I was only 19 when I bought my first home for £190,000, seven years ago.
It was a small flat in Hertford, Hertfordshire, with only one bedroom and a tiny lounge — but it meant the world to me. The thrill of holding those keys in my hand, knowing I had a place to call my own was indescribable.
Growing up, my family moved around a lot and I longed for the stability and security that owning a home provides. I wanted to build a solid foundation for my future, free from the uncertainty of renting.
Armed with a nine-to-five job, a robust savings strategy and a great mortgage broker, I conquered the daunting realm of buying my first home before I reached my twenties.
Hannah Green is the director at Greenhill Estates
Hannah Green
Today, I’m here to spill the beans on why other young adults should strive to own a piece of the property pie and my top tips on how to do it.
It’s no wonder young people feel disillusioned when the average first-time homebuyer in the UK is now 37, or 38 if you’re in London.
So the first question is, should you push to buy a home young, or are there benefits to renting and which path offers the right outcome?
The Renting vs. Buying Conundrum…
Let’s crunch the numbers
Buying:
Avg. House Price in the UK: £282,000
Avg. Mortgage Interest Rate: 5 per cent
Monthly Mortgage Payment (over 30 Years): £1,648
Yearly Expenses (Excl. Bills, Repairs): £19,776
Renting:
Avg. Monthly Rent: £1,248
Yearly Expenses (Excl. Bills): £14,976
At first glance, renting seems like the wallet friendly choice, saving you roughly £4,800 a year.
But these figures overlook the positives of long term capital growth, financial discipline, peace of mind (no threat of eviction) and the fact that as a tenant, you are essentially paying towards the landlord’s mortgage, allowing them to profit from capital growth at your expense.
With only four UK housing market slumps in the last century (the main ones being the 1990 interest rate hike and the 2008 financial crash) and with a whopping three million housing shortage, the odds are in favour of property prices continuing to march skywards.
Here are my 10 top tips to kick off your journey onto the property ladder:
Build a Positive Credit History
Why It Matters: A strong credit score is essential for obtaining a mortgage with favourable terms, as it reflects your financial reliability to lenders.
How to Achieve It: Regularly review your credit report using free services like Checkmyfile or ClearScore. Ensure timely bill payments, reduce outstanding debts, and avoid frequent credit applications.
Find a Reputable Mortgage Broker/Financial Advisor
Why It Matters: A knowledgeable broker with access to the entire market can offer a broader range of mortgage products tailored to your financial situation. Without knowing what you can afford, it would be like going clothes shopping without knowing what’s in your bank account.
How to Choose: Seek brokers with excellent reviews and recommendations who are registered with the Financial Conduct Authority (FCA). They can help you understand your affordability and guide you through the mortgage application process.
Why It’s Crucial: When the Bank of Mum and Dad isn’t an option, saving for a down payment becomes a mighty mountain to climb. A solid financial game plan will keep you on track and help you reach your homeownership dream with finesse.
How to Nail It: Set a practical savings goal (think at least 5 per cent of the property’s value). Embrace high-interest savings accounts or ISAs, slash unnecessary spending, and automate your savings. Every penny counts – even something as simple as forgoing that daily latte can work wonders for your piggy bank.
Research Areas and Local Prices
Why It Matters: We’ve all heard the saying “location, location, location.” Choosing the right area and understanding the local market are crucial for making an informed decision and avoiding overpaying.
How to Proceed: Use online platforms like Rightmove, Zoopla, or PrimeLocation to compare property prices in various areas. Visit neighbourhoods at different times to gauge the community feel. Check local amenities, transport links and future developments.
Stick to Your Budget and Criteria
Why It Matters: Staying within your budget ensures financial stability and reduces future stress. Your personal criteria ensures the property you find meets your needs.
How to Maintain: List your non-negotiables (e.g., garden, parking, proximity to work) and adhere to them. Avoid properties that exceed your budget, even if they seem attractive. Be prepared to compromise on minor details as long as these major needs are met.
Why It Matters: Understanding the difference is crucial for long-term financial planning and property rights.
How to Decide: Freehold means you own the property and the land it stands on, whereas leasehold (e.g., flats) means you own the property but not the land and you may face additional costs like service charges and ground rent. Decide which option suits your needs and financial situation best.
Don’t Be Discouraged by Interiors
Why It Matters: Cosmetic issues are often easy and inexpensive to fix, allowing you to personalise your new home. Improving interiors is all part of the fun of homeownership and putting your own stamp on your new home.
How to Approach: Focus on the property’s potential, such as layout, space, and location. Consider cost-effective updates like painting, new flooring, or DIY projects. Cosmetic flaws can also be a bargaining chip for price reductions.
Why It Matters: Viewing several properties provides a better understanding of the market and helps you compare features and prices.
How to Execute: Register with local Estate Agents and schedule viewings for different types of properties within your budget. Take notes and pictures during each viewing. Ask about the property’s history, recent repairs, the neighbours and the local area.
Factor in Additional Costs
Why It Matters: Extra costs such as legal fees, stamp duty, and moving expenses can add up, so budget for them to avoid financial surprises.
How to Prepare: Research typical costs for conveyancing solicitors, stamp duty rates based on your property price and removal services. Include these expenses in your overall budget and save a little extra for unexpected costs.
Why It Matters: Since the Help to Buy scheme ended in March 2023, other alternative schemes can still help you get on the property ladder.
How to Benefit: Consider shared ownership, where you purchase a portion of a property (typically between 25% and 75%) and pay rent for the remainder. This scheme can enhance accessibility to homeownership by requiring a smaller deposit and mortgage. Additionally, explore rent-to-buy options, which are ideal for individuals saving for a deposit.
Another possibility is no-deposit mortgages, although these may come with less favourable rates. Deposit Unlock schemes enable you to purchase a new home with just a 5 per cent deposit, while professional mortgages allow you to borrow 5.5-6 times your salary, exceeding the typical 4.5-5 times limit.
So there you have it, future homeowners! The path to owning your first home might seem like a rollercoaster, but with a bit of savvy planning, determination and these tips, you can do it!
Remember, every great journey starts with a single step, or in this case a single saved penny. Whether you’re sipping on a budget-friendly homemade latte or scrolling through property listings, keep your eyes on the prize.
The keys to your dream home might be closer than you think.