WEBVTT - Saving To Buy Your First Home 0:00:01.139 --> 0:00:04.410 Kia again, and this week I'm returning to one of A Little Bit Richer's 0:00:04.470 --> 0:00:08.730 most important topics, buying your first home. We've talked about 0:00:08.730 --> 0:00:11.789 the different schemes to help you get on the ladder, but it doesn't change 0:00:11.789 --> 0:00:14.160 the fact that it's still likely to be a lot 0:00:14.219 --> 0:00:16.859 of money. So I'm talking to Hazel Johnston from Legal 0:00:16.859 --> 0:00:20.550 and General. Hazel was previously a mortgage advisor, and now 0:00:20.550 --> 0:00:23.489 helps other advisors grow their business, so she knows a 0:00:23.489 --> 0:00:25.200 thing or two about the cost of getting on a 0:00:25.200 --> 0:00:29.969 property ladder. So Hazel, let's kick things off about talking 0:00:30.030 --> 0:00:33.059 amounts. When we talk about saving up to buy a 0:00:33.059 --> 0:00:35.250 house, just how much are we talking here? 0:00:35.969 --> 0:00:37.890 It really depends where you're in the country. As a 0:00:37.890 --> 0:00:41.010 starter it varies so much, but I'd say it can be 0:00:41.010 --> 0:00:42.600 a lot of money. You can tell by my accent 0:00:42.600 --> 0:00:45.330 I'm based up in Edinburgh, Scotland. If I use Scotland 0:00:45.330 --> 0:00:49.679 as an example, we're looking about 34, 000 pounds roughly as 0:00:49.679 --> 0:00:53.519 an average compared to London, that jumps up quite a bit. 0:00:53.520 --> 0:00:53.911 Poor London, that number is always a lot higher, isn't it? 0:00:53.911 --> 0:01:00.870 It is, 144,000 pounds on average. So, it can be really tough 0:01:00.870 --> 0:01:04.169 to get yourself into a position to have those savings 0:01:04.170 --> 0:01:07.560 for that deposit. And I think as we look at 0:01:07.740 --> 0:01:11.339 generations gone past, some of our friends were maybe buying 0:01:11.340 --> 0:01:14.430 properties when rates were a bit better and property prices 0:01:14.430 --> 0:01:17.429 were lower. So we are in probably quite a different 0:01:17.880 --> 0:01:19.740 space to what we were a few years ago when 0:01:19.740 --> 0:01:22.020 looking at the same sort of properties. 0:01:22.110 --> 0:01:26.430 Absolutely. I think I make it a point because I'm 0:01:26.700 --> 0:01:28.859 in the process of saving up for my first house. 0:01:29.190 --> 0:01:29.879 Congratulations. 0:01:29.879 --> 0:01:32.700 Thank you. And I make it a point to have 0:01:32.700 --> 0:01:33.930 a look at different areas I want to live in. 0:01:33.930 --> 0:01:36.060 I mean London, as you mentioned, that number is very 0:01:36.060 --> 0:01:40.349 hefty, so not necessarily feasible for me, but any areas 0:01:40.349 --> 0:01:42.630 I do look at, I like to go on property 0:01:42.630 --> 0:01:45.059 search websites and have a look at the sold listings 0:01:45.270 --> 0:01:47.490 because then you know, it gives you a good understanding 0:01:47.490 --> 0:01:50.760 of what properties in that area have actually sold for. Because 0:01:50.820 --> 0:01:52.680 I mean we can look at what's currently listed, but that 0:01:52.740 --> 0:01:54.450 doesn't mean it's going to sell for that. So that's 0:01:54.450 --> 0:01:57.179 kind of a little habit I've got myself into whilst 0:01:57.179 --> 0:01:59.130 I'm saving so I kind of have a good understanding 0:01:59.130 --> 0:02:00.750 of how much that's going to cost me, but it 0:02:00.750 --> 0:02:03.240 is a lot of money. But there are a lot 0:02:03.240 --> 0:02:06.540 of things that come into it. So let's talk about 0:02:06.540 --> 0:02:08.970 mortgages. Maybe you can give us a quick explainer. So 0:02:08.970 --> 0:02:12.450 Hazel, what is a mortgage, and what are different options 0:02:12.450 --> 0:02:13.111 that are available to people? 0:02:13.111 --> 0:02:16.589 Yeah, so a mortgage essentially is just like a loan that a 0:02:16.590 --> 0:02:18.360 bank or building society will give you to be able 0:02:18.360 --> 0:02:20.340 to fund your purchase. Because I think we'd all love 0:02:20.340 --> 0:02:22.589 to have a couple of hundred thousand sat in the 0:02:22.590 --> 0:02:25.680 bank to buy these properties, but it's not the case 0:02:25.680 --> 0:02:28.350 for most of us. So yeah, banks, building societies will 0:02:28.350 --> 0:02:31.110 lend that money in the form of a loan. There are lots of 0:02:31.440 --> 0:02:34.500 options though, so it's not just a case of if 0:02:34.500 --> 0:02:38.159 you're looking for that set property, you can adjust things 0:02:38.160 --> 0:02:41.190 on that mortgage to make it affordable for you, such 0:02:41.250 --> 0:02:44.850 as the length of time, as one example. So that's 0:02:44.850 --> 0:02:47.010 called your " mortgage term." So you could have a mortgage 0:02:47.010 --> 0:02:50.369 that's slightly shorter, that will mean that your monthly payments 0:02:50.370 --> 0:02:53.940 are higher, and you'll pay less back to that lender. 0:02:54.090 --> 0:02:56.729 Or you can have lower monthly payments each month for 0:02:56.730 --> 0:02:59.729 that mortgage by extending it right out and taking it 0:02:59.730 --> 0:03:02.910 over longer periods of time. So there are different options 0:03:03.150 --> 0:03:06.929 depending on what your circumstances are and the budget that you 0:03:06.930 --> 0:03:10.229 want. The good thing with mortgages as well is you can 0:03:10.230 --> 0:03:12.508 get advice on them. So, if that's something that you 0:03:12.508 --> 0:03:14.969 are looking at and you want to have a think 0:03:14.969 --> 0:03:18.480 about what's affordable for you, then absolutely you can speak 0:03:18.540 --> 0:03:20.100 to a mortgage advisor and they will be able to 0:03:20.100 --> 0:03:23.400 tailor your monthly payments to that budget as well. 0:03:23.400 --> 0:03:25.320 I think it's always good to know that you can 0:03:25.320 --> 0:03:29.578 get advice. I think things like this, buying a property 0:03:29.580 --> 0:03:32.219 is such a big purchase that you want to make 0:03:32.219 --> 0:03:35.580 sure that you are going down the right path for you and you're 0:03:35.580 --> 0:03:39.000 picking the right options for your situation. So I want 0:03:39.000 --> 0:03:41.850 to ask you, when it comes to mortgages, how does 0:03:41.910 --> 0:03:45.030 that actually impact your deposit? 0:03:45.330 --> 0:03:49.170 Yeah, so your deposit can vary and that really depends 0:03:49.170 --> 0:03:51.120 on how much you're wanting to buy that property for. 0:03:51.120 --> 0:03:54.030 So obviously the more expense of the property depends on 0:03:54.059 --> 0:03:59.190 area, it's repair, actually the desirability of that home, you 0:03:59.190 --> 0:04:01.950 are going to probably need a bigger deposit than maybe 0:04:01.950 --> 0:04:03.719 a property that needs a bit of work or somewhere 0:04:03.719 --> 0:04:07.410 that's in an area slightly out of a main town. The more you 0:04:07.410 --> 0:04:10.799 can afford to put in, then the smaller your mortgage 0:04:10.799 --> 0:04:12.600 is going to be. And that's always going to mean 0:04:12.600 --> 0:04:16.469 you can potentially obtain better interest rates in that lender and 0:04:16.470 --> 0:04:19.830 have a lower monthly payment. But that's not achievable for 0:04:19.830 --> 0:04:22.860 everyone. We've just seen how much deposits are on average. 0:04:23.190 --> 0:04:26.400 So what I would say is sometimes that's where we do 0:04:26.400 --> 0:04:28.948 see people opting to look at Bank of Mum and 0:04:28.949 --> 0:04:31.680 Dad. I mean if you look at our Bank of 0:04:31.680 --> 0:04:36.360 Family research that was recently done, about 47% of buyers 0:04:36.360 --> 0:04:39.779 under 55 years old had to get support from their 0:04:39.960 --> 0:04:42.900 relatives to help them get on the ladder. So it's 0:04:43.230 --> 0:04:45.059 a hard one. I mean it is hard to save 0:04:45.059 --> 0:04:47.940 up for that deposit, but what I would say is 0:04:48.059 --> 0:04:50.820 there are different options out there for people if needed. 0:04:51.060 --> 0:04:54.750 Absolutely. I mean like I said, as someone who's currently saving it is 0:04:55.290 --> 0:04:59.010 very difficult, especially when you have this massive number that 0:04:59.010 --> 0:05:01.799 you're trying to reach, right? Whether it's 20,000, 30, whatever your 0:05:01.799 --> 0:05:04.740 number is, it's a massive number. So if you have 0:05:04.740 --> 0:05:07.230 that help from Bank of Mum and Dad or family 0:05:07.230 --> 0:05:09.480 members or even friends you want to help pitch in, 0:05:09.900 --> 0:05:14.188 that's great. But what if you don't have access to 0:05:14.190 --> 0:05:18.900 that kind of family support? Do those people risk being 0:05:18.900 --> 0:05:20.339 locked out of the property market? 0:05:20.490 --> 0:05:22.709 I'm really interested you used the word " overwhelming," because it 0:05:22.709 --> 0:05:25.859 can be so easy to feel so overwhelmed looking at 0:05:25.860 --> 0:05:28.109 the amount, and I was a first- time buyer actually 0:05:28.110 --> 0:05:30.060 not that long ago, and I felt the exact same. 0:05:30.060 --> 0:05:32.790 I felt like I was saving forever to get that 0:05:32.790 --> 0:05:35.999 property. But what I'd say, it probably comes to three 0:05:36.000 --> 0:05:38.460 things. I'd say first of all, no, you're not locked 0:05:38.460 --> 0:05:41.459 out that market. If we're talking about savings and actually 0:05:41.459 --> 0:05:45.089 being able to financially get there, I'd say if you're 0:05:45.089 --> 0:05:47.279 anything like me and you've got a pot of money 0:05:47.279 --> 0:05:50.550 saved up, you want to try and keep that there. 0:05:50.670 --> 0:05:53.190 And it's so easy to dip into that or be 0:05:53.190 --> 0:05:56.488 tempted to if your friends, I don't know, make a 0:05:56.490 --> 0:05:59.729 trip or something. So I would always say try and 0:05:59.730 --> 0:06:03.779 save on the side. So have your property savings either 0:06:03.779 --> 0:06:06.690 in an ISA, or whichever way that you choose to 0:06:06.690 --> 0:06:09.479 do that. But then there are some apps and tools 0:06:09.480 --> 0:06:11.339 that can help make saving on the side for your 0:06:11.339 --> 0:06:14.909 little luxuries really easy. I know for example with my 0:06:15.210 --> 0:06:18.600 bank it will round up automatically the spare change to 0:06:18.600 --> 0:06:21.779 the nearest pound, and then that's my little fun fund. Because 0:06:21.779 --> 0:06:22.471 that actually builds up- 0:06:22.471 --> 0:06:22.472 It does. 0:06:22.472 --> 0:06:24.089 ... quite a bit over time. 0:06:24.089 --> 0:06:24.599 It does. 0:06:25.170 --> 0:06:28.589 And so I would definitely say trying to utilize little 0:06:28.589 --> 0:06:31.200 tools and techniques like that can help without it then 0:06:31.200 --> 0:06:33.479 feeling like a chore, trying to get those savings up. 0:06:33.599 --> 0:06:37.229 Thirdly, and the more practical part really, if you really 0:06:37.230 --> 0:06:39.839 can't afford to save, or get to the savings that 0:06:39.839 --> 0:06:42.720 you want to are all the schemes that are available. 0:06:42.720 --> 0:06:47.460 So Skipton Building Society have launched a new mortgage product 0:06:47.610 --> 0:06:50.789 to really help renters get on that property ladder. So 0:06:51.000 --> 0:06:53.639 it's a no- deposit mortgage, there's lots and lots of 0:06:53.639 --> 0:06:56.610 details which I'm sure mortgage advisors could help you with 0:06:56.790 --> 0:06:59.729 on that, but that's a great incentive in terms of 0:06:59.730 --> 0:07:03.510 that no deposit option. And then you've also got Lifetime 0:07:03.630 --> 0:07:06.479 ISA, essentially getting free money. If you put a thousand 0:07:06.480 --> 0:07:09.900 pounds in, they'll give you a thousand pounds for every 4, 0:07:10.230 --> 0:07:14.880 000 pounds you save. So it's 25% of your savings up to 4,000 pounds each 0:07:14.880 --> 0:07:17.520 year. And I just think people need to be more 0:07:17.520 --> 0:07:20.760 aware of that. And then finally, as I said, I'm up 0:07:21.240 --> 0:07:24.989 in Scotland. Scotland's actually the only area that still have this, 0:07:25.290 --> 0:07:26.578 I was speaking to one of my friends who's a 0:07:26.580 --> 0:07:29.609 mortgage advisor the other day, is the lift scheme. That's 0:07:29.609 --> 0:07:32.010 something that people forget about and that's run by the 0:07:32.010 --> 0:07:35.640 Scottish government where they'll give you a percentage of funds 0:07:35.640 --> 0:07:37.890 towards that deposit in that home. So it's not just 0:07:37.890 --> 0:07:40.980 about buyers and purchasers having to do all these different 0:07:40.980 --> 0:07:44.429 things to try and get into the industry. A lot 0:07:44.429 --> 0:07:47.609 of big industry names are also supporting new and innovative 0:07:47.730 --> 0:07:51.630 initiatives. So, one being generation home, that's a startup mortgage 0:07:51.630 --> 0:07:54.720 company, so there's lots and lots going on to try 0:07:54.720 --> 0:07:57.268 and make it easier for people to get on that 0:07:57.270 --> 0:08:01.170 property ladder. So, that really can help people out and 0:08:01.170 --> 0:08:04.140 we just don't often realize all that's out there. 0:08:04.260 --> 0:08:07.530 I love that, I think it's so important. I want 0:08:08.190 --> 0:08:11.670 to talk about then, we've mentioned obviously mortgages, you mentioned 0:08:11.700 --> 0:08:15.239 deposits, but there are lots of other fees associated too 0:08:15.240 --> 0:08:19.080 with the home- buying processes, I'm sure you know, having 0:08:19.080 --> 0:08:22.799 been through it yourself. So what else should people consider 0:08:22.799 --> 0:08:26.520 financially when it comes to buying a property that isn't 0:08:26.520 --> 0:08:27.300 just a deposit? 0:08:27.630 --> 0:08:30.240 Yeah, so you've got quite a few different fees to 0:08:30.240 --> 0:08:32.550 consider as part of the buying process. I would say 0:08:32.550 --> 0:08:35.280 as a kind of first port of call, standard ones like 0:08:35.280 --> 0:08:39.749 your solicitor fees, potential surveys, and anything maybe that you want 0:08:39.750 --> 0:08:41.250 to put aside if you want to do up that 0:08:41.250 --> 0:08:43.770 property. The only way I could afford mine was to 0:08:44.070 --> 0:08:46.290 buy a property that needed everything done and I had 0:08:46.290 --> 0:08:48.990 to then factor in, I need some funds to do 0:08:48.990 --> 0:08:52.200 that property up and make it livable. Another expense could be 0:08:52.200 --> 0:08:55.740 stamp duty, always worth checking because if you're a first time buyer 0:08:55.740 --> 0:08:58.019 you may not need to pay it, but for certain 0:08:58.020 --> 0:09:01.350 property values and if you're a home mover moving for 0:09:01.350 --> 0:09:04.650 a second, third, fourth time, then absolutely it's worth checking 0:09:04.650 --> 0:09:08.250 how much that stamp duty is. It's dictated by property price 0:09:08.580 --> 0:09:11.219 and can also be dictated, depends on if you've got 0:09:11.219 --> 0:09:14.520 secondary properties running in the background. So it's always worth 0:09:14.520 --> 0:09:17.998 going on your government website depending on where you're based 0:09:18.000 --> 0:09:20.640 in the country. And you can type in the " property value" and 0:09:20.640 --> 0:09:23.070 it will tell you based on your situation how much 0:09:23.070 --> 0:09:25.559 stamp duty is payable. So I'd say they're your key 0:09:25.559 --> 0:09:28.530 ones and part of the buy- in process, you potentially 0:09:28.530 --> 0:09:31.468 need to consider lender product fees as well, depending on 0:09:31.469 --> 0:09:34.979 which mortgage products you're going to look at. But again, 0:09:35.490 --> 0:09:37.650 as I said, mortgage advisors will keep you right. So 0:09:37.650 --> 0:09:39.809 definitely I speak to them, they'll keep you in the 0:09:39.809 --> 0:09:42.600 know. And sometimes you can add them onto the loan as 0:09:42.600 --> 0:09:45.179 well. So you've got options there. But then you've got 0:09:45.179 --> 0:09:48.300 to think about your more practical living costs as well. 0:09:48.300 --> 0:09:52.559 So in terms of the property, you may find there 0:09:52.559 --> 0:09:55.348 are, if it's a leasehold property, you've got your ground 0:09:55.350 --> 0:09:57.750 rent service charges up in Scotland, that would be your 0:09:57.750 --> 0:10:02.250 factor fees. And we're talking about a lot of first 0:10:02.250 --> 0:10:05.190 time buyers here, but actually any home mover, if you 0:10:05.190 --> 0:10:07.860 are moving to a new area, it's really worth considering 0:10:07.860 --> 0:10:12.630 that your commute, nursery, childcare, all these other elements that 0:10:12.630 --> 0:10:16.200 may change in your life from that change of vocation 0:10:16.200 --> 0:10:18.420 as well. And then I would just say if you're 0:10:18.420 --> 0:10:21.059 looking to save for a deposit to get to that 0:10:21.059 --> 0:10:25.860 point, it's really, really valuable to think about your finances 0:10:25.860 --> 0:10:28.650 now and what commitments you're getting into now such as 0:10:29.070 --> 0:10:32.580 car loans, Klarna's a biggie. It's again, another very big 0:10:32.580 --> 0:10:34.290 temptation out there- 0:10:34.530 --> 0:10:37.020 I love the fact that you mentioned thinking about your 0:10:37.020 --> 0:10:41.370 finances now. Because I mean home buying often isn't, I 0:10:41.370 --> 0:10:42.630 decided to stay, I want to buy a house, I 0:10:42.630 --> 0:10:44.940 buy it tomorrow. It is a long- term process, but 0:10:44.940 --> 0:10:47.399 you've got to factor in, like you said, what commitments 0:10:47.400 --> 0:10:50.730 financially are you making now that could impact if you 0:10:50.730 --> 0:10:53.280 did take out car financing that could impact maybe your 0:10:53.280 --> 0:10:58.110 affordability or just anything that you're committing to that could 0:10:58.110 --> 0:10:59.940 maybe detract from you being able to get on a property 0:10:59.940 --> 0:11:02.369 ladder or make it harder for you once you move 0:11:02.370 --> 0:11:02.731 into that property. 0:11:02.731 --> 0:11:02.732 Yeah. 0:11:02.732 --> 0:11:05.369 Like you said, I mean, who moves into a property 0:11:05.369 --> 0:11:06.751 and wants to sit on the floor for six months? 0:11:06.751 --> 0:11:06.960 No. 0:11:06.960 --> 0:11:08.011 You want to make sure that you've got money- 0:11:08.011 --> 0:11:08.011 Exactly. 0:11:08.011 --> 0:11:10.618 ... to be able to furnish it. So that's something that you've got to 0:11:10.620 --> 0:11:12.271 think about now as well as think about future finances as well. 0:11:12.271 --> 0:11:15.660 Yeah, and they'll impact your affordability with that lender too. 0:11:15.660 --> 0:11:17.639 So it's not even just about your own budget and 0:11:17.639 --> 0:11:19.740 being able to have your lifestyle and at home. If 0:11:19.740 --> 0:11:24.630 you go on lender websites, there's usually affordability calculators. So 0:11:24.630 --> 0:11:27.510 if you are thinking of a certain car finance or 0:11:27.570 --> 0:11:30.360 loan or whatever it may be, just check it, and 0:11:30.360 --> 0:11:32.610 you can do that on the lender website. It's really 0:11:32.610 --> 0:11:33.509 easy quite often. 0:11:33.540 --> 0:11:35.700 I love that, that's really, really good point that you made 0:11:35.700 --> 0:11:39.929 there. So Hazel, I always end our episodes with the 0:11:39.929 --> 0:11:42.659 same question, which I'm going to ask you now. What 0:11:42.690 --> 0:11:45.540 three tips do you have to help people get a little 0:11:45.540 --> 0:11:46.020 bit richer? 0:11:46.440 --> 0:11:49.530 My first one would be talking about that comparison piece. 0:11:49.530 --> 0:11:52.348 So I don't think you'll ever feel richer if you're always competing 0:11:52.889 --> 0:11:55.800 to others. There'll be people that aspire to be where 0:11:55.860 --> 0:11:59.730 you're at and you'll probably also always be aspiring sometimes 0:11:59.730 --> 0:12:01.980 to where other people are. So I'd say that first 0:12:01.980 --> 0:12:04.260 one is just celebrate the small wins, even if you've 0:12:04.260 --> 0:12:06.630 managed to save a 10er, that's a 10er more than what you 0:12:06.630 --> 0:12:11.790 did yesterday, so celebrate those. Secondly, I would say think 0:12:11.790 --> 0:12:16.708 about stabilizing your income. We do sometimes see people suffer 0:12:16.708 --> 0:12:20.848 illnesses or have to take time off work. COVID was a 0:12:20.850 --> 0:12:23.250 massive time for that. And what you don't want to 0:12:23.250 --> 0:12:25.380 have to do is to dip into those savings you've 0:12:25.380 --> 0:12:28.919 worked really, really hard for. Take out things like products, 0:12:28.920 --> 0:12:32.820 like income protection policies and it's a little bit of 0:12:32.820 --> 0:12:35.729 a safety net just in case you fall ill, you 0:12:35.730 --> 0:12:37.828 don't want to have to touch those savings that you've 0:12:38.100 --> 0:12:40.439 really worked hard for. And then the third one is 0:12:40.440 --> 0:12:44.098 seek industry help. Take advice from experts, whether that's estate 0:12:44.099 --> 0:12:48.960 agents, mortgage advisors, solicitors, ask around because everybody's been there 0:12:48.990 --> 0:12:50.759 for the first time at some point if they want a 0:12:50.820 --> 0:12:53.880 property. And I would just say, always ask. 0:12:54.090 --> 0:12:57.000 Hazel, thank you so much. That has been really, really 0:12:57.000 --> 0:13:01.020 good tips, especially celebrating the small wins. I think sometimes 0:13:01.020 --> 0:13:03.509 we always have a big goal, but you can celebrate 0:13:03.510 --> 0:13:05.728 the small milestones as we get there. So like you 0:13:05.730 --> 0:13:08.369 said, I'm going to celebrate the fact that I'm saving. 0:13:08.429 --> 0:13:11.491 Yes, please do. 0:13:11.491 --> 0:13:13.140 That's what I'm going to take home, I'm going to let all my friends know I'm saving. This is the 0:13:13.140 --> 0:13:15.120 small goal I want to celebrate. And I think that'll 0:13:15.120 --> 0:13:16.559 keep you motivated as you keep going. 0:13:16.559 --> 0:13:17.400 Definitely it does. 0:13:17.400 --> 0:13:18.450 So thank you so much- 0:13:18.450 --> 0:13:18.571 Thank you. 0:13:18.571 --> 0:13:21.088 ... for coming on. This has been such a great episode. So 0:13:21.360 --> 0:13:23.939 thank you so much. Next week I'm taking a look 0:13:23.940 --> 0:13:27.990 at things women specifically need to know about money. If 0:13:27.990 --> 0:13:30.720 you're not a woman, don't hit " skip." There'll still be 0:13:30.720 --> 0:13:33.870 some highly tips for you too. I promise. Don't forget to 0:13:33.870 --> 0:13:36.420 follow and review the podcast and I'll catch you next week.