is slow, but Rome wasn’t built in a day.

If you want to get onto the property ladder, it is possible, with perseverance and a lot of strawberry daquiris you will get there. Saving money takes dedication but if I can do it (and still stuff my face with unnecessary take-aways) then you can. I understand I am very fortunate to have a partner to support me, as well as an incredible family who I’m lucky to have help me out when I need it and I understand not everyone will have that support network, but you can do it, it just takes time. Me and john are completely financially independent, and I am so so grateful for that, after purchasing the house we literally had to start saving from nothing again, and it is possible to live, play and save at the same time.

I apologise for the length of this post but I wanted to make sure I covered the majority of questions people asked me in regards to purchasing a home.

If you have any other questions relating to buying a house feel free to message me on Instagram.

Thanks for reading

xxx

(Hover on the image to read the caption)

 

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