Interview With a Homebuyer

OnLadder talks with Louise
As part of an ongoing series, we will be interviewing first time home buyers to get their side of the home buying process. We want to use these stories to highlight aspects of the process that first time buyers may find challenging so they can be properly prepared for the experience, but also highlight the benefits of purchasing your first home. Enjoy!

What were your reasons for buying a home?

Well, I’d been renting for a number of years, and this was my first significant purchase as an adult. I was encouraged to buy my first home by my parents, who thought it was a good way to start putting money into an asset. I wanted to transfer some of the money I was spending on expenses and start putting it towards a mortgage.

I felt I was in a steady role in the financial services industry that was going to provide me with a stable source of income, and I had the appetite to get on the ladder.

Were there any other social forces pushing you towards buying a home?

It was more so my parents. I'm single and don’t have dependents, so it wasn’t a situation of “I need a home to grow a family”, but it was more of my parents saying that I’m at that age now, and we perceived as a good time in the market to start the process.

It was primarily them that pushed me to start looking at the market, to start talking with a broker, and to get my finances in a state where I was ready to buy a house.

What was your biggest hurdle to getting on the ladder?

Lack of knowledge for sure. I hadn’t done any due diligence about the process and what it entails. So many questions arose: What's a good mortgage? Should I focus more on the interest rate? What can I get on my salary?

I knew that the credit score mattered, and I perceived myself as ineligible to buy a home. I had a few late payments over the years and just assumed that I wasn’t eligible after cursory look at my credit score. However, my parents encouraged me to meet with a broker and get an expert opinion on the situation.

What I found by talking with my broker was that, even though there were some missed payments in the past, there are specific steps that I could take to improve my credit score, which is constantly changing.

It is important for homebuyers to get a good idea of where you stand financially in order to develop a game plan to start taking steps to improve your credit score for when you are ready to apply for a mortgage.

The deposit was another barrier that I could have had, but I was fortunate enough to have my parents there to support me. They were able to gift me a significant amount for the deposit, and coupling that with a high stable salary, I was able to get a mortgage on a property that I owned 100%.

If you didn’t have the gift from your parents, how long would it have taken you to save up for the deposit?

I think it would have probably taken about six or seven years of consistently saving, even after factoring in expected salary increases. Money would have been a barrier and I didn’t perceive that there were properties that I could afford in London, as a solo borrower.

I was keen not to do shared ownership and those other schemes because while I may have been able to get on the property sooner, I still probably wouldn’t have gotten 100% ownership by now, only the share of a property. The 100% ownership is important because I want the flexibility to let the property out, or to sell it if my circumstances change. The current shared ownership schemes make it significantly more complicated to sell.

If not for the gift deposit from my parents, I would have certainly had to compromise and buy a home that was outside of London. I would have had to move significantly further away from my place of work in order to get on the ladder which would have made commuting much more difficult.

What were the looking for out of your first home when you started the process?

I was looking for an older property. Not excessively old, but certainly not a new build. New builds were generally more expensive with the margin’s homebuilders charge. I also wanted a home that was in a good location with good transportation links, and in an area that was green and safe and generally had a good standard of living. I wanted to be in the London zones to avoid paying the commuter rail fees that you could expect to pay if you were coming from say, Kent. These commuting costs are not insignificant and can end up spending 5 grand a year.

I was looking for a 2 bedroom and ideally 2 bath, and off road parking as well. Also looked at the square foot per pound to make sure I got good value for space. Wanted to stay in the property for potentially 5-10 years, so wanted to have town centres with gyms and other places of leisure, and local schools as well. The schools may be attractive to a prospective buyer when I decide to sell and may help boost my property’s price.

How stressful was it trying to find a home that fit all these requirements?

Trying to find a property that meets my criteria was quite stressful. Typically, mortgage offers are valid for 6 months, so I had 6 months in which to find something that fits my criteria, that is priced at a point I could afford, and has a seller that was motivated to sell to me. This was more stressful than applying for the mortgage since aspects of finding the right home were out of my control.

The due diligence part was also quite stressful because I didn’t know what to expect. The conveyancer didn’t try to explain what they were doing and why they were doing it. To them it was just churning out work, but I would have appreciated having someone who I could ask questions of to learn more about what red flags to look for when buying a home.

Were there other times where the process was confusing?

I bought a home that was at the end of the 10-year new buyer guarantee, so I was the first person buying it from the developer. The conveyancer asked for documentation about the construction of the property, and sent it to me and asked “Are you happy with this?” and I didn’t know what I was looking at or how do I get assurance over it. The conveyancer only said that it was up to me whether or not I was happy with the document, so I ended up having to ask friends and family if they had encountered this before. Overall, it was stressful when it didn’t really need to be.

Were there any other experiences during this process that you think first time homebuyers should know about?

Plenty, but one that stands out is my property suffered from a faulty heating system. When selling your house, the seller has to provide a declaration to the buyer that states that “the following we believe, to our knowledge, are in good working order.” Further the standard homebuyer survey does not do an in-depth review of the house. If I wanted to get something like the underfloor heating checked, I would have to find a specialist. I asked the conveyancer what they recommended, and they just said they couldn’t advise on this, and it was up to me whether or not I wanted to do a more extensive survey.

I made the assumption that since it was a newer model that I didn’t have to worry as much about this and signed off on the seller’s declaration and the standard homebuyer survey. However, after I moved in, I found that the underfloor heating in the living room wasn’t working. It took a month to diagnosis the problem, and what I found was that the wiring had been fried because it wasn’t laid properly when the house was built.

I went back to the seller to bring this issue to their attention, but they pushed back saying the purchase is done and it is your problem now. I thought that the declaration would be considered false representation, but after talking with my conveyancer I had no recourse since I signed off on the seller’s declaration that they believed everything was in good working order. I then had to spend an extra £3,000 to fix the issue.

Would it have been hard to get the more extensive survey?

It would have cost £750-800 versus the £500 I spent on the standard survey. Looking back, I had my mortgage agreement expiration date coming up, and the conveyancer pushing me to close the sale. I was rushed and didn’t have the time to properly assess the situation, and it cost me thousands of pounds in the end.

When I go for my next home, I will certainly do the more comprehensive survey, and what I would recommend to other first-time buyers is that you have to be willing to walk away. I should have been willing to walk away from the deal, but I was so in the moment, I had already bought furnishings, and wanted a property now. In retrospect, I should have been critical of the due diligence and when I was unhappy or uncertain about how it was done, I should have been able to walk away. Yes, the conveyancer fees would have been higher, but that’s better than inheriting a property that’s a burden for you.

What did you enjoy about the process? Was it worth it?

Shopping for the properties was fun, as was going for the viewings and getting a feel for what is on the market. It is that point when you know you have that purchasing power and you are going to find something that meets what you are looking for.

Going through that process with my parents was a nice experience to share together as well. I definitely think that buying a home is worth it if you buy the right home, and if you buy a home that meets what you’re looking for. Previously when I was renting, I was living in areas that I didn’t truly want to live in, but I felt I had to because of my budget. Now I feel like I’ve significantly improved the quality of my life by moving to my current area, I can change and decorate how the home looks, and no one can take this home away from me. Having it and knowing it’s mine, and not a landlord’s, is key.
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