FIRST-TIME buyers are finding it harder to get on the property ladder, but Danielle managed to bag her dream home with just a 5% deposit.
Teacher Danielle Oakley, 25, moved into her three-bed semi-detached house in County Durham in August 2022.
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After setting her heart on a new build property by developer Gleeson, she decided to use the government’s Help to Buy scheme.
The government scheme allowed budding buyers to put down a deposit of just 5%.
You could then get an equity loan of up to 20% of the value of your property – or 40% if you lived in London – under the scheme.
The loan is interest-free for the first five years – but bad news for any aspiring buyers, the scheme closed for applications in October 2022.
But there are other schemes available that will give you a helping hand up the property ladder.
Buyers with a small deposit of 5% can use the government’s mortgage guarantee scheme to get a 95% loan to value (LTV) mortgage.
The initiative was originally due to finish at the end of 2022 but has been extended by another year. You now have until December 31, 2023 to take advantage.
First-time buyers can use the scheme, as well as home movers, but the property you want to buy must be below £600,000.
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Or the Help to Build scheme offers an equity loan to help you build a home or convert a previously commercial building.
Through the scheme, the government offers you a loan based on the estimated costs to buy a plot of land and build a home or buy a building to convert into a home.
And the First Homes scheme means prospective first-time buyers in England can get homes at a 30% to 50% discounted rate compared to market price.
But, if the homeowner decides to sell the property down the line, the discount on the new value will be made available to any future buyer too.
Splitting her savings between her cash Isa and her Help to Buy Isa, it took Danielle just shy of two years to save up for her deposit.
We sat down with Danielle to discuss how she went from being a saver to a homeowner for The Sun’s My First Home series.
Tell me about your home
It’s a three-bedroom semi-detached house in County Durham.
I have a large living room and an open-plan kitchen diner.
In the kitchen, there are French doors leading to my back garden.
There is a cupboard under the stairs for storage and a downstairs toilet.
Upstairs, there are two bedrooms, a bathroom and a room that I have converted into a dressing room.
I also have a driveway that is big enough to fit two cars.
How did you decide on the location?
My parents house, where I was living before I moved into my own home, was around 45 minutes away from the school I teach at.
Commuting so far was a bit of a pain, so I knew I wanted to be a bit closer to the school.
But that said, I also wanted to be far enough away so that I wasn’t bumping into pupils all the time.
The location of this property is perfect because it’s a ten-minute drive away from my workplace, but still feels a fair distance.
How much was it?
My house was £126,995 and I put down a 5% deposit of just over £6,300.
I took out my mortgage with Halifax and met with a mortgage broker recommended to me through Gleeson.
Putting down a smaller deposit was a perfect choice for me.
This is because, even though I had saved up more than the £6,300 I needed, I was able to put the rest towards furnishing my new home.
I applied for a Help to Buy equity loan.
It’s a scheme that helped first-time buyers get on the property ladder with just a 5% deposit.
The government will provide a loan of up to 40% of the value of the property if you live in London, otherwise you would have got 20%.
There’s no interest added to repayments in the first five years.
You had to buy a new-build in order to be eligible for the loan, but that suited me perfectly.
I took out a mortgage of £120,695 for 30 years with a five-year fixed rate of 3.25%.
The longer mortgage term means that my repayments are more manageable – coming in at around £380 a month.
How did you save for it?
I first started saving up for a deposit in September 2020.
At the time, I had just started my career so I had no money in savings – meaning I was starting completely from scratch.
Living at home was a huge saving because it meant I didn’t have to fork out on rent every month.
Instead, I would buy my parents a takeaway every month which came to around £60.
My only outgoings at the time were my car finance, insurance, phone bill, union fees and road tax. This came to under £500 a month.
I didn’t set myself a target for moving out because I still wanted to have a social life and enjoy finally having my own money.
That said, I made sure that I always had at least £400 to put into savings every month.
I found this to be a manageable amount while still being able to go out with my friends and family.
I split the cash between my easy access cash Isa and my Help to Buy Isa.
I opened a Help to Buy Isa in 2019, and put the maximum of £200 a month into the account.
By the time I was ready to buy, I had saved up £4,000 and I got a bonus of over £1,000.
I chose a cash Isa because it gave me a chance to earn interest tax-free.
When I came to complete on my house sale, I had £12,000 in this account, including interest.
I also used the round-up function on my Monzo account, which was a really easy way to save.
If I bought something for £19.30, then this would round up to £20 and 70p would go into a savings account.
While it might not sound like much, doing this helped me to save around £50 a month.
How did you afford to furnish it?
Once I hit my deposit goal, I just carried on with the same strategy for saving that I had before.
I bought everything in stages so that I wasn’t forking out large amounts of cash all at once.
Using Facebook Marketplace was also a great way to find bargains.
For example, I bought two DFS sofas for £200 and they were pretty much brand new.
I also got a kitchen table for £15, a bed for £200 plus a coffee table and some shelves for £20.
Overall, I think I saved around £2,000 on furniture just by using Facebook Marketplace.
I was also lucky enough to get £1,000 worth of freebies from Gleeson because I’m considered a key worker.
I put this towards getting fitted wardrobes in the bedrooms.
Gleeson also gave me all of my flooring for free because my home was delayed. This saved me around £4,000.
What advice would you give to other first time buyers?
Make sure that you wait until you find the property that you want and don’t just go for the first place that you find.
Getting the perfect home takes time but it’s worth the wait.
Here’s how one couple cut £11,000 off their deposit for their £217,000 first home.
An easy mortgage trick helped this family shave thousands off their £385,000 first home.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
