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Saving To Buy Your First Home · A Little Bit Richer

• 0:01
  Kia Commodore: Kia again, and this week I'm returning to one of A Little Bit Richer's
• 0:04
  Kia Commodore: most important topics, buying your first home. We've talked about
• 0:08
  Kia Commodore: the different schemes to help you get on the ladder, but it doesn't change
• 0:11
  Kia Commodore: the fact that it's still likely to be a lot
• 0:14
  Kia Commodore: of money. So I'm talking to Hazel Johnston from Legal
• 0:16
  Kia Commodore: and General. Hazel was previously a mortgage advisor, and now
• 0:20
  Kia Commodore: helps other advisors grow their business, so she knows a
• 0:23
  Kia Commodore: thing or two about the cost of getting on a
• 0:25
  Kia Commodore: property ladder. So Hazel, let's kick things off about talking
• 0:30
  Kia Commodore: amounts. When we talk about saving up to buy a
• 0:33
  Kia Commodore: house, just how much are we talking here?
• 0:35
  Hazel Johnston: It really depends where you're in the country. As a
• 0:37
  Hazel Johnston: starter it varies so much, but I'd say it can be
• 0:41
  Hazel Johnston: a lot of money. You can tell by my accent
• 0:42
  Hazel Johnston: I'm based up in Edinburgh, Scotland. If I use Scotland
• 0:45
  Hazel Johnston: as an example, we're looking about 34, 000 pounds roughly as
• 0:49
  Hazel Johnston: an average compared to London, that jumps up quite a bit.
• 0:53
  Kia Commodore: Poor London, that number is always a lot higher, isn't it?
• 0:53
  Hazel Johnston: It is, 144,000 pounds on average. So, it can be really tough
• 1:00
  Hazel Johnston: to get yourself into a position to have those savings
• 1:04
  Hazel Johnston: for that deposit. And I think as we look at
• 1:07
  Hazel Johnston: generations gone past, some of our friends were maybe buying
• 1:11
  Hazel Johnston: properties when rates were a bit better and property prices
• 1:14
  Hazel Johnston: were lower. So we are in probably quite a different
• 1:17
  Hazel Johnston: space to what we were a few years ago when
• 1:19
  Hazel Johnston: looking at the same sort of properties.
• 1:22
  Kia Commodore: Absolutely. I think I make it a point because I'm
• 1:26
  Kia Commodore: in the process of saving up for my first house.
• 1:29
  Hazel Johnston: Congratulations.
• 1:29
  Kia Commodore: Thank you. And I make it a point to have
• 1:32
  Kia Commodore: a look at different areas I want to live in.
• 1:33
  Kia Commodore: I mean London, as you mentioned, that number is very
• 1:36
  Kia Commodore: hefty, so not necessarily feasible for me, but any areas
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  Kia Commodore: I do look at, I like to go on property
• 1:42
  Kia Commodore: search websites and have a look at the sold listings
• 1:45
  Kia Commodore: because then you know, it gives you a good understanding
• 1:47
  Kia Commodore: of what properties in that area have actually sold for. Because
• 1:50
  Kia Commodore: I mean we can look at what's currently listed, but that
• 1:52
  Kia Commodore: doesn't mean it's going to sell for that. So that's
• 1:54
  Kia Commodore: kind of a little habit I've got myself into whilst
• 1:57
  Kia Commodore: I'm saving so I kind of have a good understanding
• 1:59
  Kia Commodore: of how much that's going to cost me, but it
• 2:00
  Kia Commodore: is a lot of money. But there are a lot
• 2:03
  Kia Commodore: of things that come into it. So let's talk about
• 2:06
  Kia Commodore: mortgages. Maybe you can give us a quick explainer. So
• 2:08
  Kia Commodore: Hazel, what is a mortgage, and what are different options
• 2:12
  Kia Commodore: that are available to people?
• 2:13
  Hazel Johnston: Yeah, so a mortgage essentially is just like a loan that a
• 2:16
  Hazel Johnston: bank or building society will give you to be able
• 2:18
  Hazel Johnston: to fund your purchase. Because I think we'd all love
• 2:20
  Hazel Johnston: to have a couple of hundred thousand sat in the
• 2:22
  Hazel Johnston: bank to buy these properties, but it's not the case
• 2:25
  Hazel Johnston: for most of us. So yeah, banks, building societies will
• 2:28
  Hazel Johnston: lend that money in the form of a loan. There are lots of
• 2:31
  Hazel Johnston: options though, so it's not just a case of if
• 2:34
  Hazel Johnston: you're looking for that set property, you can adjust things
• 2:38
  Hazel Johnston: on that mortgage to make it affordable for you, such
• 2:41
  Hazel Johnston: as the length of time, as one example. So that's
• 2:44
  Hazel Johnston: called your " mortgage term." So you could have a mortgage
• 2:47
  Hazel Johnston: that's slightly shorter, that will mean that your monthly payments
• 2:50
  Hazel Johnston: are higher, and you'll pay less back to that lender.
• 2:54
  Hazel Johnston: Or you can have lower monthly payments each month for
• 2:56
  Hazel Johnston: that mortgage by extending it right out and taking it
• 2:59
  Hazel Johnston: over longer periods of time. So there are different options
• 3:03
  Hazel Johnston: depending on what your circumstances are and the budget that you
• 3:06
  Hazel Johnston: want. The good thing with mortgages as well is you can
• 3:10
  Hazel Johnston: get advice on them. So, if that's something that you
• 3:12
  Hazel Johnston: are looking at and you want to have a think
• 3:14
  Hazel Johnston: about what's affordable for you, then absolutely you can speak
• 3:18
  Hazel Johnston: to a mortgage advisor and they will be able to
• 3:20
  Hazel Johnston: tailor your monthly payments to that budget as well.
• 3:23
  Kia Commodore: I think it's always good to know that you can
• 3:25
  Kia Commodore: get advice. I think things like this, buying a property
• 3:29
  Kia Commodore: is such a big purchase that you want to make
• 3:32
  Kia Commodore: sure that you are going down the right path for you and you're
• 3:35
  Kia Commodore: picking the right options for your situation. So I want
• 3:39
  Kia Commodore: to ask you, when it comes to mortgages, how does
• 3:41
  Kia Commodore: that actually impact your deposit?
• 3:45
  Hazel Johnston: Yeah, so your deposit can vary and that really depends
• 3:49
  Hazel Johnston: on how much you're wanting to buy that property for.
• 3:51
  Hazel Johnston: So obviously the more expense of the property depends on
• 3:54
  Hazel Johnston: area, it's repair, actually the desirability of that home, you
• 3:59
  Hazel Johnston: are going to probably need a bigger deposit than maybe
• 4:01
  Hazel Johnston: a property that needs a bit of work or somewhere
• 4:03
  Hazel Johnston: that's in an area slightly out of a main town. The more you
• 4:07
  Hazel Johnston: can afford to put in, then the smaller your mortgage
• 4:10
  Hazel Johnston: is going to be. And that's always going to mean
• 4:12
  Hazel Johnston: you can potentially obtain better interest rates in that lender and
• 4:16
  Hazel Johnston: have a lower monthly payment. But that's not achievable for
• 4:19
  Hazel Johnston: everyone. We've just seen how much deposits are on average.
• 4:23
  Hazel Johnston: So what I would say is sometimes that's where we do
• 4:26
  Hazel Johnston: see people opting to look at Bank of Mum and
• 4:28
  Hazel Johnston: Dad. I mean if you look at our Bank of
• 4:31
  Hazel Johnston: Family research that was recently done, about 47% of buyers
• 4:36
  Hazel Johnston: under 55 years old had to get support from their
• 4:39
  Hazel Johnston: relatives to help them get on the ladder. So it's
• 4:43
  Hazel Johnston: a hard one. I mean it is hard to save
• 4:45
  Hazel Johnston: up for that deposit, but what I would say is
• 4:48
  Hazel Johnston: there are different options out there for people if needed.
• 4:51
  Kia Commodore: Absolutely. I mean like I said, as someone who's currently saving it is
• 4:55
  Kia Commodore: very difficult, especially when you have this massive number that
• 4:59
  Kia Commodore: you're trying to reach, right? Whether it's 20,000, 30, whatever your
• 5:01
  Kia Commodore: number is, it's a massive number. So if you have
• 5:04
  Kia Commodore: that help from Bank of Mum and Dad or family
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  Kia Commodore: members or even friends you want to help pitch in,
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  Kia Commodore: that's great. But what if you don't have access to
• 5:14
  Kia Commodore: that kind of family support? Do those people risk being
• 5:18
  Kia Commodore: locked out of the property market?
• 5:20
  Hazel Johnston: I'm really interested you used the word " overwhelming," because it
• 5:22
  Hazel Johnston: can be so easy to feel so overwhelmed looking at
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  Hazel Johnston: the amount, and I was a first- time buyer actually
• 5:28
  Hazel Johnston: not that long ago, and I felt the exact same.
• 5:30
  Hazel Johnston: I felt like I was saving forever to get that
• 5:32
  Hazel Johnston: property. But what I'd say, it probably comes to three
• 5:36
  Hazel Johnston: things. I'd say first of all, no, you're not locked
• 5:38
  Hazel Johnston: out that market. If we're talking about savings and actually
• 5:41
  Hazel Johnston: being able to financially get there, I'd say if you're
• 5:45
  Hazel Johnston: anything like me and you've got a pot of money
• 5:47
  Hazel Johnston: saved up, you want to try and keep that there.
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  Hazel Johnston: And it's so easy to dip into that or be
• 5:53
  Hazel Johnston: tempted to if your friends, I don't know, make a
• 5:56
  Hazel Johnston: trip or something. So I would always say try and
• 5:59
  Hazel Johnston: save on the side. So have your property savings either
• 6:03
  Hazel Johnston: in an ISA, or whichever way that you choose to
• 6:06
  Hazel Johnston: do that. But then there are some apps and tools
• 6:09
  Hazel Johnston: that can help make saving on the side for your
• 6:11
  Hazel Johnston: little luxuries really easy. I know for example with my
• 6:15
  Hazel Johnston: bank it will round up automatically the spare change to
• 6:18
  Hazel Johnston: the nearest pound, and then that's my little fun fund. Because
• 6:21
  Hazel Johnston: that actually builds up-
• 6:22
  Kia Commodore: It does.
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  Hazel Johnston: ... quite a bit over time.
• 6:24
  Kia Commodore: It does.
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  Hazel Johnston: And so I would definitely say trying to utilize little
• 6:28
  Hazel Johnston: tools and techniques like that can help without it then
• 6:31
  Hazel Johnston: feeling like a chore, trying to get those savings up.
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  Hazel Johnston: Thirdly, and the more practical part really, if you really
• 6:37
  Hazel Johnston: can't afford to save, or get to the savings that
• 6:39
  Hazel Johnston: you want to are all the schemes that are available.
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  Hazel Johnston: So Skipton Building Society have launched a new mortgage product
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  Hazel Johnston: to really help renters get on that property ladder. So
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  Hazel Johnston: it's a no- deposit mortgage, there's lots and lots of
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  Hazel Johnston: details which I'm sure mortgage advisors could help you with
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  Hazel Johnston: on that, but that's a great incentive in terms of
• 6:59
  Hazel Johnston: that no deposit option. And then you've also got Lifetime
• 7:03
  Hazel Johnston: ISA, essentially getting free money. If you put a thousand
• 7:06
  Hazel Johnston: pounds in, they'll give you a thousand pounds for every 4,
• 7:10
  Hazel Johnston: 000 pounds you save. So it's 25% of your savings up to 4,000 pounds each
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  Hazel Johnston: year. And I just think people need to be more
• 7:17
  Hazel Johnston: aware of that. And then finally, as I said, I'm up
• 7:21
  Hazel Johnston: in Scotland. Scotland's actually the only area that still have this,
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  Hazel Johnston: I was speaking to one of my friends who's a
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  Hazel Johnston: mortgage advisor the other day, is the lift scheme. That's
• 7:29
  Hazel Johnston: something that people forget about and that's run by the
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  Hazel Johnston: Scottish government where they'll give you a percentage of funds
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  Hazel Johnston: towards that deposit in that home. So it's not just
• 7:37
  Hazel Johnston: about buyers and purchasers having to do all these different
• 7:40
  Hazel Johnston: things to try and get into the industry. A lot
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  Hazel Johnston: of big industry names are also supporting new and innovative
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  Hazel Johnston: initiatives. So, one being generation home, that's a startup mortgage
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  Hazel Johnston: company, so there's lots and lots going on to try
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  Hazel Johnston: and make it easier for people to get on that
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  Hazel Johnston: property ladder. So, that really can help people out and
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  Hazel Johnston: we just don't often realize all that's out there.
• 8:04
  Kia Commodore: I love that, I think it's so important. I want
• 8:08
  Kia Commodore: to talk about then, we've mentioned obviously mortgages, you mentioned
• 8:11
  Kia Commodore: deposits, but there are lots of other fees associated too
• 8:15
  Kia Commodore: with the home- buying processes, I'm sure you know, having
• 8:19
  Kia Commodore: been through it yourself. So what else should people consider
• 8:22
  Kia Commodore: financially when it comes to buying a property that isn't
• 8:26
  Kia Commodore: just a deposit?
• 8:27
  Hazel Johnston: Yeah, so you've got quite a few different fees to
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  Hazel Johnston: consider as part of the buying process. I would say
• 8:32
  Hazel Johnston: as a kind of first port of call, standard ones like
• 8:35
  Hazel Johnston: your solicitor fees, potential surveys, and anything maybe that you want
• 8:39
  Hazel Johnston: to put aside if you want to do up that
• 8:41
  Hazel Johnston: property. The only way I could afford mine was to
• 8:44
  Hazel Johnston: buy a property that needed everything done and I had
• 8:46
  Hazel Johnston: to then factor in, I need some funds to do
• 8:48
  Hazel Johnston: that property up and make it livable. Another expense could be
• 8:52
  Hazel Johnston: stamp duty, always worth checking because if you're a first time buyer
• 8:55
  Hazel Johnston: you may not need to pay it, but for certain
• 8:58
  Hazel Johnston: property values and if you're a home mover moving for
• 9:01
  Hazel Johnston: a second, third, fourth time, then absolutely it's worth checking
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  Hazel Johnston: how much that stamp duty is. It's dictated by property price
• 9:08
  Hazel Johnston: and can also be dictated, depends on if you've got
• 9:11
  Hazel Johnston: secondary properties running in the background. So it's always worth
• 9:14
  Hazel Johnston: going on your government website depending on where you're based
• 9:18
  Hazel Johnston: in the country. And you can type in the " property value" and
• 9:20
  Hazel Johnston: it will tell you based on your situation how much
• 9:23
  Hazel Johnston: stamp duty is payable. So I'd say they're your key
• 9:25
  Hazel Johnston: ones and part of the buy- in process, you potentially
• 9:28
  Hazel Johnston: need to consider lender product fees as well, depending on
• 9:31
  Hazel Johnston: which mortgage products you're going to look at. But again,
• 9:35
  Hazel Johnston: as I said, mortgage advisors will keep you right. So
• 9:37
  Hazel Johnston: definitely I speak to them, they'll keep you in the
• 9:39
  Hazel Johnston: know. And sometimes you can add them onto the loan as
• 9:42
  Hazel Johnston: well. So you've got options there. But then you've got
• 9:45
  Hazel Johnston: to think about your more practical living costs as well.
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  Hazel Johnston: So in terms of the property, you may find there
• 9:52
  Hazel Johnston: are, if it's a leasehold property, you've got your ground
• 9:55
  Hazel Johnston: rent service charges up in Scotland, that would be your
• 9:57
  Hazel Johnston: factor fees. And we're talking about a lot of first
• 10:02
  Hazel Johnston: time buyers here, but actually any home mover, if you
• 10:05
  Hazel Johnston: are moving to a new area, it's really worth considering
• 10:07
  Hazel Johnston: that your commute, nursery, childcare, all these other elements that
• 10:12
  Hazel Johnston: may change in your life from that change of vocation
• 10:16
  Hazel Johnston: as well. And then I would just say if you're
• 10:18
  Hazel Johnston: looking to save for a deposit to get to that
• 10:21
  Hazel Johnston: point, it's really, really valuable to think about your finances
• 10:25
  Hazel Johnston: now and what commitments you're getting into now such as
• 10:29
  Hazel Johnston: car loans, Klarna's a biggie. It's again, another very big
• 10:32
  Hazel Johnston: temptation out there-
• 10:34
  Kia Commodore: I love the fact that you mentioned thinking about your
• 10:37
  Kia Commodore: finances now. Because I mean home buying often isn't, I
• 10:41
  Kia Commodore: decided to stay, I want to buy a house, I
• 10:42
  Kia Commodore: buy it tomorrow. It is a long- term process, but
• 10:44
  Kia Commodore: you've got to factor in, like you said, what commitments
• 10:47
  Kia Commodore: financially are you making now that could impact if you
• 10:50
  Kia Commodore: did take out car financing that could impact maybe your
• 10:53
  Kia Commodore: affordability or just anything that you're committing to that could
• 10:58
  Kia Commodore: maybe detract from you being able to get on a property
• 10:59
  Kia Commodore: ladder or make it harder for you once you move
• 11:02
  Kia Commodore: into that property.
• 11:02
  Hazel Johnston: Yeah.
• 11:02
  Kia Commodore: Like you said, I mean, who moves into a property
• 11:05
  Kia Commodore: and wants to sit on the floor for six months?
• 11:06
  Hazel Johnston: No.
• 11:06
  Kia Commodore: You want to make sure that you've got money-
• 11:08
  Hazel Johnston: Exactly.
• 11:08
  Kia Commodore: ... to be able to furnish it. So that's something that you've got to
• 11:10
  Kia Commodore: think about now as well as think about future finances as well.
• 11:12
  Hazel Johnston: Yeah, and they'll impact your affordability with that lender too.
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  Hazel Johnston: So it's not even just about your own budget and
• 11:17
  Hazel Johnston: being able to have your lifestyle and at home. If
• 11:19
  Hazel Johnston: you go on lender websites, there's usually affordability calculators. So
• 11:24
  Hazel Johnston: if you are thinking of a certain car finance or
• 11:27
  Hazel Johnston: loan or whatever it may be, just check it, and
• 11:30
  Hazel Johnston: you can do that on the lender website. It's really
• 11:32
  Hazel Johnston: easy quite often.
• 11:33
  Kia Commodore: I love that, that's really, really good point that you made
• 11:35
  Kia Commodore: there. So Hazel, I always end our episodes with the
• 11:39
  Kia Commodore: same question, which I'm going to ask you now. What
• 11:42
  Kia Commodore: three tips do you have to help people get a little
• 11:45
  Kia Commodore: bit richer?
• 11:46
  Hazel Johnston: My first one would be talking about that comparison piece.
• 11:49
  Hazel Johnston: So I don't think you'll ever feel richer if you're always competing
• 11:52
  Hazel Johnston: to others. There'll be people that aspire to be where
• 11:55
  Hazel Johnston: you're at and you'll probably also always be aspiring sometimes
• 11:59
  Hazel Johnston: to where other people are. So I'd say that first
• 12:01
  Hazel Johnston: one is just celebrate the small wins, even if you've
• 12:04
  Hazel Johnston: managed to save a 10er, that's a 10er more than what you
• 12:06
  Hazel Johnston: did yesterday, so celebrate those. Secondly, I would say think
• 12:11
  Hazel Johnston: about stabilizing your income. We do sometimes see people suffer
• 12:16
  Hazel Johnston: illnesses or have to take time off work. COVID was a
• 12:20
  Hazel Johnston: massive time for that. And what you don't want to
• 12:23
  Hazel Johnston: have to do is to dip into those savings you've
• 12:25
  Hazel Johnston: worked really, really hard for. Take out things like products,
• 12:28
  Hazel Johnston: like income protection policies and it's a little bit of
• 12:32
  Hazel Johnston: a safety net just in case you fall ill, you
• 12:35
  Hazel Johnston: don't want to have to touch those savings that you've
• 12:38
  Hazel Johnston: really worked hard for. And then the third one is
• 12:40
  Hazel Johnston: seek industry help. Take advice from experts, whether that's estate
• 12:44
  Hazel Johnston: agents, mortgage advisors, solicitors, ask around because everybody's been there
• 12:48
  Hazel Johnston: for the first time at some point if they want a
• 12:50
  Hazel Johnston: property. And I would just say, always ask.
• 12:54
  Kia Commodore: Hazel, thank you so much. That has been really, really
• 12:57
  Kia Commodore: good tips, especially celebrating the small wins. I think sometimes
• 13:01
  Kia Commodore: we always have a big goal, but you can celebrate
• 13:03
  Kia Commodore: the small milestones as we get there. So like you
• 13:05
  Kia Commodore: said, I'm going to celebrate the fact that I'm saving.
• 13:08
  Hazel Johnston: Yes, please do.
• 13:11
  Kia Commodore: That's what I'm going to take home, I'm going to let all my friends know I'm saving. This is the
• 13:13
  Kia Commodore: small goal I want to celebrate. And I think that'll
• 13:15
  Kia Commodore: keep you motivated as you keep going.
• 13:16
  Hazel Johnston: Definitely it does.
• 13:17
  Kia Commodore: So thank you so much-
• 13:18
  Hazel Johnston: Thank you.
• 13:18
  Kia Commodore: ... for coming on. This has been such a great episode. So
• 13:21
  Kia Commodore: thank you so much. Next week I'm taking a look
• 13:23
  Kia Commodore: at things women specifically need to know about money. If
• 13:27
  Kia Commodore: you're not a woman, don't hit " skip." There'll still be
• 13:30
  Kia Commodore: some highly tips for you too. I promise. Don't forget to
• 13:33
  Kia Commodore: follow and review the podcast and I'll catch you next week.