If you’re out there thinking/hoping/confused about buying a first home in London, it is possible! We don’t have to be forever condemned as ‘the un-propertied youth of the capital’ and no other people in their 20s that I know are talking about how to actually get on the property ladder and own your own home. Here’s my experience buying our new-build flat with Help To Buy London.
If you live in London and have been for some time, there’s a good chance you’re hearing that ‘you need to get on the property ladder’. Even if your first thought is ‘I could never afford it… I’m doomed to rent in London forever’ then this is for YOU! If I managed to buy a flat here, you can too! Here’s what we learnt in the four month process of becoming homeowners. I never imagined myself owning my own property in London, having a mortgage or enough money for a deposit etc, but it’s not so complicated after all. In the spirit of full disclosure – I have a joint mortgage with my husband, we used Help To Buy London, we borrowed some money (£15k) from parents to help with what we needed for the deposit and our flat is in Zone 6. This is London we’re talking about…
So here’s an overview of the process:
~ start looking ~
1. Have deposit ready – a minimum 5% of purchase price – and then some more to cover bank transfer fees, land registry charges, moving costs and furniture!
2. Start making appointments for every weekend and look far and wide, cheap and expensive and have an open mind! Search for the area you think you want to live in and then cast the net wide. We looked at everything and anything in our price bracket, going to least six different development sites across North London. Also look at crime ratings for potential areas on Police.uk. This is such an eye opener and really changed our mind on a few areas.
Once you’ve been to a few you get a picture of what you’re actually getting for your money and what your life could be like there. It’s important to think how your life in the area will be as you’re going to be there for a few years minimum. Question about job opportunities in the area, do you want to start a family/ are there schools nearby, what does the community look like etc. The things we were looking for were:
- Within our budget
- 2 bedrooms
- Location to our jobs in London and Hemel Hempstead.
- Proximity to a tube station so I can get to work in London
- Close to Heathrow Airport for H’s work
- Access to a motorway so I can visit my family in Dorset.
- Local amenities – we lived in pretty dodgy area for four years before, so most places were better than there! We wanted a ‘safe’ area with a pub, restaurants, supermarket and shops close by… not too much to ask, right?
3. Talk to a financial advisor – this is free and no strings attached. We initially thought that our budget was much less than what our maximum property price actually could be (by about +70k!)
4. Speak to a broker or mortgage advisor to get things in writing and see what mortgage rates will be available to you. Once you’ve found the right mortgage for you, you will need to provide a lot of paperwork and we had to wait around 6 weeks for the mortgage to be approved. Our IFA fees were around £1,000.
~ find your flat ~
5. Appoint a solicitor or conveyancer. Be sure to browse different companies, read reviews, take recommendations from family/friends – as you’re going to be in constant contact with these people for months, even many times per day at the end. It also helps if they are close to where you are (ours weren’t!) as they will want a lot of documents and paperwork. We went with two recommended local companies in Dorset, where my friends and family have recently bought homes. It was also cheaper than London prices. Our solicitor fees were approx £1,250.
6. Reserve your flat – we bought off plan so this means that the property is not built, or is in the process of being built. When we found our flat the building was up, but it was covered with scaffolding and we didn’t see inside for another two months. It’s a risk/gamble but you also get to snap up your dream property before it gets taken by someone else. When you reserve off plan, the development company take a small sum to take it off the market from any other potential buyers. I think ours was £500, that you get back at the end. Make sure you check the terms & conditions before reserving. It turns out we had agreed to a designated completion date without realising it, and if our flat had not been delayed we probably wouldn’t have met it and then you will have to pay late fees.
Also, know that if you’re using HTB London then you only have four working days to submit your Authority To Proceed to the developers after reserving it. This is a certificate to say you qualify for Help To Buy and they will pay the remaining 40% of your purchase price.
~ the legal part ~
7. Apply for Help To Buy London (through your solicitor) – this was probably quickest and the most stress-free part of the process. This is where you agree your 40% equity loan that you will need to pay back within 5 years – or pay X% interest thereafter. This allows you to get a 55% mortgage and pay a 5% deposit instead of the usual 10%. 40 + 5 + 55 = 100% of purchase price. If you can afford to buy without Help To Buy that’s great and better for you long term as opposed to short term…
7. Get your mortgage offer. This was the most stressful part for us, as our whole building were set to complete on the same deadline of Halloween, and were told that if we were late we would have to pay fees to the developers. It then turned out that that we were delayed by six weeks due to our builders not completing the build on time. This was actually a blessing in disguise as 48 hours before we were due to exchange, it turned out that the government scrapped the Stamp Duty*, so this saved us a big chunk of money (almost £7.5k) on our flat that we were then able to spend on furnishing our flat and multiple trips to IKEA in the first few weeks. That also allowed us to buy our first car in London that we would need for H to get to work from our new location. We’ve got a little 2001 Polo (nothing fancy)!
8. Agree exchange date – this is the date when you exchange final contracts between you, your solicitor and the developers and exchange the agreed money to your solicitor who will coordinate your mortgage start date and pay the developers the desposit money. We exchanged and completed on the same day, so I don’t know what happens exactly between exchange and complete if done on different dates.
9. Complete – this is where you officially own your home and everything is complete. You can pick up the keys and the property is yours!
10. Hello Homeowner(s)!
We started looking for a flat in early July and stumbled upon our flat on 13 August 2017 by accident, as we were going to look at another housing company on the same development site. Some developers we looked at across various sites in North London if it’s helpful: Taylor Wimpney, Persimmon Homes, Barratt London, Weston Homes and St Modwens. We accidentally walked in to the St Modwen Homes sales suite instead of the other one and after we saw the (small, dark and dingy flat – a definite no), we went back to ask more about their properties. We saw their show home and loved the huge windows, quality of the homes and use of light, and we had already fallen in love with the area as soon as we stepped off the tube. We put down the holding deposit one week later and started the meetings with our financial advisor and agreed to work with our solicitor. Here are some pictures of our flat before we moved in.
We had our Help To Buy Authority To Proceed in early September and after this it was all about choosing the interiors for our flat and many many many calls to our financial advisor about our mortgage offer. We first applied with Nationwide but had to cancel this because they didn’t approve H’s visa status. So we ended up going with Santander. Our mortgage was approved on 28 September. After this point when the mortgage is approved it’s all over to the solicitors to get all the paperwork together and to work with the developers on your behalf to put all the enquiries and paperwork together. We first saw inside our flat on 6 October and then in November, two weeks before our completion date we paid our solicitor the deposit money before we exchanged and completed on 24 November and moved in the day after.
I can’t believe it’s already been over 4 months since we lived here, but we’ve never been happier! We’ve still got lots to sort out in terms of finishing the furnishing but there’s no real rush for us. Hope this is helpful for anyone curious or thinking about buying their first property in London. Any questions please ask!