As I said yesterday, I want to discuss the financial process of buying our first home. I’m going to again lay out some points to start with:
- I’m not trying to brag – I’m trying to give an idea of the kind of work required to get a property at my age.
- I recognise that this just won’t be possible for everyone. I wouldn’t have been able to buy the house we’ve bought without my partner also contributing.
- I’ll preface this by saying that I, personally, had around £3,000 in savings from my parents which I did use towards the house desposit. This was money intended for university which I never needed. However, I won’t make a big deal of this – as you’ll find out, we would have saved that much extra money if given another few months.
Once we moved into our flat together, we were paying our bills proportionally. My partner earned more money than me, so he paid more. After a couple of months, we both changed our jobs, and I received a raise. A small time later, so did my partner.
Due to our budget and fairly reserved spending habits, we were building up savings fairly rapidly. We vaguely knew we wanted to buy a house at some point, so we just kept casually saving. We both received further raises in the subsequent year. When we reached the end of our tenancy agreement in the flat, we signed on to another one; the rent stayed the same and we liked the property and location. Neither of us felt we imminently wanted to move elsewhere.
When that happened, we realised that we did actually want to buy a house, and after looking online for some examples, and crunching the numbers, we felt it would be possible after saving for another year. After that, we kicked our saving up a notch. Where we’d previously crept up to eating out two times a week, we knocked this back down to one, and we both avoided spending money unnecessarily.
All in all, in the following six months, we were saving over £1100 a month between us. This added to the savings we already had. Our savings first went into our Help to Buy ISAs, which are now sadly discontinued. If you’re unaware, these allow you to pay in up to £200 a month. When you buy a house, on completion you can cash out the account and the government will add a 25% bonus on top of whatever is in them. We were able to use our accounts jointly, which netted us an extra ~£2,000 in bonuses alone.
The Help to Buy ISAs were only usable on first time properties which were valued at £250,000 or less. This helped us as it set a hard limit on what we could afford. In January 2019, we decided to just test the waters and go to view some properties which were on the market at the time. Our intention was to just try and find out what we were looking for, then go back a few months later to actually make an offer.
The industry is pushy. We ended up getting swept along in the process, and we viewed many properties over January. By the end of the month, we had gotten our offer accepted on our current house. The final price we agreed on was £237,500. This meant that our intended 10% deposit would need to be £23,750.
While that was a huge number, it was good to finally have a solid figure in mind to base our calculations on.
I think tomorrow I’ll go into more detail on what the costs were in our house buying. It might be good to shed light on how the different parts come together.