I thought it was about time I followed up my 1st blog post with a 2nd one.
I managed to buy my 1st property in July so I've decided to provide a brief breakdown on what the costs were and some key lessons learnt along the way. Hopefully it will make young people realise that it is in fact feasible to get on the property ladder at a young age. (I did it at 22)
Property Price - £140,000
Initially I offered £130,000 which got rejected. In the end I negotiated for £135,000
I would advise buyers to speak to a mortgage consultant before you begin house hunting. It will give you a good idea on what you can afford and will help you understand what your monthly costs are likely to be.
Luckily I had an excellent mortgage adviser. I never had to speak with Halifax once as the mortgage adviser sorted everything for me and kept me updated with any information I needed to provide.
(My mortgage repayments are £700 a month) – (I was saving £700 prior to the mortgage)
- Communication with the sellers’ solicitor·
- Legal Work (I.e. Preparing contracts & searches)
- Registering new owners with the Land registry
- Exchange of Contracts
- All monies due I.e. mortgage loan, stamp duty & search fees are paid to your conveyancer who then pay all monies to the seller/HMRC
- My deposit was 5% - £6750
- Stamp Duty 1% - £1350*
- Conveyancing - £2352
- Mortgage adviser - £395
- Halifax Product Fee - £999
- Halifax Valuation Fee - £315
TOTAL** - £12,161
*Halifax were doing a deal at the time where they paid for stamp duty (I had to pay it first then they refunded me the money)
**This total doesn't include the cost of furnishing/refurbishing the property
How long did it take?
I think I was one of the lucky people as it only took me about two months to find a property that met my needs/wants. The whole process (from my initial offer to completion took about 3 months.)
1. It is important to have all paperwork to hand as lenders will want to see
- 3 months pay slips
- 3 months Bank statements
- Proof of deposit
2. Don't forget banks will only lend you approximately 4- 4.5 times your salary
3. Consider adding someone's name to the mortgage if you don't earn enough to get a suitable mortgage (however, please note that the banks have your best interest at heart so do not add someone's name to your mortgage if you know you can't afford the payments alone)
4. There are several monthly costs involved with owning a property that need to be considered e.g. mortgage, council tax, utility bills, service charge (if it’s a flat) My total costs for the month (including travel, food & phone & gym bill comes up to approximately £1300.(I think a good aim is to have at least £500 left after all costs)
5. 3 months prior to applying for a mortgage be frugal with your spending. Lender will want to see your spending habits and new rules coming in October mean your bank statements will be under even more scrutiny
6. A good conveyancer / solicitor with excellent communication is key. Ask for recommendations. Don't just go for the cheapest deal!
7. LOCATION ... Consider present & future transport links. I.e. Crossrail, local amenities etc.
In total I spent approximately £14,000. In my opinion that is affordable and achievable by many young people. (I have friends whose cars costs more than my deposit)
Remember you don't need to fully know how you're going to achieve something in order for it to happen.
I’m now 26 and this was the first blog I wrote regarding Property.
Inevitably property prices have increased since I got on the ladder however the obstacles faced haven’t.
I sold this property and made £40,000 in a year. I was 23 and naive and thought it was a lot of money, not knowing that I’d miss out on £120,000 a year after selling. Experience is really the best teacher. It‘s only recently that I’ve been able to laugh at the financial loss I took.
The saving grace was that I reinvested that £40,000 straight away into another business and another property so I didn’t lose out financially in the end. Nevertheless in hindsight I would have kept the place and remortgaged.
One tip I’d give anyone looking to invest in Property is to be patient and learn from others mistakes. And if you sell and make money make sure you reinvest straight away.
You shouldn’t see your age as a barrier to getting on the ladder. I know house prices aren’t the same now as when I initially got on but where there’s a will there’s a way.
NB. My 1st job out of uni was a £6.20 internship and I was still saving. Don’t let your current circumstance stop you from aiming high!