I had to go interest only to get started as I had no credit rating, then 2 years in HSBC asked me to come in for a chat, I got turned away (I moved banks shortly after) the same day I popped into nationwide to book an appointment and walked out one hour later with a mortgage (pending all the paperwork stuff)
So I guess do what you need to do and donāt get too disheartened by a no.
I use a credit card to buy things I need and then pay it off in full, Iām not sure if that actually helped with the credit rating but I did finally get a real mortgage, only 9 years left and Iām paid off
My only tip for buying a house (which is a long way off for me too!) is the Help To Buy ISA. Iāve got one and itās pretty decent just as a savings account, plus being able to get a little bump towards a house is a bonus!
Yeah, I actually still have an HTB ISA open with Santander, as they pay a whopping 4% interest. (Only for old customers, I think: New customers get only 2%.) The problem I had with HTB ISA is that the cut off is too low if you buy just outside London, like we did. Therefore we didnāt qualify for the bonus.
The Lifetime ISA could be a better deal, now, as the cut off for the government bonus is much higher, I believe, but I havenāt checked it out in detailā¦
The only thing you have to watch out for with the Lifetime ISA is that if you withdraw early or not for an eligible house purchase then you pay a 25% fee on the withdrawal. If youāre withdrawing the entire balance you end up losing more than the bonus paid
Yeah, you definitely need to weight up the HTB and LISA for your own personal needs.
I calculated money I can absolutely love without and put it into my LISA, and also put a bit into an ISA, so Iāve still got some accessible for emergencies.
Iāve managed, including the bonus, just under 3k and I started the LISA last June with Skipton.
So - related personal news - I bought a house, in London, a few weeks ago Iām so thrilled to finally own a house. Renting has been fine, but we never wanted to do it forever. I started saving when I was about 25, too. Took over five years, but we got there in the end, with about a 15% deposit. We chose not to use help to buy or shared ownership, for various reasons, but they are viable options we considered down the line. It IS possible, would be my main message. When I started I was on about 20k - 25k too.
Budgeting
My top tip for budgeting would be to live on a small budget and find ways to enjoy the lifestyle it creates. Walking holidays in the UK can be awesome. Cheap local restaurants often have the best / most exciting food. Lots of cool stuff is actually free or very cheap. My favourite coat was Ā£10 from BHF. Avoid looking at stuff and thinking ālife would be better if I only I could afford toā¦ā because if your mentality is that you feel like you are making sacrifices, it will be a lot harder than if you just feel satisfied with the life you have.
I reckon - work out what the priorities are for your happiness and then protect these. The last five years have been some of the best in my life, and thatās how it should be.
Iād also say, itās a marathon and not a sprint, and small amounts become big amounts over time, so donāt worry too much if it feels like progress is slow at first. And like setting a marathon pace, find your ācomfort zoneā and then stick within it. Personally I find a budget of Ā£450 a month for disposable income (excl. bills and rent!), is enough for me to be relatively comfortable and socially active. I experimented with less, but it didnāt work out well.
Over time as your income (hopefully!) rises, keep your expenditure steady and avoid ābig ticketā items that would cause a hit to your savings, and earn any extra you can that would boost them (e.g. overtime, bonuses etc). At this stage even if you were saving just Ā£50-100 a month, itād be a decent start.
Things NOT to do
Cut down on your social life (lifeās too short!)
Read lifestyle articles in national newspapers or magazines. They are always full of rubbish like telling you to buy expensive ingredients and tools for cooking or travel to expensive hotels and restaurants, or buy new clothes. None of this stuff affects your actual happiness in my experience, especially if you never read about it in the first place.
Anything that makes you actually unhappy. You are 25, please enjoy your 20s! I recently discovered that surprisingly they do not last forever
Worry too much yet what house you can/cantā buy and all the affordable housing schemes etc. The ground shifts so much on most of these things each year, you canāt predict what it will be like by the time you are actually ready to buy (mortgage rates, house prices, affordable housing schemes and your personal circumstances will all change). To buy, you need a big chunk of money, and more is always better, so worry about that bit first!
Anyway enough of this absolute essay of a post. Back to a Friday evening of packing boxes ready for my big move
This is brilliant news @JonathanL that really needs applauding! (I have to embarrassingly admit that my ego was hurt, being 35 and renting with zero savings) what youāve done is a huge achievement and inspirational to anyone who wants to own their own home.
This post has helped me today, seeing as weāve all got to start somewhereā¦ Iām going to start a serious savings plan and save diligently over the next 5 years, then post back here and share my homeowner success at 40
I often compare myself to my friends who own their own home and it seemed like an insurmountable task. After reading this, I feel like itās a fresh start from today. Letās get saving!
I would strongly suggest looking at Shared Ownership - I know some people are sceptical but it can work out brilliantly. I bought my 2 bed flat in Peckham 3.5 years ago on Ā£30k living in London, and currently it costs me less than Ā£900 all in (inc. bills) per month. You also only need 5% of your share as a deposit (so e.g. Ā£400k flat, you buy 25% for Ā£100k, your deposit = Ā£5k).
The trick to it is that the rent the housing associations charge is totally random - so one two bed flat will have rent for say Ā£600, another identical one down the road will be Ā£300. If you find a place with low rent, more of your money will be going to the mortgage which means you can get to live in a much expensive place while paying less dead money (total monthly cost cannot exceed 45% of your income). If youāre a uber-geek about it like me here is how you calculate whether the rent is good value or not:
(rent_amount+service_charge *12) / (total_house_price x housing_association_share)
e.g.
Rent = 500
Service = 100
House price = Ā£400k
Your share = 25%
Housing association share = 75%
As a guide from memory below 2.5% is good, above 3.5% is bad
PS. I think the best value rent is to be found on resale places, you never get it with the new builds - avoid anything with glossy brochures and email marketing campaigns!
Also - on a separate note, I read about this the other day, which seems an almost to-good-to-be-true way to save up for a house way faster than normal: https://joinstepladder.com/
(Have never heard of this, and it sounds magical 
)
Ignore me
Iām so thrilled to finally own a house. Renting has been fine, but we never wanted to do it forever. I started saving when I was about 25, too. Took over five years, but we got there in the end, with about a 15% deposit. We chose not to use help to buy or shared ownership, for various reasons, but they are viable options we considered down the line. It IS possible, would be my main message. When I started I was on about 20k - 25k too.
I suppose you should enjoy all of them!
