How to Leap Onto The Property Ladder in The UK

Getting on the property ladder can be an incredibly exciting experience. You will have a versatile asset which tends to increase in value over time. You will also have that empowering feeling of ownership. It isn’t all sunshine and rainbows, because the entire process can be very stressful.

We were sick of renting so decided to get a mortgage. The process was complicated, and there was always someone attempting to deceive us.

  •  The bank tried to push an expensive insurance policy on us.
  • Estate agents lied to us about the property’s condition.
  • Contractors inflated their quotes to cash in on the “newbies”.

And this is why I took the time to write this guide. I want to help you avoid the pitfalls of getting on the property ladder.

When you tell other renters of your plans to buy a property, you will be met with some backlash.  You will hear comments such as “Renting gives me the freedom to move as I wish.”. At the end of the day, every human being needs shelter to protect them from the elements and store valuables.

We all need a safe place to return to each day. Therefore, property will always have value. I live next to a kind-hearted elderly lady. She always brings us vegetables from an allotment and looks out for the whole neighbourhood. She was due for retirement 3 years ago, but couldn’t afford to retire. One of the reasons is that she rented her whole life and feels the pension stipend wouldn’t be enough. She has racked up debts and doesn’t own any appreciating assets.  A property can be rented out, sold or used as collateral for a loan. You can even rent out a room through Airbnb and make decent passive income. And most importantly, you are in control. We enjoy decorating our home how we like.

Saying that, there are disadvantages to owning a property which I will cover later. Generally speaking, we don’t regret it.

Here is what I will be covering:

  1. How to get on the property ladder regardless of your situation
  2. The true costs of owning a property
  3. How to sort your finances prior to applying 
  4. The tricks used on first-time buyers and how to avoid them
  5. How to get a mortgage if you are self-employed or a contractor
  6. Frequently asked questions of first-time buyers

How to jump on the property ladder regardless of your situation

Getting a mortgage as a first time buyer

The biggest mistake I see is people buying a bigger house than they can afford. You should have wiggle room in case life throws one of those annoying surprises- a job loss for instance. Ideally, you should get a mortgage which provides some ‘wiggle room’ for saving money. For instance, I currently reside in an “up and coming” area. As a result, the mortgage repayment is low. Consequently, we are able to save a lot of money each month and put it towards other projects. If you have a partner, this can be a challenging discussion. Should you go for that massive “forever home” or a cheaper one which enables you to save more each month?


Like most things in life, buying a property comes down to having the right finances. A lender will look at your salary, debt, job type and other factors before reaching a decision. Therefore, the first step is to take a deep look at your finances. Any lender will check your salary, outgoings, debt and creditworthiness.

For tips on how to clean up your finances check out the straightforward guide to better finances.

We all have that one friend who lends money and never pays back. As a result, you become more hesitant to lend them money. Banks think in exactly the same way. Here is how to assess your finances before applying for a mortgage:

1) Recurring bills 

It is easy to sign up for something, get charged monthly and then forget to cancel it. For instance, we had 3 insurance policies which covered the same thing – how stupid was that?! Some bills are unavoidable such as rent and utilities. However, you can either cancel some or find cheaper alternatives. For example, we rarely used the landline, so we cancelled it. I spent a Saturday afternoon cancelling services we rarely used. I also found cheaper alternatives to the ones we use frequently. In some cases, it turns out that I had the best deal. However, I called each provider to see whether they would reduce it further. Surprisingly, they all said yes. The Saturday afternoon shaved off £236.64 in monthly outgoings. I was shocked, and now conduct this process every year.

For a step-by-step guide to this process, check out my post on slashing household bills in half.

2) Debt

Banks pay close attention to how much debt you have. Think about it, would you lend money to someone who owes several people money? The best thing you can do is to pay down your debts. We ploughed more savings into our monthly debt repayments.

Secondly, we found that some of our debts were spent on expensive goods- silly I know. It is amazing how quickly 0% offers can pile up. Therefore, we sold all the items we had no use for and this raised £2.864.87 which we ploughed directly into debt repayments. You would be surprised at what your unused items are worth. This ‘clean up’ exercise made us look more viable to mortgage lenders.

I wrote a detailed and straightforward guide to boosting your credit score. Be sure to take a look.

3) Income

Lenders want to know that you have enough income to cover all your bills, a mortgage and all the other costs of owning a home. Therefore, the higher your disposable income, the higher the amount you are likely to be approved for.

Raising a deposit

Raising a mortgage deposit

If you are wondering how to raise the money needed for a deposit/downpayment, this section will help you to do that. Plus, we will take a look at how entrepreneurs and salaried workers can increase their income before applying for a mortgage.

Let’s begin with salaried workers:

A) Get a raise

Most employers are reasonable with a pay increase so long as you show them how they would benefit. For instance, sitting your boss down to say you need more money because you are about to buy a home won’t work. The easiest way is to ask what they would like you to do to be more valuable in the workplace. My boss (at the time) told me to complete a qualification which took 3 months. After finishing it, I received a 15% increase in salary. Moreover, I renegotiated my work hours so that I could do a bit more over time. I would get to work 45 minutes early and leave 45 minutes later. This increased my billable work hours to 9 from 7 and a half. As a result, I gained a 20% increase in pay to make a total pay increase of 35%.

B) Get a new job

Despite your best efforts some employers arIt is incredibly easy to get comfortable with where you are. However, data shows that people who move jobs every 3-5 years make more money over time. This is because when you already have a job, you are in the driver’s seat. You are free to accept or reject an offer. Therefore, they are likely to offer you more than your current salary. However, if you are made redundant or sacked, employers know that you are a bit desperate and will make an offer accordingly.

C) Have a side income

A side income enables you to save money towards a deposit, or pay down debts before applying for a mortgage. The internet is a wonderful thing and enables anyone to start up a low cost, high-profit potential business. In the interest of full disclosure, this blog is a business. I get paid a commission if you click a link and sign up. It costs me about £100 a year to maintain this blog. I also make money through freelance writing because my articles act as samples. I get paid £80 – £120 per article.I also buy from car boot sales and resell on eBay. This has its challenges, but so far it is going better than expected. Due to the low costs of launching an online business, it is worth a try.

One of the quickest ways to turn your skills into extra income is to post on local buy and sell Facebook groups. I advised a friend to do this, and he now makes £30/hour teaching G.C.S.E Mathematics during weekday evenings and the weekends. What skills do you have?

Here are some resources which have proved to be crucial:

Andrew Minalto – Free information on how to buy and sell products

SmartBlogger – Teaches how to write with impact. This is useful for attracting more buyers and launching an attractive blog.

Matthew Woodward – Without traffic, your online business will die. This site teaches you a range of strategies to get people through the door.

Raising a mortgage deposit as a sole trader or entrepreneur

How to get a mortgage as a sole trader


Being your own boss is incredibly freeing, but it also comes with its own challenges. For instance, you can make a lot of money for one month, and little the next. This is part of the challenge… and there I say it, fun. However, mortgage lenders don’t view it that way. What they want is stability. As a result, entrepreneurs need to jump through more hoops.

Here are some things to consider:

1) 2 years’ accounts prepared by a chartered accountant

In general, banks use your average profit to calculate income. Since some people might be tempted to ‘edit’ the numbers, you will need to hire a chartered accountant to prepare your accounts.

2) Common business practices might go against you.

There are tax advantages to showing a small profit on your balance sheet. This reduces your taxable income. As a result, some business people intentionally invest in equipment, employ relatives, etc. However, when it comes time to apply for a mortgage, this can count against you. If you employ such legal tactics, it is worth speaking to an accountant about your mortgage plans. They can advise you on the best way forward.

3) It isn’t impossible

Entrepreneurs are a higher risk to mortgage lenders. Your industry could experience a downturn, a big client could fail to pay you on time, or you could get pushed out the market by a big competitor. Therefore, you will need to show beyond any reasonable doubt that your business is stable and geared for growth.

Tricks used on first-time buyers and how to avoid falling victim

mortgage 'scams' used on first time buyers

Whenever a house is sold, multiple people benefit, The bank gets a new long term customer, a lawyer gets paid, an estate agent gets a commission, and the seller gets a load of cash. As a result, you will come across manipulative and deceptive tactics. Here are some of the common tricks used.

1) The seller lies about the state of their property

At first glance, a property can appear to be in perfect condition. It is straightforward to mask issues such as damp and mould. Fixing serious issues cost money; therefore, most sellers hope to get a signature on the dotted line. Once the keys change hands, it is no longer their problem. A property we viewed had no insulation in the loft. This would have made the house incredibly cold during the winter months. The £200 we paid for a property inspection saved us £8000 in renovation costs. To solve this, hire a property inspector and a pest control inspector. This will help you to detect any issues with the property. You can request that the seller solves any issues before you make an offer.

2) Estate agents lie about offers

To rush you into buying, estate agents frequently lie about the number of offers on a property. You should never feel rushed into buying. Remember, you are buying a home, not a phone. New properties come on the market all the time. If you miss out on your ‘dream home’, another one will arrive on the market. Purple Bricks charge sellers a standard rate before marketing their property. Therefore, they aren’t pushy or use the deceptive tactics used by most real estate agents.

3) Pressure to sign up for things you don’t need

Some estate agents and bank reps get kickbacks for signing you up to certain products and services. They will make it seem essential to getting on the property ladder. As a general rule, tell them that this is an unexpected expense. Therefore,  you will need 2-3 days to think it through. This will give you the time to conduct independent research. A popular sales tactic is for them to say something like “This is a one-time offer, and I am not sure we can offer it later…”.

For example, our bank offered us home insurance at £150 a month. I felt this was rather high. They argued that it covers “everything”.We went away and found similar insurance for less than £50 a month. There is never a rush to sign up for a product or service – no matter what they say.

The true costs of owning a property

So, you are still set on this home ownership thing huh? Great.

You will often hear that renting is like throwing money away. And this is partly true. However, besides your monthly repayments, there are additional costs to having a mortgage:

1) Insurance

Things happen when we least expect it. Fixing a problem in your home can cost thousands or even tens of thousands of pounds. I use comparethemarket to see what is out there and find out whether they offer cashback by visiting Topcashback. You can even negotiate on the quoted price. 10-20% is a good discount to aim for.

2) Renovations

Over time, things break or become old. You might have to change your boiler, radiator etc. Renters don’t need to worry about renovation costs. It is wise to set some money aside each month in case you need to fix something.

3) Freedom of movement

A lot can change during your repayment term. You might want to move to secure a better job opportunity. This is more challenging with a mortgage. You could rent out the property. Finding a tenant can take many months. Some mortgage lenders will enable you to ‘move’ your mortgage to another property. However, you will have to find a buyer for your current property. It is worth taking these factors into account before applying for a mortgage.

Frequently asked questions (FAQs) of first-time buyers

First time buyer questions

1) Can I get a mortgage even if my credit score isn’t perfect?

Every lender has a different way of ‘scoring’ your finances. If you would like to view your credit score for free visit Noddle. They make it very easy to understand your credit score and how to improve it. Your credit score is one piece of the puzzle. Lenders will also look at the following:

  • Income
  • Time spent in current employment/business
  • Current debts and repayment history
  • Age
  • Monthly financial commitments

2) I am confused by the different types of mortgages. Which one should I go for?

There are so many terms that it can get confusing. You could easily sign up for a mortgage which doesn’t fit your future ambitions. It is worth discussing your financial situation and aims with a certified expert. Below is a summary of the different types of mortgages.

Repayment mortgage

You pay a set amount each month, and at the end of the repayment term, the property is yours. The more you pay, the more equity you build. For instance, if your mortgage has a term of 20 years, at year 10, you will have paid off half, and hold £100,000 in equity. If the property increases in value, you would own equity in proportion to the increase. Interest-only mortgage: You only pay off the interest on your mortgage. As a result, monthly repayments are much lower than a repayment mortgage. However, for the property to be fully yours, you would need to pay for it in full at the end of the repayment term. If not, your lender will take it back. I some cases the property skyrockets in value. As a result, the borrower can sell the house, pay off the mortgage, and make a substantial profit.

Fixed rate mortgage

This guarantees that your interest rate will remain the same over a set period. If interest rates increase, you are unaffected. However, should interest rates drop, you will end up paying more than if you were on a standard variable rate mortgage. After the initial period of your loan, the lender will switch you to their standard variable rate.

Standard variable rate mortgage

SVR changes from one lender to the other. This can change over time. It is one of the things to ask about when approaching lenders. The higher the interest rate, the more you pay each month.

Tracker mortgage

Your mortgage repayment amount will change monthly. It usually follows the Bank of England base rate, plus a fixed amount determined by the lender. Cash back mortgage: Lenders use cash to incentivise borrowers. At first glance, it seems like a great deal because you will be given thousands of pounds. However, this is usually used by less competitive lenders. Therefore, you might end up repaying significantly more than if you had gone with another lender which doesn’t offer cash back.

3) How much will I get?

The loan amount depends on your income and current debt. Every lender wants to loan you enough to buy a home, but not so much that you struggle to make the monthly repayments. You can increase the mortgage amount by applying with a friend or relative. You will need to seek legal advice to draw up an agreement to split the homeownership. Most people split it 50/50. However, in some cases, one person might provide more of the downpayment or pay a higher percentage of the monthly repayments. In such scenarios, you would need to reach an agreement on percentage ownership.

4) What if my income drops and I am unable to make repayments?

Despite your best efforts, redundancies and business disasters are out of your control. If you lose your primary source of income, don’t bury your head in the sand. Be honest with your lender about the situation. They can arrange a repayment holiday or reduce your monthly repayments until you get back on your feet. The longer you leave it, the less understanding they will be. A close friend was made redundant, and the bank offered her a repayment holiday of 4 months. This was enough time for her to find a new job, and carry on with the mortgage as normal.

5) How can I find the best deal?

Before you apply for a mortgage, I suggest you chat with lenders on the high street. They can review your finances and give a good idea of how much they can offer you. This won’t affect your credit score. Be very specific about wanting a “pre-qualification”. In some cases, they can even tell you While searching for a good mortgage deal, I used Habito. They search the entire industry to find the best deal. Plus, if you sign up using this special link, and successfully complete a mortgage application, you will be given £100. You can also chat with their specialists online. This saved us a lot of time.

Final thoughts

Just to recap, here is what was covered:

– My own experiences of applying for a mortgage

– How to sort out your finances before applying

– The tricks used by lenders and agents

– ‘Hidden’ costs of owning a property.

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One Response

  1. Matthew Woodward April 27, 2019

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