How to buy your first home before you turn 21
This month I’m sharing with you our interview with James and Demi whereby they share their fantastic story of buying their first property before the age of 21. So inspiring!
Read on to find out how.
1. Can you share with our readers how you were able to buy your first property at 21?
We started saving up as soon as we could. I left college after one year to become a Web Developer full time at an agency. My first wage packet was saved, and I continued saving since. After one year, I left that job to set up my own business developing websites for my own clients. To date, business has been growing strong and I’ve saved as much money as I could. My girlfriend also begun her career after leaving college – and often worked six day weeks in retail to earn as much overtime as possible, so that it could be saved. We haven’t restricted ourselves though. We’ve enjoyed some amazing holidays around the world, including New York, Portugal, Paris, Dublin, Greece etc – and we both own our cars outright (a Mercedes-Benz A Class and a Fiat 500). Ultimately, we just saved rigorously with what we earned – but we still enjoyed our life as and when we could.
2. What type of property did you buy (new build, off-plan, desolate etc) and why did you choose that specific property?
Our property is a new-build 4 bedroom house, which we purchased about 5 months before completion. This allowed more than enough time to process all of the necessary paperwork, organise our financial affairs, and the exciting part of choosing out options and extras for the house. We’ve also had some fun with flying the drone over the house at various stages to track its building progress! For someone who works from home, it was important that we had enough space for a comfortable office as I would be spending most of my working hours there. We also wanted extra rooms, as we plan on living here for the long term and hopefully raising a family. Not forgetting the amazing location and the view over the fields/countryside.
3. What practical tips would you recommend to our readers in order to save for a property?
I understand everyone earns different amounts of money, but whatever you do earn – just make a goal to set aside a set amount each month. Then, if you have anything left over – then save that also. Interest rates are extremely low today, so there’s not much help from the banks in terms of growing the money you’ve saved – but I’d certainly recommend looking into the Help To Buy ISA. Unfortunately, we didn’t opt for this option at the time. Budgeting is important, and cutting out unnecessary spending is key (i.e. buying that £3 coffee twice a day, or financing the latest car, or just living above your means). Enjoy yourself, but also remember to limit yourself financially. Try and cut down any monthly expenditures as well, such as car finance payments, any credit card debt bills, etc. We both still had to pay our house keep to our parents, etc – so we still had some sort of monthly outgoings.
4. How helpful do you find the help-to-buy schemes set up by the government to assist new buyers?
The help to buy scheme is great – and that made our first property a whole lot more affordable for us. The government gave us a 20% interest free (for five years) loan, which really bought our loan to value down for our mortgage. After the first five years, you only pay the interest on the loan (which is at a low rate anyway). Without the help to buy scheme, we would have settled for a smaller house that we may not have been so happy with. Recently, the government also announced that they slashed Stamp Duty fees for first time buyers – which I feel is a great incentive as it can save the purchases thousands of pounds up front (depending on the value of the property they purchase). There are numerous options which allow you to pay back the help to buy loan in due course.
5. What factors would you tell new buyers to consider before putting a deposit down for a particular property?
There are many factors, and different people will tell you different things. The first, and most important, is to ensure you are confident you can meet the monthly mortgage payments with enough money left over each month. Also, do some research and work out how much it will cost you to furnish your house; you will want to make sure you have enough money left over for this. So, if you need to, you can put down a smaller deposit to accommodate this. For the house itself, it’s important that it’s in a good location (I always look for nearby supermarkets, transport links, etc) and is the perfect size for you. If you plan on staying in the house for the long term, then you may want to consider that there are enough bedrooms for if you wish to have children in the future.
6. What are your next property ambitions?
We aim to remain in our own residence for the foreseeable future, unless our circumstances dramatically change. Ultimately, we want to continue saving up for our next property venture – a deposit for a rental property.
I think their story is inspiring and quite clearly shows that the traditional career route that many of us undergo, could actually be a hinderance to our financial growth. Does this mean everyone needs to be become an entrepreneur in order to get on the property ladder? I hope not.
This is not by any means an investment or entrepreneurship blog, however, as young people, I want to encourage you to find ways you can generate multiple streams of income. Guess what, property is one of them! For some, being a landlord is a full time job.
What is your property ambition? Start thinking about it now…
Pictures included in this post are not representative of the property.