A bit of a different kind of post is coming your way today – after mentioning my house purchase on Twitter, I’ve had a couple of requests to explain exactly how my boyfriend and I managed to buy a flat of our own in London. This will be a wordy one, you are warned; I must also say that I am in no way an expert on this – this flat was the first buy for both of us, so this post is a summation of our experience and how we managed to buy in what is generally known as a RIDICULOUS market. I’m just here to make sure you don’t lose hope if you dream of owning a place; it definitely can be done!
Deposit and Excess
The first hurdle always seems like the biggest, and this is definitely apt for this stage of the homebuying process. From the outset, Lewis and I knew we’d be aiming for a 95% mortgage, with Nationwide being our preferred lender, so we set about saving a 5% deposit, which for us was around £10,000. You can find out how much you’ll need by using an online mortgage calculator from a couple of lenders; this will give you an estimate of how much they might be willing to lend you. Then you can level this against house prices to see where you can afford to live (Kensington’s out, sob!).
I started saving when I got my first job out of university in September 2013, initially setting aside about £300 a month, bumping it up as much as I could whenever I had any cash spare at the end of the month. If you move it to savings as soon as you’re paid, it’s like you never had it and you don’t notice it’s gone. Sort of… I was also lucky enough to be given £1000 for my half of the deposit from my grandparents, which was a huge boost. Lewis got together his half, with similar help from his family, and within 18 months of starting, we had our target saved. It was hard, but we didn’t go without too much – you just need to be realistic and sensible. Better to shift leftover cash into a savings account than splash it unnecessarily at this stage! I should also mention that we saved with a Nationwide Save To Buy account; this is a special account Nationwide offer that allows you the option of a 95% mortgage when you’re ready to buy. You have to put in a minimum of £50 for nine months before you’re eligible, but you can’t take the money out once it’s in unless you close the account. For this reason, I put the minimum amount in the Save To Buy every month, and kept the rest in my savings until we applied for the mortgage.
We rented the entire time we were saving; initially this was easy while we were living in Glasgow, where rental costs are much cheaper. When we moved back to London in September last year, things were a little bit trickier but it was still achievable. I should say that neither of us earn huge wages, we’re definitely below the average wage – you just need to budget and prioritise. You might not be able to buy new clothes every week for a year, but you might just have your own home at the end of it! One huge thing to remember is that buying a house doesn’t start and end with the deposit; you’ll also need to factor in funds for solicitors, stamp duty and all of the other associated fees – this amounted to about £3500 for us, and everything needs to be paid on the day you get the keys, so there’s no escaping this bit, unfortunately! It’s a massive expense but it has to be done, so make sure you have enough to cover all of this before you get serious and move on to the next stage…
Decision in Principle
Once you have your deposit, you can start the ball rolling! You’ll need to get a Decision in Principle (or Mortgage in Principle) before you start searching – some estate agents won’t even let you view properties without you having this in place. It’s basically assurance from your chosen lender that you’re fit for a mortgage and they are, on principle, happy to lend to you. Do your research and shop around for your lender to make sure you’re getting the best deal for you; our preferred choice from the start was Nationwide, as it’s our bank already and is one of the only high street lenders that offers a 95% mortgage option. We’d had a couple of glowing recommendations on Nationwide so for us, it was a straightforward choice.
You’ll need to make an appointment with your lender to obtain your Decision in Principle; this takes about an hour in total and involves declaring basic details about your income and your lifestyle. You’ll need to show payslips and bank statements, but nothing too in-depth at this stage. You’ll also need to be sure of how much you want to borrow at this point, as this is when your lender will assess whether they want to loan you that amount. If you’re freelance, they can discuss all of these options with you too, but make sure you tell them before you book your appointment, as they might need you to bring more information with you. And once you have your Decision in Principle certificate, you can get on with the exciting stuff – viewing!
This was fun and depressing in equal measure for me, if I’m honest. Initially, we both resigned ourselves to the fact that we’d be unable to afford anything closer to London than Zone 6, so we set about viewing flats on the East London/Essex border, despite it being pretty far from my family and friends in South East London. The first flat we viewed was one we’d been keeping an eye on for weeks and we were super excited to see it – only for it to be a huge let-down. Estate agent photography can be massively deceptive; in this case, huge damp pockets in the walls were hidden, as were broken floorboards and general bad condition. In our search, we encountered several deceptively bad flats and a couple of too-small heartbreakers, but all in all, we only viewed six before we found The One. So not too bad really! It was one of only two places we found in South East London (and in Zone 4) that we liked, so it feels like it was meant to be. I’m just not cut out to be an Essex girl, it seems!
We had one rejection on a property before finding our current home, which was gut-wrenching, but we found this place the next day and it’s so much better, so the key thing to remember is everything happens for a reason! It’s pretty easy to get caught up in the excitement of viewing a house but you do need to keep your head screwed on. I particularly found it tricky to not let my heart run away with the potential of every place we saw, so it was lucky that Lewis is so practical! Make a list of requirements – for example, we wanted bigger rooms than our cupboard-sized rental, a decent-sized kitchen and lots of storage room, in a top-floor flat in a safe, accessible area. Think about what you need. Consider EVERYTHING. Where will your stuff go? How will you live your life here? Neighbours, space and storage are all things to consider, as well as the heating system, the windows and expensive things to change, like the kitchen and the bathroom. Décor is NOT important. Seriously – our flat was painted in many shades of black when we viewed it. It doesn’t matter, paint can be bought. Think about your compromises too – in our case, the area isn’t the most fashionable, but it’s a nice, safe suburban part of town, 25 minutes from central London. We can always travel to trendy areas; having a nice flat (or a flat at all!) was more important for us.
It sounds clichéd, but you’ll know when you find the one that feels right. When we walked in here, I felt comfortable and I could see the potential of the place; it was also the first and only place we viewed that ticked every requirement we had. Sold!
Making an Offer
Here’s where all of those evenings spent watching Location Location Location served me well! We decided to make an offer on this place as soon as we closed the door, so we spent the walk to the estate agent discussing figures. We decided on a slightly lower opening offer, allowing us a tiny bit of manoeuvring room should we need it., which we did. The negotiation took a full day, which was agonising, but we stood firm and kept repeating our attributes – being a first-time buyer is basically the best thing you can be, so keep on about it! Any seller would be mad to pass up a chain-free buyer for someone else who has their own place to shift, so make sure you know your worth. Also be sure on your terms – I was very firm that our offer was only on the table if the flat was taken off the market immediately, with nobody else getting a chance to see it/make a higher offer on it. My Phil Spencer-esque speech worked a charm!
As soon as we had our offer accepted, the estate agents wanted us to get a solicitor on board. We were pretty set that we would be using a firm used by all of my family, Nelsons in Bermondsey. They are a little bit more expensive than the average but their reputation was fantastic and honestly, they were so slick, so professional and so worth the extra cash! They ran rings around our sellers’ solicitors and we were ahead of the game at every turn. When you make an enquiry about instructing them, your chosen solicitor should send you a detailed outline of their fee and all expected costs, so you can budget accordingly. This was a huge help in keeping us on track with saving for that pesky cash on top of the deposit…! Just make sure you do your research – our solicitors were a given for us considering their reputation in my family, so find out from trusted family who they use as a starting point.
Serious stuff! We booked an appointment to get our mortgage properly approved about a fortnight after securing our flat, and I was dreading this; I’d heard all kinds of horror stories about assessing how much you spend on everything from haircuts to birthday presents and takeaways, and I was worried my lavish Dominos’ habit would sound the death knell for our dream home. However, we experienced none of this. Our discussion with the Nationwide mortgage adviser was based completely on what we felt comfortable with, so the mortgage felt like it was on our terms. The appointment was three hours long(!) but we got everything sorted and walked out with a mortgage in place. Obviously I can’t speak for other lenders, but our experience with Nationwide was hassle-free, friendly and so easy from start to finish.
This is generally where you leave the solicitors to get on with it while you get busy with a Pinterest board, but it doesn’t always go so smoothly… For a month or so, we had no problems and all was smooth sailing, but then it went a bit pear-shaped. This is where having a good solicitor is key, as our experience was that our sellers’ solicitor was trying to be a bit cheeky, by getting us to pay for things that the seller should cover. Luckily our solicitor was amazing and fought our corner to get a fair deal, but it was pretty stressful. We almost had a calamity towards the end of the process when both sellers in the chain started threatening to pull out and all of that melodramatic jazz, but again, our solicitor managed to save the day and made everyone see sense again. Seriously, a good solicitor is worth every penny. The process took less than three months from start to finish – and a month of that was our seller house-hunting for their new home. Speedy!
This is the part when I finally felt like I could breathe again. At this point, you’re now contractually obliged to buy the house and your seller is contractually obliged to sell it. No more tantrums and threats – it’s definitely yours! On this day, you’ll need to hand over your hard-saved deposit to your solicitor, so make sure you transfer this in advance so there’s no delays. This is also when a completion day is set, i.e. the day you can collect the keys and move in.
The day of dreams! You’ll be high as a kite and surrounded by boxes, but you’ll need to sit tight and wait until you get the call to say it’s all done. Your solicitor will have been liaising with your lender to arrange the transfer of the purchase funds, so no worries on that front, but you’ll need to pay the stamp duty and the solicitor fees before completion yourself. Wave goodbye to your cash..! When the estate agent calls, you can head on in and collect the keys! It’s so surreal, honestly. I stood in this big empty flat that day and felt totally overwhelmed, but it soon subsided.
It’s been a long journey but it’s been fantastic, and it just goes to show that you can definitely buy a flat in London for a reasonable price – just not in zone 3 or above!!