A FIRST-TIME buyer from London used a budgeting spreadsheet to help squeeze an extra £1,000 a month towards her deposit.
After just 15 months Hannah Moeller, 29, had saved up the £20,000 she needed to buy a £315,000 one-bed flat in Greenwich through shared ownership.
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Four years ago, she thought that buying in London was just a pipe dream for Hannah, who works at Playstation, when she was on a salary of £40,000 a year.
Fed up renting a room for £850 a month in a house-share, she made a spreadsheet to help her set goals and work out where she could cut back on her spending.
She’d already put aside £3,000 to go towards buying somewhere but saved an extra £250 a month by moving house with cheaper rent.
She also found ways to cut back on shopping, holidays, as well as switching banks and cancelling her gym membership.
Motivated by her growing savings account, she’d put away at least £1,000 a month, and after fifteen months Hannah had enough cash to buy property through shared ownership, meaning she owns a 32 per cent share of the flat.
With an £80,000 mortgage, and aged just 26, Hannah picked up the keys to her flat in 2016.
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The thrifty homeowner has stuck money saving regime and already reduced her mortgage term by two years after a few overpayments.
We caught up with Hannah to get the lowdown on shared ownership for our My First Home series.
What is your property like and what did you pay for it?
I bought my one-bed, second-floor flat in Greenwich, southeast London, in 2016 via shared ownership.
It’s pretty spacious at 52 sq metres with an open-plan kitchen and a large balcony. There are some community areas outside, a children’s playground and an ecology park nearby.
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I didn’t get to choose any of the fittings but luckily the lovely grey laminate flooring and grey kitchen are just my style.
The bedroom is my favourite part of the flat. For the first time it is a place to sleep rather than where I live my life which was the case when I was house-sharing.
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I have focused on making it calm and relaxing. There is no television – plus white linen and towels to give it that hotel feeling.
My flat was £315,000 and I bought a 32 per cent share worth £100,800 with a £20,160 deposit that worked out at 20 per cent of my portion.
It took me here were 15 months from the time I decided to save to actually moving in.
How did you save so much whilst you still rented?
I already had £3,000 but I wanted to buy somewhere before I turned 30 so I started by creating a spreadsheet.
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I worked out how old I would be by the time I had enough money to buy based on saving £100, £200, £300 a month – it went all the way up to £1,500 a month.
I saw that if I put away £100 a month I would be 45 before I could afford to buy.
At the time, I was working as a project coordinator earning £40,000 so I decided to knuckle down and save at least £1,000 each month so I kept track of what I was spending my money on.
I was paying £850 a month in rent but decided to move in with a friend who was willing to rent me a room for £600 a month to save £250 a month.
I stopped shopping, cancelled my gym membership, cut out “thoughtless spending” like coffees and cut down on nights out. I didn’t take any holidays or have any weekends away either.
I switched my current account again and the bank paid me £150. To be honest, this is something I’ve done every year for the last four years just to get the switch incentive.
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I also got about £120 in cashback from my credit card provider when I used it to spend in certain shops.
Something else I tried my hand as was investing. I put £500 into RateSetter Peer to Peer Lending to see if I could make some extra cash but because I didn’t want to be too risky I gave up quite early on and only made about a tenner!
It’s something I would go back to if I ever manage to save money again.
How does the money work with shared ownership?
Every month I pay £417 for my mortgage and a £557 for rent – that includes the service charge – totalling £974.
One-bed flats in the same building are typically rented out for £1,600 a month, so I’m definitely saving money even though I pay for rent on part of the property.
My monthly payments are also only slightly more now that I live on my own compared to what it was when I paid £850 for a room in a shared-house with six people.
Having my own space for a bit extra a month is absolutely worth it.
My mortgage is for £80,640 and I’m now locked into a 10-year fixed-rate deal of 2.69 per cent.
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It’s turbulent times with Brexit so I’d rather stick with that for 10 years than potentially have rates rise to some crazy figure in the next decade.
My parents have paid 15 per cent for their mortgage in the past so I thought 2.69 per cent sounded great.
I also get a bonus through work that I put straight into my savings account. Last year’s was £4,500.
I use it to pay the maximum overpayment every year without incurring any charges which for me is 5 per cent value of the mortgage.
I’ve already reduced my mortgage term by two years by doing this to bring it down to 20 years.
Have you had any problems with shared ownership and would you recommend it?
It did make the mortgage process more difficult and I do think it makes interest rates slightly more expensive.
My first mortgage when I bought was with Halifax. A few months into the process I was told my contact had messed up the paperwork.
We had to go through some of the hoops again – that wasn’t too bad.
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Then I remortgaged last year with Barclays. Ten weeks into the process they told me they hadn’t realised it was a shared ownership property.
It said very clearly in the mortgage offer they had given me that it was a 32 per cent share – so I don’t know how that eluded them!
They had to go back to the beginning – it ended up taking five months to complete. It was crazy.
I felt very much in the dark about the whole process which I found difficult. I had to do the research and chase to keep things moving along.
During the five months, interest rates were set to rise but fortunately Barclays honoured their original offer.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The Government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
There were a few issues when I moved in too. There was a dodgy tap that the housing association had fixed.
But the worst one was with my balcony that leaked into the flat below and the contractor they sent lifted all my paving stone, told me they’d return the next day and then didn’t come back for six months.
Without shared ownership there is no way I would be able to buy my own flat and I rate that as more important than anything else.
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I couldn’t live in a flat of this calibre either for under £1,000 a month rent.
Another positive is the flat has gained value. When I remortgaged in 2018 the flat was valued at £371,000.
How did you afford to furnish the flat?
I bought all my furniture new from Ikea, and spent my lengthy mortgage process researching what I wanted to buy.
I moved in with my bed, wardrobe and a couple of bedside units. A few months later I bought my sofa and dining table.
My sofa is probably my best buy. It’s an L-shaped four-seater that is comfortable enough to sleep on if I ever had a guest. It’s leather so easy to keep clean. I paid about £1,000.
I have done quite a bit wallpapering, put up curtain rails and installed a projector to my ceiling.
I saved some money with moving costs by doing it all myself – with the help of my dad.
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What was it like finally getting the keys?
Amazing! One of the first things I did was take a selfie.
It has done so much for my levels of happiness. I have consistently hated house-sharing.
I once lived with a banker who partied every week and increased my rent after three months, and I didn’t get along with the others when I’d been sharing with six housemates.
Now I just love living on my own.
Do you think you will stay there?
I haven’t found anywhere else in London where I want to live more.
Greenwich has a great balance of shops, green areas, museums, restaurants and is convenient to get to on the Jubilee line.
At the end of my 10-year fixed rate I will have paid off a considerable amount of my mortgage.
If at that point interest rates have risen I will hopefully be in a position to pay it off quickly.
Have you got any advice for first-time buyers?
Research the mortgage process so that you know the different stages and can chase up when things aren’t happening.
Make sure you have your motivation down for saving. If you are not excited about saving it’s so much harder to do.
I was constantly motivating myself by setting up Pinterest boards of what I wanted my kitchen, living room etc to look like.
You can sometimes get lost in the paperwork too and forget you are buying a flat. Looking at the pinterest boards kept it real.
Don’t rush the furniture. Do the essentials and buy the rest once you are living there. I am limited in how I can rearrange my furniture and wish I had bought smaller, more modular pieces.
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