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Most people dream of having a place of their own.
Somewhere they can close the door, shut out the world (although you could argue we’ve probably had TOO much of this in recent months… ) and completely relax.
As someone who rented for 15 years, I know all too well the pains of living in someone else’s house. There was the flatmate who barely came out of her room and looked terrified every time I tried to make small talk, and the guy who refused to move after the lease ended and camped out in the empty flat for weeks.
There was the guy who made me surf down the stairs on an ironing board for my flatmate initiation, and the girl who just decided to quietly stop paying her share of the rent for three months, landing the rest of us with her arrears bill. And let’s not talk about the flatmate who ordered a banned body building supplement over the internet and got our entire house raided by customs police!
I still remember the absolute relief when we completed on our first flat. We no longer had to put up with someone else’s terrible interior design choices, or live in fear of the owner turfing us out.
It wasn’t anything flash – a modest two-bed apartment in Putney – but it was ours, and that felt amazing. I busied myself painting the walls and buying fluffy towels and fancy bed linen.
It gave us greater financial security, and it was a nice feeling to know that the money we were paying each month was now going towards paying off our own home, not someone else’s.
WHAT MORTGAGE CAN I AFFORD?
With the news that Rishi Sunak is planning to extend the stamp duty holiday for another three months, it’s a great opportunity for people – particularly first-time buyers – to get themselves on, or up, the property ladder.
Designed to keep the UK property market buoyant during these turbulent times, it’s believed nearly three-quarters of a million buyers will have benefitted by the original deadline of March 31, saving an estimated £5billion in tax.
If you were planning to buy before COVID-19 was even a thing, this is an amazing chance to save thousands of pounds.
Provided your property is valued under £500,000 you’ll pay no stamp duty at all while the holiday is in place, while properties valued from £500,000 – £925,000 pay 5% (properties sold for higher don’t receive any discount, and pay 10% as usual).
After this time, stamp duty will revert to usual rates: properties sold for between £125,000 – £250,000 will pay 2%; properties up to £925,000 will pay 5% (work out exactly how much you’d need to pay using the stamp duty land tax calculator).
But, regardless of how much money you save, it’s important to ask yourself ‘what mortgage can I afford?’ to ensure what you DO end up paying is manageable for you.
We were lucky to secure our first repayment mortgage with a 5% deposit (this was back in the pre-crash days when you actually borrow MORE than the value of your property!), but – more importantly – we could comfortably afford the monthly payments, which were only slightly higher than we’d been paying in rent.
We bought at what everyone warned us was the top of the market, but (mostly due to blind luck) our gamble paid off. The area where we lived continued to rise in value – even during the recession – meaning we could put a bigger deposit down on our next house.
As tempting as it has always been to buy the fanciest house we could manage, we’ve always chosen to stay well within our financial means. The easiest way to ensure this is to use a mortgage calculator. You enter the mortgage amount, how much deposit you have and the interest rate you’ll be paying, and it works out how much you’ll pay back each month.
If there’s one thing the past year has proven it’s that life can be flipped upside down at a moment’s notice – often completely out of our control. If you’re stretched to your limits financially, there’s no buffer zone for those unexpected twists and turns, and you could find yourself in a precarious financial position, almost overnight.
By using a calculator to work out the affordability of a property and asking yourself ‘what mortgage can I afford?’, you can get yourself safely and comfortably on the property ladder, and take a big step up towards securing your financial future.
Image courtesy of Kelly Sikkema on Unsplash
