You might not have thought that years ago a pesky black mark on your credit score from a missed bill would be a big deal—but Laura Preston-Roe found it could stop buying your first home.
A mark on his credit history meant that instead of putting down a 5% deposit to buy his first home, he would have to save four times that amount and make a 20% down payment.
Any mark on your credit history can be a Big red flag to mortgage lendersAnd taking your first step on the property ladder can make it tough.
Laura, 29, didn’t think so missed phone bill When she was 18 years old, many problems arose when she bought her first home for £165,000.
But a mistake from a decade ago meant he had to save twice as much as he expected for his deposit,
After being rejected for a mortgage application, she panics, thinking that her dream of buying a home is over.
Laura realized that the missed phone bill was the issue when her mortgage broker noticed the problem.
She knew she would have to rebuild her credit score if she ever wanted to buy a home.
Laura, who works in insurance, followed simple tips for improving your credit score: taking out a credit card and paying off your balance quickly, and signing up on the voter list.
It was worth it in the end, as Laura got her second application with Halifax and finally got the keys to her three-bed house in 2018.
he bought it through shared ownership Plan – whereby you can buy a part of the house, and pay rent on the rest.
This rent goes to a housing association, which owns the rest of the property.
Usually, you only need to deposit 5% to secure one of these houses.
But Laura had to deposit 20% of the £8,250 due to her credit history – which would be four times what other buyers would save.
To raise extra money, Laura worked extra shifts at work, earning her an additional £570 a month.
She also cut down on luxuries like dyeing her eyebrows and takeaways.
The Sun finds out how she went from being a saver to a homeowner for The Sun my first home Chain.
tell me about your house
This is a three bed mid terrace house near Leeds.
It has a separate kitchen, dining room and living room and a toilet downstairs.
There is a bathroom upstairs.
I have a decent sized garden outside, with a patio area as well as grass, and a double driveway.
I can’t even rent out any spare rooms I want – there’s a clause in my shared ownership agreement that says I’m not allowed to sublet.
How did you decide about the location?
My home is five miles from where I grew up – so it’s really close to my friends and family.
I was specifically looking for new construction homes – I didn’t want to pay for renovation work if I bought an older home.
And I could buy a new construction house quickly under the shared ownership scheme.
This lets buyers buy a portion of the equity in the property if they cannot take out a mortgage for the total value of the home.
This meant I could take out a smaller mortgage.
You then pay rent on the remaining portion of the house which is owned by the housing association.
This house was the closest new construction home for my friends and family to live in.
how much did you pay for it?
The total value of the house was £165,000.
I bought 25% of it, which was £41,250 and put a 20% deposit for £8,250.
I pledged £33,000 over 15 years at 2.6% interest.
My monthly mortgage repayment is £170, and my rent is £308.
How did you save for this?
The main way I saved for my deposits was to do a lot of overtime at work.
From Monday to Wednesday, I would finish my normal 9 a.m. to 5 p.m. shift and then work extra hours between 6 p.m. and 9 p.m.
I work from home, so I have dinner in between shifts.
This gave me an extra £570 a month, which I put directly into my deposit. It was really tiring but worth it in the end.
And cutting back on luxuries helped me save even more.
I used to get my eyebrows painted every month, which cost me £35 – but I stopped going to the salon when I was saving up.
Every month I used to spend about £60 on takeaway – but I put it all off and cook my own food instead.
I also stopped going out to lunch at work, saving me £70 a month.
My family gave me about £3,000 to fund my deposit, which really helped me.
While I was saving, I also stayed at home with my mother for six months – saving me £650 a month in rent.
Selling my old furniture also helped me raise £1,000 for my deposit: I sold a sofa for £250, a single bed for £50 and a dining table for £200.
How did you present it?
I bought a lot of things second hand to keep my cost down.
I found a second-hand sofa for £300, which would be about £1,000 new.
I also found a second-hand fridge for £25, which would have originally cost £250 from Curry.
Were there any complications?
My credit score was not very good, so I had to deposit more deposit than I expected.
You only need to make a 5% deposit to buy a shared-owned home, although I was budgeting to put 10% down so I could take out a smaller mortgage.
But because of my credit history, I had to deposit 20%.
Mortgage firms usually look for people who have low credit score The more risky it is to lend – so they may demand a higher deposit than usual.
I had a problem with my credit score because I had hardly any credit history and when I was 18, I couldn’t get paid on my phone bill.
As the only credit I had so far was this, it really affected my score a lot and meant that I was rejected by Barclays for a mortgage.
Fearing that I would never get the loan, I tried my best to raise my score.
I got a credit card and would pay for my fuel and groceries on it, then quickly clear the balance. This helped prove to lenders that I could manage credit wisely.
I also got on the voter list – it proves who you are and where you live, which means it’s easy to get credit if you’re on the list.
What is your advice for other first time buyers?
Stay focused on your end goal and you’ll get there, even if it’s not as easy as you hoped.
Don’t let anything distract you while saving.
You might just think “this is just a takeaway”, but it all adds up.
It’s worth it in the end when you have your own home.
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