Buying my first flat - a Case Study!
When the opportunity came up to get onto the housing ladder it didn't seem possible for some reason. Maybe because the state of the housing market - particularly in London - has reached crisis point and the figures pointed out across the media had me thinking I would need at least a £100k deposit in the bank before I could even think about owning a property. Nevermind the fact that I was purchasing a place by myself. But there were some key things I only found out during the purchase of my 1st flat which surprised me. I wish I had known these things earlier. Just to lay out the context, my purchase was for a 1 bed flat in Hackney Wick - 560 sq foot, zone 2 for a price of £389k.
Anyway here goes;
- Look into the help to buy government scheme. If it wasn't for this policy - for all its benefits and faults - I wouldn't be on the ladder. In the end I required a £20k deposit - which I think is reasonable given the circumstances in the London market. Admittedly I had to stretch myself to every point necessary; meaning I could only just get the 5% deposit together, then I stretched my mortgage to the absolute limit (more on this later). But ultimately I saw the purchase process as a bunch of stages; stages that would push my stress levels to the absolute limit as well!
- If you are in a full time job and thinking of buying your 1st property or going self employed BEFORE you try to buy a place be prepared for a 2 year wait! Or go for the property purchase before making the career switch.
- Be prepared to speak to A LOT of mortgage advisors. Because my situation was a fairly unique one; bear with me here: I was 18 months self employed and the rules state you need 24 months filed accounts to even get a mortgage offer - I also lucked out with a developer who had a 'first time secure buy' scheme in place meaning I could make an offer, pay the deposit 4 months before even needing to get a mortgage offer approved (which I needed the extra 4 months to reach 24 months self employment) and if for whatever reason I could not get a mortgage offer high enough to make up the rest of the purchase price (55% as it turned out) I would get my deposit AND £500 reservation fee back in full! Anyway, because of this unique situation I spent hours on the phone with mortgage advisors; most of whom either didn't specialise in mortgages for self employed, or I didn't really develop a sense of trust with. I was parting with a £20k cash deposit without a mortgage offer which is usually a huge no-no, and banking on a scheme which no other developer or mortgage advisor had even heard of for protecting me if anything went wrong at least 4 months later! Eventually I was introduced to a brilliant mortgage advisor who I trusted immediately and built up a great rapport even to this day months after. You go on a stressful but rewarding journey with your advisor so make sure you get the right person for you!
- Get quotes for a) solicitors (also known as conveyancers) and b) surveyors before you agree to using the ones the estate agent will push - you'll likely save yourself an extra few hundred quid if you go down this route. Quotes can be given pretty quickly online and will take no longer than 10 - 15 minutes total work.
- Make sure your work has a functioning printer and scanner. The amount of times I had to visit the printer over the 6 month process was getting rather silly. There seemed to be something new every week I was required to sign, initial and understand. Or just to correct. For example, right at the end of the process the address of the property was changed by the council meaning I had to go back and amend all my initial application forms. Luckily I am based in a coworking space meaning I was easily able to use their facilities but on the days I wasn't in the office things proved to be difficult as I didn't have a printer scanner at home.
- There are some good mobile apps to help you manage all the documentation. Evernote was great for saving all the important stuff. It has the ability to scan as well just so long as the document is no longer than a few pages. Another useful app is Docusign which allows you to electronically sign and complete forms which saved me additional hours faffing with printing and scanning. The website pdffiller.com was also a godsend and wish I'd discovered when it came to completing the help to buy application form.
- With a new build you have a chance to customize some of the finishes like carpet colour, wooden flooring, shower/bath, kitchen worktop and cupboards. Make sure you get from the estate agent in advance what the different options are so you can come prepared if you have an overall interior design goal in mind.
- Patience is a virtue. Difficult to remember at times, particularly with the estate agent putting pressure on you to meet their deadlines, but don't expect things to get done overnight. Instead try to think in stages, stage 1 being to get your help to buy application ready and submitted. Stage 2 might be getting all of your documentation required for the mortgage application.
I hope you found these points useful and best of luck in your journey to home ownership.