Think you can't afford to buy a house? Don't be so sure. It's tough, but there are women all around the country who have. Here, we speak to 27-year-old management consultant Laura, who bought her first home in London.
The Money Bit:
Age when bought property: 24
Location: Stratford, London
Salary: £36,000 when I bought, £54,000 now
Any other sources of income: I have a lodger
Mortgage size: Originally £70,000
Monthly mortgage payment: Was £300
Take-home pay after mortgage: Was approximately £2,000
Deposit size: £30,000
House location: Stratford London
House size: 2-bedroom flat with a small balcony
Number of people living there: 2
How I Made It Work…
I bought (part of) my own place in April 2014 in the Olympic Park in Stratford, through a Shared Ownership programme, which is a great way for first time buyers to get onto the housing market. It means that I bought a portion of the apartment, and effectively rented the rest from the housing association.
I had saved for a number of years and had about £30,000 saved for a deposit. I knew that I would really struggle to get a whole apartment by myself, as I was only earning £36,000, and even if the banks would lend me 5x my salary, £180,000 would hardly get me a garage in London…
So I decided that I’d do Shared Ownership and started off with 25% of a property worth £400,000 instead. I chose a lovely 2 bed apartment on the 3rd floor in an apartment block in the London 2012 Olympic Park. They converted the Athlete’s Village into a range of apartments (from 1 to 4 bedrooms), so there are hundreds of properties in this area, with lots of these reserved for Shared Ownership.
This cost me £100,000, so I used my deposit of £30,000 and borrowed £70,000 from Barclays through a specific Shared Ownership mortgage. I borrowed over 30 years so my monthly mortgage was just short of £300 a month. I hear you, £300 a month for a 2 bedroom flat in London sounds too good to be true, but with Shared Ownership you need to pay rent on the portion that you don’t own as well. This meant that with the £600 monthly rent I had to pay to the housing association, my home was costing me £900 per month. On top of that, the block also has a £200 a month service charge (regardless of the percentage that you own), so, my total expenses came to £1100 a month before all of my bills. To help me afford this, I rented the second bedroom out to a university friend, who contributes towards these costs.
I have been fortunate enough to qualify as an accountant since buying my first 25%, so have been able to borrow some more money from the bank. This has allowed me to ‘staircase’ which basically means I have bought another 25% from the housing association, so I now own 50% and am renting 50% (one day hopefully I can own 100%). Whenever you buy more, you have to get a valuation and buy at the new market rate - which was when I found out the apartment value had increased to £450,000, which meant my extra 25% share cost me £125,000 (rather than the £100,000 I’d paid for 3 years ago). That all sounds a bit complicated, but put simply, I paid a few legal fees and got myself a new (higher) mortgage, increasing the amount of the apartment that owned in the process and adjusting the rent I owed to the housing association accordingly.