We bought our £575k home with a 5% deposit thanks to a ‘life-saving’ scheme & we’ll pay it off 2 years early saving £16k
FIRST-TIME buyers are finding it harder to get on the property ladder, but Jan and Helen bought their home with a tiny deposit thanks to a “life-saving” scheme.
Nurses Jan Filiu and Helen Vladez, who are both nurses, moved into their three-bedroom apartment in Kingston, London, in 2022.
Before moving into their home, the couple were paying £1,600 to rent a two-bedroom flat and were desperate for a place of their own.
Jan, 40, and Helen, 37, had always been pretty savvy with money, but they had up their game to afford to put down a deposit for a home in London.
Getting together a deposit is often the biggest challenge on the journey to owning a home.
Usually, buyers need to come up with 10% of the property value, taking out a mortgage for the rest.
Luckily, Jan and Helen, were able to take advantage of the government’s Help to Buy Scheme.
The government scheme gave budding buyers an equity loan and allowed them to put down a deposit of just 5%.
You can get up to 20% of the value of your property – or 40% if you live in London – under the scheme.
The loan is interest-free for the first five years – but bad news for any budding buyers, the scheme has now closed.
But there are other schemes available that will give you a helping hand up the property ladder.
There are plenty of other schemes that first-time buyers can take advantage of too, like the Help to Build and First Homes Scheme.
The Sun has put together a handy guide to all the first-time buyer schemes available at the moment.
Jan and Helen also bagged £1,500 in free cash towards their deposit from their Help to Buy Isa.
They opened the account in 2019 and saved £6,000 in there over two years.
The Help To Buy ISA was a savings account that allowed first-time buyers to save for a mortgage deposit and then claim a government bonus when they bought their first home.
For every £200 you save, the government pays a £50 bonus towards the purchase price of a property.
This particular government scheme closed to new applicants in November 2019, although if you already have an account, you can continue paying into it until November 2029 and claim the bonus until 2030.
The Help to Buy Isa has been replaced by the Lifetime ISA, which can be opened by anyone aged 18 to 39.
When you open a Lifetime Isa the government will add 25% to your savings, up to a maximum of £1,000 a year.
Now they’re settled into their home, the pair are set to be mortgage-free just under two and half years early and save £16,570 by overpaying £1,000 a month.
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. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan – The Government will lend you up to 20% of the home’s value – or 40% in London – after you’ve put down a 5% 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% 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% of the property but you’re restricted to specific ones.
Mortgage guarantee scheme – The scheme opens to new 95% mortgages from April 19 2021. Applicants can buy their first home with a 5% deposit, it’s eligible for homes up to £600,000.
Most lenders allow customers on fixed rates to make overpayments of up to 10% of the outstanding mortgage balance in a year.
This is without being hit with an early repayment charge.
Overpaying by even a small amount could reduce the mortgage term and interest.
Meanwhile working overtime during the pandemic and cutting down expenses, helped them to get the £28,000 deposit they needed to secure their £575,000 home.
We sat down with Jan to discuss how the couple went from being savers to homeowners for The Sun’s My First Home series.
Tell me about your house
It’s a three-bedroom duplex in New Malden, Kingston when we saw it we fell in love immediately.
Our flat has a nice big open plan kitchen and living room and three really good-sized bedrooms.
The whole flat had nice open space so there was lots of room for us to decorate.
It has a lovely ground-floor balcony and a wonderful communal garden.
There were only six three-bedroom units like this in the complex so we’re very lucky to have gotten one.
How did you decide on the location?
We were both keen to find somewhere that was close to where we work.
Our new home is only 20-minute walk from the hospital, plus there are loads of amenities close by.
We can easily reach shops like Aldi and Matalan, plus it’s such an iconic location and it’s a really lovely community too.
Fairview were really friendly and helpful, they made the process very easy.
How much was it?
Our apartment was £575,000.
We took out a mortgage of We took out a mortgage of £547,000 for 35 years with a five-year fixed rate of 1.3%,
We could only afford to buy the flat because we applied for a Help to Buy equity loan and it was a life-saver.
We got a 40% equity loan of £220,00 through the Help to Buy Scheme.
You had to buy a new-build in order to be eligible for the loan, but that suited us perfectly.
Our interest rate is low compared to current interest rates, which are around 5% or 6%.
We’re making the most of it and overpaying on our mortgage where we can.
Our monthly mortgage payment is £920 but we try to pay anywhere between £1,080 to £2,000 a month.
Since 2022, we have overpaid £10,000 on our mortgage.
We are planning to put down a lump sum payment of £20,000 at the end of this year towards our mortgage.
This is set to take around £16,570 worth of interest off of our mortgage and reduce the term by just over two years.
In order to afford this, we have completely given up luxuries like takeaways and holidays.
We have also seen our bills go down quite a bit since moving home which has allowed us to do this.
We are saving around £1,860 a year on energy bills because our property is a new build, which has a higher EPC rating.
EPC stands for the Energy Performance Certificate which is given to all properties in the UK.
An EPC rates how efficient properties are from A (the best) to G (the worst).
Our rating went from E to B when we bought our new home and it’s saving us around £1,860 a year.
All of this extra money we have stashed away to put towards overpaying on our mortgage.
How to get the best deal on your mortgage
If you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or you home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
How did you save for it?
We first started saving in 2019, opening a Help to Buy Isa and putting £200 into that every month.
By the time we came to buy, we had saved £6,000 into the account and got a bonus of £1,500 from the government.
When the pandemic struck, we cancelled our holiday we decided to work towards putting money into our savings.
Covid meant there wasn’t much else we could do besides work, so we decided to do as much overtime as we could and see if we could get the money together for a deposit.
We were doing 14-hour shifts sometimes during very unsociable hours and a lot of it on the front line.
But it was worth it in the end because it meant we were earning £300 extra a month to put towards our deposit.
We have always been pretty frugal with our spending in general and have never splurged on takeaways, holidays, fancy meals out and designer clothes.
We tried to keep our food bill down by shopping at Aldi and only buying yellow sticker and essential items to help us save.
We also found that planning our meals at the time helped us to keep our grocery bills down.
Being savvy with our shopping and working overtime helped us to save £2,000 a month, with £200 going into our ISA and the rest going into a general savings account.
We were working so much that we saw a small dip in our bills since we weren’t at home as much and using as much energy and electricity.
A lot of people don’t realise all the extra fees that come with buying a home.
We had to pay £18,700 stamp duty and £2,000 legal fees.
That’s an extra £20,000 before we even moved in so first-time buyers should make sure they overestimate their costs and save as much as possible.
How did you afford to furnish it?
When we first moved in there was no furniture, and we didn’t have much to start with as we didn’t buy much from our old flat.
We budgeted around £5,000 and we made sure to save over our deposit amount to afford it.
We went to places like IKEA and B&Q to buy furniture that would make the place feel homey.
A lot of the furniture we bought on finance from IKEA as they offered a 0% interest rate for five years.
We pretty much had to place kitted out within six months.
Do you have any advice for other first-time buyers?
I don’t think I would have been able to save the way I did without my partner Helen.
We made the decision and worked as a team, we were always on the same page.
As an individual I am ambitious but I’m not blind to the sacrifices we made along the way, but the time flew and we got there in the end.
I would advise anyone who wants their own home to break the rental cycle as soon as they can.
Set yourself a fair goal but make changes so you find yourself saving without realising.
Helen and I are hoping to try for a baby and now we will have somewhere the little one to grow up.
I think it would the journey would have been a lot harder with a child so we are glad we settled it now.
One woman has shared how she was able to save £16,000 for her deposit with a “last digit savings” trick.
Another family is saving THOUSANDS on their £385,500 first home with a simple mortgage trick.
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