AFTER five years of saving, first-time buyer Ayooluwa Adeogun finally had enough for a deposit – but a last minute change in her mortgage lender's affordability criteria left her £2,200 short.
Determined not to miss out, the 26-year-old made a last minute scramble to raise the extra funds – and she did it just six weeks.
But it wasn't easy and the secretarial assistant banned herself from spending any cash she didn't need to, living off packet noodles to cut down on her food bill.
Like many first-time buyers, Ayooluwa had taken out a mortgage in principle, to give her an idea of what she could afford to borrow if she put down a 5% deposit.
She worked out that her £20,000 would easily cover the £16,250 deposit on her £325,000 flat, and leave her with some cash to purchase furniture.
Ayooluwa made an offer on her flat that was accepted but when she applied for the mortgage through a broker, the lender had changed its affordability criteria.
The lender would only agree to give her a loan if she put down a 6.8% deposit to reduce her level of risk as a borrower – but it meant she had to stump up another £5,950 for the deposit.
Even with her remaining savings, she was still £2,200 short, and with only six weeks left before she was due to complete on the house she put everything she could into raising the funds.
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She saved nearly every penny of her paycheck for October and November to scrape together enough cash, and lived off just under £200 over a six week period.
She managed this by living off packet noodles, ditching meals out and postponing buying her dad a birthday present to raise the funds.
But it was worth it in the end, as Ayooluwa moved into her new build flat in January this year.
The new homeowner also used the Help to Buy equity loan scheme, which sees the Government lend up to 20% – or 40% in London – of the value of your property.
The loan is interest-free for the first five years, meaning her mortgage repayments are £511 a month.
We spoke to Ayo’s for The Sun’s My First Home series to find out how she overcame the challenges of buying property on her own.
Tell me about your house
It’s a two-bed flat in Bexley, London.
It also has one bathroom, and an open-plan living room and kitchen area.
Why did you pick this location?
I stumbled across the development on Rightmove.
It’s a good location as it's not too far for me to commute to work and I’ve visited the area before, so I’m familiar with it.
The house prices here are more affordable compared to what I’d get for my money living in the city.
How much did you pay for it?
I was earning £42,000 a year at the time, which wasn't enough to borrow enough to buy somewhere on my own.
I could only afford to buy my £325,000 house because I applied for a Help to Buy equity loan.
It’s a scheme that helps first time buyers get on the property ladder with just a 5% deposit, even if they can't borrow enough for a mortgage.
The government will provide a loan of up to 40% of the value of the property if you live in London, otherwise you’ll get 20%.
There’s no interest added onto repayments in the first five years.
You have to buy a new-build in order to be eligible for the loan – but I liked it because I could move straight into my house without any issues.
I wanted to buy a home quickly and I was on a budget, so the scheme seemed like a good fit for me.
I received a £130,000 loan, and I took out a separate mortgage of £172,800.
In the end, I ended up putting a £22,200 deposit for it.
Were there any complications applying for the Help to Buy loan?
At first, I found the process for applying for a Help to Buy equity loan was really simple.
You apply for it in the same way you would normally apply for any other mortgage.
I applied for a mortgage in principle in September using the broker the developer recommended to me.
All I had to do was fill out a form for the Help to Buy loan that the broker gave to me.
I filled out my personal details as well as information about the property, including the value, the size of the loan, my deposit I details about my income.
After that, the broker lodged the form and applied for the loan on my behalf.
I got a mortgage in principle a month later in October, and the developer said we could exchange around the end of the year, by December.
A mortgage in principle isn't a firm agreement, so it wasn't set in stone – meaning I ran into some issues later when I was trying to get the deal done.
It all seemed to be going well, but I got a phone call from my bank at the end of October saying that they wouldn't be able to lend me the money with a £16,250 deposit.
I was told I had to put down a £22,200 to secure my home and get my mortgage approved.
My broker told me this was because the bank had tightened its affordability checks for my mortgage had changed slightly.
It was around the time that banks were asking people to save for larger deposits due to the impact of Covid last year.
Banks were less likely to lend first time buyers mortgages if they had just a 5% deposit.
I had a total of £20,000 in savings, so that covered most of the deposit, but I still needed to find another £2,200 in just six weeks.
It was a struggle though – I was living with my dad at the time, so I had to ask him if I could skip my final month’s rent.
But my bills were still coming out – £68 a month for Sky and £13 on my phone.
Apart from that, I barely spent anything for two months – in fact, I basically lived off packet noodles for six weeks.
How can I apply for a Help to Buy loan?
YOU can apply for a Help to Buy equity loan for new build homes that will be ready between April 1, 2021 and March 2023.
Under the scheme, the government will lend you up to 20% – or 40% in London – of the cost of a new build home.
The loan is interest-free for the first five years. After that, fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) level of inflation, plus 2%.
There's also a £1 monthly management fee for the full term of the equity loan. The loan repayments are on top of your mortgage repayments.
You can look for eligible Help to Buy homes online or through developers.
Once you've found a property that meets the criteria, you might have to pay a fee (capped at £500) to secure it.
Then, when you've had an offer accepted, you'll need to go through a Help to Buy agent. You can find one near you on the Homes England website.
Like Ayo, your agent will most likely apply for the loan on your behalf.
I didn't spend any money at all on going out, seeing my friends, or clothes, which saved me around £250.
My dad's birthday was in November, so I had to ask him if I could postpone buying him a birthday present – which saved me up to £100.
By living frugally, I was able to put almost two months’ worth of pay checks straight into my savings, and luckily it covered it all.
How did you save for it?
I began to seriously start thinking about buying a house when the pandemic hit last year.
I’m part of a big family, and Covid made me realise that it was my time to fly the nest and get some space of my own.
But by that point, I had already saved up nearly £20,000 in my savings account over five years.
I saved money by living at home after I had finished university in 2015, as my dad only charged me around £200 to £300 a month in rent.
This was much less than what it would have cost moving out and living in a flat share.
On average, I was putting up to £700 a month into my savings.
I would always put away this amount of money at the beginning of the month, so I wasn’t tempted to spend it.
I would put £200 into my Help to Buy ISA, saving up around £10,800 over a four year period – the rest was put into my normal savings account.
Aside from living with my dad, the main way I boosted my cash was through cutting my bills.
I made sure to shop around for better deals when my car insurance renewal was up each year and paid the whole amount in one go using my credit card – which I paid back over time.
By doing this I lowered the interest I was paying back on it, so I spent £550 on my insurance instead of £670, saving me £120 a year.
I also stopped going out and spending money on unnecessary things like nice trainers as much as I could to put aside more cash.
How did you afford to furnish your home?
Because I maxxed out my savings by putting it all into a deposit, I bought furniture over a six month period, saving up each month to buy a new item at a time.
But I’ve also been making my own furniture to save me hundreds of pounds.
When I looked online to buy a desk, I saw that the ones I liked would have cost me up to £350.
So I got furniture panels and a shelving unit from Ikea to make my own – I spent well under £100 on it in total.
My auntie has also given me a spare single bed in her house that she doesn’t want.
I’m going to cut it down and make it into a daybed, spray paint the legs and save myself hundreds of pounds.
What is your advice for other first time buyers?
The Help to Buy equity loan gets a bit of a bad reputation because you have to pay interest on your loan after five years.
But if you’re a single person like me, it makes it much more affordable to buy your own home – so I wouldn’t be off put from applying for the support.
I know I had a bit of trouble with it at the end, but it was worth it.
I would never have been able to buy this place otherwise – so I’m so thankful I found this flat.
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