Couple move in with parents to save up a deposit - A Case Study!
After travelling around the world, Ellie, 26, and Ash, 28, were ready to settle down and buy a property together. They are just one couple among thousands of first-time buyers who returned to their family home to save up enough for a deposit.
Ellie, a police staff investigator for CID, and her partner Ash, a construction worker and part-time firefighter, were keen to travel before getting a mortgage. In 2015, they spent five months backpacking across Thailand, Cambodia, Vietnam, Malaysia. Singapore, Philippines, Indonesia, New Zealand and Fiji.
“Travelling was always a priority for me and something I had to do before settling down. I wasn’t even sure if I wanted to live in the UK or abroad,” said Ellie.
When they returned from their travels, Ellie moved back in with her parents in Portsmouth. Ash also moved back to his childhood home. The couple didn’t want to fork out huge sums for rent as it would leave little spare cash to save for a deposit.
It took two-and-a-half years but between them they managed to save the impressive sum of £43,500 for a deposit. In August 2018, the couple purchased a three-bedroom, semi-detached house for £290,000.
Ellie said: “Neither of us wanted to throw money away on rent. Although at times we wanted our own space and were very ready to move out by the time we did, it wouldn’t have been possible to save as much if we hadn’t returned home.”
Did they get a helping hand from the bank of mum and dad? “We did it all on our own, other than the fact our parents allowed us to outstay our welcome and live at home while paying them a minimal amount of money,” said Ellie.
“Both of us are good at putting money aside each month. I wouldn’t say it was particularly hard, we just tried not to waste our money. We didn’t eat out on a regular basis and we barely spent any money on new clothes.”
The couple did, however, still go on fun trips. Ash refurbished an old VW camper van for surfing weekends in Cornwall. Ellie said: “We did still get away. When we went on holiday, we stayed in hostels and cheap accommodation.”
The couple chose not to put their savings into a Help to Buy ISA, one of several government schemes available to help first-time buyers get on the housing ladder. The maximum purchase cap of £250,000 or £450,000 in London would have limited them to buying a flat or two-bedroom house in Portsmouth. Ellie and Ash were thinking ahead to when they might need a third bedroom. They also wanted a reasonably-size garden.
So even though they could have picked up £3,500 in bonus to help buy their first property, the couple took the decision to prioritise getting a bigger family home instead.
Ellie explained: “We never wanted to buy a flat as we knew it would only be a short period of time before moving again. We had saved a reasonable deposit and wanted as much as we could get for that amount of money. We never planned to buy a house over £250,000 but once we began to look, we realised we needed to.”
The couple started house-hunting in suburban parts of Portsmouth but extended their area of search to get more value for money. They found their dream home in Havant, six miles from the city.
Did being first-time buyers give them an advantage? Ellie said: “We were told another couple also made an offer on the property, but the vendor was interested in us as we were first-time buyers with no chain.”
It took just three months between making an offer in August 2018 – and moving in but it was a stressful period. The seller, who lived abroad, commissioned an online estate agent to market the property which dated from the 1950s.
Ellie said: “The online estate agent would only allow us one viewing and then we had to wait until our survey was completed to arrange a second viewing.”
Stress levels were further increased by the seller’s choice of solicitor to handle all the paper work, including exchange of contracts. He used an online conveyancing firm, recommended by his estate agent, based in the north of England. The firm proved difficult to get hold of - and the sale nearly fell through.
Ellie said: “Our solicitor and even the vendor said they were unable to contact the online solicitor on numerous occasions. We had major difficulties towards the end and came very close to our mortgage offer in principle expiring. We were told of our moving-in date less than 48 hours beforehand!”
The couple paid for a Homebuyer’s survey, so the property was inspected and checked for structural problems, such as subsidence or damp, as well as other issues.
Ellie said: “It was a daunting to read and highlighted various problems. However, we were reassured that it was nothing out of the ordinary given the age of the house.”
The Government axed stamp duty for first-time buyers while they were still saving – did the tax break help? Ellie said: “It definitely helped in leaving us with more money left over to furnish the house. It was also an incentive to buy as big as we could afford and make the most of it.”
Ellie said it has been a “no-brainer” to get financial advice from Ash’s cousin, a mortgage advisor at Trojan Financial Services Ltd. Ash is largely self-employed which can make it more difficult to get a mortgage.
The couple opted for a fixed-rate, 40-year mortgage with Principality Building Society which has recently reduced the level of income information it needs for self-employed mortgage borrowers from three years to two.
Monthly payments are lower with longer-term mortgages. The downside is more interest is paid over the lifetime of the loan – and it might not be paid off when you retire.
Ellie said: “We realise it’s a considerable amount of time but we’re both responsible with money and I pay a reasonable amount into my pension. We hope to chip away at it over the years!”