Being informed about mortgages: The best book I purchased
A couple of years ago, I found a book recommendation and decided to purchase Money: A user’s guide. It’s by far my favourite book because it covers so much, from debt, buying your first home, investments, retirement and so much more.
Learning about LISA savings accounts
One thing the book mentioned for first-time buyers is opening up a LISA account. This account is for first-time buyers, or extra money for retirement. Every time you put money in, you get 25% from the government. You can only put in £4,000 every tax year (from April to April), but if you put in the max, then you’ll get an extra £1,000 from the government.
Also, if you have a partner, they can also open up a LISA account. That means you could get an extra £2,000 every year if you’re able to max out both accounts.
This amount might seem monumental for you, and it was for me. But if you can get in the habit of saving small and often, then you’ll certainly surprise yourself on how much you can save. Don’t get disheartened by the fact you can’t max it out. Make smaller targets like £500, then £1,000, and you’ll eventually save up a good amount.
I opened up an account with Moneybox which is one of my favourite savings apps. They make saving feel effortless because they offer different ways to save. There’s round-ups which round up your spending to the nearest pound, weekly payments and even one-off payments.
It makes you feel like you’re in control of your savings, and every time you meet a goal, it gives you a huge sense of accomplishment.
A year later, Tiff opened up her own LISA account, and we were able to put everything we could into both accounts. We managed to max my account, and then focus on doing the same to hers. It didn’t really matter whether we maxed out the account or not, but it was great that we could.
What was our mortgage deposit goal?
Our initial goal was £10,000 because we were looking at a 2-bedroom house and we wanted to use the help to buy loan scheme. This scheme meant we needed to find 5% of our deposit, and the scheme would pay the rest.
The loan is interest free for the first five years, and then we’ll be planning to put that amount into our mortgage when we eventually re-mortgage.
To use the help to buy scheme, I knew we had to act fast. The reason is because our government are taking it away next year. We started looking to see what was available nearby, but there wasn’t any new properties being built in Newton Abbot.
In order to use the help to buy scheme, we had to purchase a new build. We started looking in areas around Newton Abbot and found a new phase build by Barratt Homes in Paignton.
We decided to take a look at their show homes, and we asked people who already live there what it was like. They told us the area is lovely, and the company have dealt with their snagging issues efficiently.
This gave us the confidence in choosing them as our new build. We then checked out the show-homes and we fell in love with their 3-bedroom property. It was slightly above our budget, but we knew we could reach the deposit amount and afford the monthly payments.
We needed to find an extra £4,000, and the mortgage company wanted us to pay off Tiff’s car payment. We paid the remaining amount which was around £500, but we still needed to find the rest of our deposit. We decided to sell Tiff’s car, and share mine.
As the market for used cars was up, we managed to get a decent amount selling her car and had the deposit amount ready.
Our mortgage company put us through the ringer
Mortgage companies are renowned for being a pain when applying. They want to go through everything with a fine comb, and ask a lot of questions about payments made. If there’s any debt payments such as car loans, then they will likely want you to pay it off.
It was stressful, but we managed to iron out their questions. However, when we went to apply, we chose their 40 year option. Our mortgage advisor went to apply, and they came back and told us they closed applications for this one. We then had to choose the next one down which is 35 years.
It was a little annoying, and to make things worse, we had to get everything together by 12pm the next day. We scrambled to get everything they requested together, because we’d probably struggle to pay more. The less time you have to pay, the more money you have to find.
We applied for the mortgage and finally got approval which meant we could carry on with the process.
The worst is over, but there’s still a lot to do
The mortgage application is probably the worst part when it comes to buying a house. But there was still a lot more to go through. The next step was to apply for our help to buy loan. This was a lot easier because they didn’t ask questions, and accepted faster than the mortgage company.
We also had to exchange contracts, sign our mortgage deed, and save for solicitor fees, moving van and extras for the house. It was a lot, but we feel it’s been worth it, and now we’re waiting to move in.
You can read my previous post 9-weeks until we move house! The excitement build!