How I bought an £80k flat on £10k a year salary after getting rejected for a mortgage
IT was second time lucky for part-time blogger Emma Jackson when it came to buying her first home.
The savvy saver, 25, bought a £80,000 one-bed flat in Sheffield in September 2019 after her first attempt at getting a mortgage failed.
This meant she eventually had enough saved to put down a 45 per cent deposit she needed because of her low salary.
But despite a mortgage broker telling her that she was eligible, Emma's loan application was rejected due to the short lease on the flat.
The delay meant that she risked missing out on the property entirely but luckily the seller was willing to wait.
She then switched to a different broker who found her a deal that she was accepted for.
Emma spoke to My First Home about the ups and downs of buying her one-bed property.
What is the flat like?
It is in a block of 300 modern flats built in 2004 and I'm on the third floor.
The great thing is that it has a balcony that lets in lots of light and overlooks the hills of Sheffield.
The flat is also really close to the city centre and I can walk to everything.
Plus, I worked about 30 hours a week the whole way through university while doing my BSc Sports Development degree and was always stashing money away.
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I earned more money than I needed because I lived below my means. I managed to save around £200 to £500 a month during university.
Then the second year of my blog I made £2,500 from it and another £2,500 from other side hustles.
By the time I came to buy I had £30,000 in savings, plus £6,000 in my Help to Buy Isa - £4,800 plus the £1,200 government bonus - and I had made enough money from my blog to pay the £1,200 solicitor fees.
Did you have any problems getting a mortgage?
Yes. It was really hard to get a mortgage and I thought I wasn't going to get the flat after I made an offer on it.
Because I am only employed part-time and didn't have enough years of self-employed earnings I could only get a mortgage for £44,000 or below.
This really restricted what I could buy even though I had £36,000 in savings.
I was also offered a really good mortgage deal and then the lender pulled out because it was worried the relatively short lease at 83 years meant it would struggle to sell the flat if it got repossessed.
Extending the lease is also pricier the lower it goes, although this isn't something I'm worried about right now.
So I had to go to a different mortgage broker and start the whole process again.
From April to August last year I was trying to get a mortgage in principle and kept getting rejected. Luckily my second broker was able to sort it quickly and I was in the property within six weeks as there was no chain.
How much do you pay each month?
NatWest ended-up being the only lender that would give me a mortgage on the remaining £44,000 and all it would offer me was 25 years. It is a two year fixed rate at 2.16 per cent.
The payments are only £190 a month which is way lower than what I can afford.
I am already overpaying the maximum amount I can on top, which is 10 per cent of the mortgage - £4,400 a year.
As it's a leasehold property I also pay £300 a year ground rent and an £800 annual service charge.
How did you afford to furnish it?
I was really lucky because the previous owner was a landlord and just wanted to sell it quickly. They left me all the white goods and a lot of furniture.
I got a dishwasher, cooker, fridge, washing machine, bed, mattress, dining table, bedside table and settee all for free.
I had all my crockery and cutlery from living in my flat previously and I got given a new settee from my brother's girlfriend's mum, so I actually sold the existing settee for £25.
The only thing I really bought was a £200 television.
Are you still managing to save money?
Yes. I am saving everything I make from the blog which is about £1,000 a month now.
My outgoings for mortgage, bills, food and disposable income is around £700 a month so it means I can still save lots.
One of my best savings is actually my broadband deal - it’s only £16 a month but I also got £65 cashback; meaning I basically got four months of free broadband.
I also did this with my phone contract – it costs £8 a month for a 12-month contract and I got £40 cashback.
What did it feel like to pick up the keys?
I was really chuffed because I thought owning my own home wasn't going to happen.
The kind of flats I could afford weren't very nice, my first mortgage got rejected and it was all very frustrating.
So I was absolutely thrilled when I got the keys.
What is your advice to other first time buyers?
This all came from me working hard. I was doing minimum wage jobs and 16-hour shifts as a lifeguard.
Do the overtime, work hard and save money everywhere.