Guest Blog – I Chose to Leave the City
In this guest article from @penceandcents, we hear about a home buying journey that involves a huge change of heart. Enabled by the pandemic and remote working, the ability to relocate to a less expensive area allowed for a complete change in plan and ended in a strategic plan for the future.
- What was your original plan or goal?
I started to take a serious interest in personal finance when I moved to London in 2017. Navigating a new tax, pension and financial system as a twenty-one-year-old was pretty daunting, but I knew I needed to get to grips with it to ensure I wasn’t drowning in student loan repayments annually to the Aussie Tax Office. After I repaid my student loan (and became debt-free!) in 2018, I started working on building my emergency funds (one in pounds and one in Aussie dollars) and began to think about where I wanted to be in five, ten or twenty years’ time. I was 23, receiving no financial help from family or a partner, renting in London, wanting to travel and working on building my career in the tech sector. I honestly didn’t know what country I’d be in five or ten years time…but I knew I wanted to give my future self options.
Particularly the choice to buy my own home, solo, in “five years time” as that represented stability, security and freedom for me.
So, I started researching and created a plan to support “2025 me” to do just that. I worked backwards from 2025 to figure out how much I needed to save yearly and monthly to hit my deposit goal – my aim was circa 50K and I ended up with a 38K deposit – and how I could begin to do this while still enjoying my life over the next five years. I knew, realistically, I needed to buy in the UK and not Australia but beyond that, I didn’t have a specific idea on exact areas, while I enjoyed living in London it wasn’t affordable for me as a solo buyer and the idea of a massive mortgage made me nauseated. The pandemic and hybrid/remote working were what allowed me to explore the possibilities of accelerating my timeline and buying up north away from my firm’s London office where I’d been based.
- What were your lightbulb moments along the way?
There were definitely a few! The most memorable would be when I learned my (then 30K) salary wouldn’t qualify me for a home loan solo in late 2018 early 2019.
I was seeing people in my life glossing over the facts of their own situation in the name of positivity only to wind up intensely disappointed and I realised I needed to not only commit to this plan of supporting the 2025 version of myself by getting her set up with a house deposit… I also needed to raise my income to a point I hit the mortgage serviceability criteria solo. During that time I told myself over and over that while I couldn’t afford to buy, I could afford to save and that really helped maintain momentum. Over a 24 month period, I doubled my salary and have been fortunate enough to continue working full time during the pandemic so when I came to apply for a mortgage, my broker didn’t have issues securing my mortgage due to my income level and being a solo homeowner.
- Are you happy with your choice? What is life like now being a homeowner?
I feel a deep kind of soul-happy with my choice. From the first viewing, I could envision myself living here and I’m relishing the opportunities my apartment is giving me. It has genuinely felt like the start of a new adventure and particularly during the pandemic I appreciate that.
What’s been slightly surprising is how much – unsolicited! – advice I received from personal and professional contacts about the wisdom of buying a flat vs a house, the merits of south vs north, rental and resale values of one-bedroom vs two etc.
Ultimately, I feel comfortable disregarding a lot of the noise because while I’m happy, I didn’t make the decision lightly. I know my lovely two bedrooms, two bathroom city centre flat up North (with gloriously fast internet so I can comfortably work from home) will have great rental potential should I decide in two, five or ten years time to take an opportunity to move abroad for work. I want to keep giving my future self choices which means not being tied down to a massive mortgage on my primary residence, so, I spent a lot of time learning and educating myself on rental potential, cities in the UK that are better value to buy than to rent, understanding how long it would take me to hit a point where the equity in my flat would allow me to rent it out if I decide that’s what I want to do and then triple checked my homework.
I expected life as a homeowner to bring more anxieties but after the initial freak-outs and moments of panic over being responsible for an asset worth hundreds of thousands of pounds, I’ve found a sense of relief in it. It’s definitely my little sanctuary. Counter-intuitively, I think it’s given me the breathing room to refocus and dream even bigger – I’m still thinking about supporting 2025 me but I’m also now thinking about how in five years time I want to be doing more to give back both from a time sense and financially.
(I’m also VERY happy to report that while I did save my deposit 100% solo with zero financial assistance from family or a boyfriend, being a solo homeowner has yet to make me suddenly believe in the bootstraps narrative or that ‘renting is always dead money’. Was very grateful to discover my homeowner bias didn’t suddenly blind me to all the nuance in the world!)
- What advice would you give somebody to someone who could be in a similar position?
You are not a crystal orb – you cannot honestly expect to know what you’ll want in five, ten or twenty years time so give yourself the freedom and flexibility to change your mind as you navigate your path and grow. You really don’t have to know you 100% want a house to start saving for one – I certainly didn’t. Even if you can’t afford a home, you might be able to afford to save. Those small amounts genuinely do add up over time. If I hadn’t begun saving for a house, I wonder if I’d have had the same tenacity when pushing for merit-based pay raises, side hustling, learning to invest (PSA: you can invest and save for a house at the same time) and learning to trust myself with complex financial decisions.