How I bought my first house

It’s fair to say that no one feels financially fearless when trying to buy their first home.

We all know how difficult it is to climb the ladder of ownership. And the gender pay gap means that women could face a greater challenge than men.

A report by the Women’s Budget Group last year found that a house costs about 12 times a woman’s salary, on average. For men it is eight times. It may seem like a challenge for women to buy their first property. But there are steps you can take now to get closer to that dream of homeownership.

Ally, an HL colleague and client, shares her experience buying her first property.

This article is about Ally’s personal experience and opinions, and is not personal advice. If you are unsure of a course of action for your own circumstances, please seek advice. ISA and tax rules may change, and your benefits depend on your situation.

How I set out to buy a house and started saving

As soon as I knew I wanted to buy a property, I started taking steps to make that dream a reality. Although the prospect of buying seemed distant at the time, I still wanted to move towards my goal.

I started out by getting an ISA for life and saving a little each month. It wasn’t much when I started working, but as I changed jobs and my salary increased, I also increased my monthly direct debit. I would then top it up with my debit card if I had extra cash from somewhere.

All these little details added up, especially since the government adds a 25% bonus on top. Therefore, it is worth pursuing a lifetime ISA if you have not already done so. Just make sure you understand the eligibility rules and limitations, so you know what you’re getting into.

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I also knew my credit score was going to be a factor, so I used websites to keep an eye on it. Even things like credit cards or whether you’re registered to vote can affect your credit score, and many websites will give you tips on how to improve yours.

Lifetime ISA Key Facts

  • It is a way to save or invest for your first home or your future life.
  • You can pay up to £4,000 each tax year and the government will add an additional 25%. The amount you pay forms part of the total annual allowance of £20,000.
  • You can choose to save cash or invest in the stock market, and your money can grow free of UK income and capital gains tax. If you choose to invest, remember that, unlike the security of cash, all investments fall and rise in value, so you may get back less than you invested.
  • You must be between the ages of 18 and 39 to open a Lifetime ISA. But once it’s opened, you can continue to pay up to age 50.
  • You can withdraw your money to buy your first home after 12 months or wait until you are at least 60 years old and withdraw your money at that time. Other withdrawals will usually mean there is a 25% withdrawal fee, so you could get back less than you invested.


Determine what mortgage you could afford

I told myself that I would start getting serious about buying a house when I started earning £30,000 a year or when I turned 30, whichever came first. It was just a rule of thumb that I gave myself to aim for.

Then I started researching home prices and mortgages to get a better idea of ​​what I could afford. It’s disheartening to see how expensive everything is. But I’d rather know how far I am from my goals than not know. Being in the dark can be scarier and make it seem like a pipe dream.

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I was very lucky because I received money from my family for a deposit on a house. I wanted to put it in a place that was easily accessible. But I also didn’t want it in my bank account where I could accidentally spend it.

I chose to put it in an Active Savings account so I could earn a little interest while I was visiting the house. Also, I could keep an eye on it along with my other HL accounts.


Get an accepted offer on a property

Saving a deposit is just the first financial hurdle. Even if you get an accepted offer on a property, there are attorney fees and moving costs to think about. I decided to put some cash aside to cover these charges and help renovate the property when I moved out.

That was the decision I made, but you may want to do it differently. Setting money aside meant a smaller deposit, which in turn meant higher mortgage payments. So, you have to weigh that.

I also decided to get a mortgage in principle (also known as agreement in principle) from a bank. It is where they give you an indication of how much they would be willing to lend you if you applied for a mortgage. I found it useful when making an offer because it shows that the bank is likely to give you a mortgage. I chose to go through a broker, but you can also go directly to the bank.

My first offer was rejected, so be prepared for that. But, after what seemed like the shortest bidding war in the world, the offer was accepted. The lesson here is to keep trying and hopefully it will pay off.

Maintain control of the purchase of the house

It took me seven months from when they made me the offer until I finally got the keys. Seeing things through to completion was a long and painful process.

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My experience was very similar to that of most people. Rarely will you find someone who has said that buying a home was quick and painless. But that doesn’t mean just sitting back and feeling completely helpless.

I found that letting the realtor know everything got the job done faster. In my case, the real estate agent was the only person allowed to talk to all the other parties involved. I couldn’t contact the seller or his attorney directly, but the real estate agent could. Including the realtor in the emails meant they could go after other people on my behalf.

The other thing to remember is that your attorney works for you and the real estate agent is interested in helping you with the sale. At first, I felt pressured to make rash decisions because I was worried that the sale would not go through. But in fact, you have more power than you think. So ask them questions if you’re not sure.

My take home message: You are a key player in the process, not just the journey.

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