Should I stay or should I go?

mstopham

Thank you all for the advice so far.

Buying a house should also never be for financial reasons - real returns on property are 0 (long term).

I would consider having a property a financial step up from renting. Once paid off then it is rent free. Also our plan long term is to move abroad. The bigger the equity the better.

It's a terrible time to buy (and particularly sell) property at present though, so I'd say there was no rush - think next Spring at the absolute earliest : the market might however still be pretty moribund through 2010.It depends on how soon the banks can start lending again.

For more than one reason we are realistically looking at spring 2011.

I wonder if the OP could structure a deal with the G/F whereby she funds the new property initially, with him paying her rent until the debt is sorted. His rent could then notionally accumulate until he had a "stake" in the property - and perhaps some savings as well - at which poiunt they could switch over to a joint ownership arrangment?

We have had discussions but obviously my debts are not her favourite topic. She has indicated that a more frank discussion on property purchase can get underway when the debts are much lower (a figure of £5000 was mentioned as this would be most of the way there from my current position and only a matter of months away from debt free)

I see you're paying the debt off at £700p/m - have you looked elsewhere on this site to make sure the APR's are the lowest they can be?

Whilst not the best on the market they are currently the best I can get. I have 3 CC's on 0% running out shortly and have card ready to receive the balance transfers but that will be depending on Natwests offers! September had an OK life of balance transfer, October had no life of balance transfer, will have to see what November brings! All the rest are on between 5.9 and 7.9% life of balances.

I am leaning towards keeping the pension now, it would seem to be transferable if I move jobs and dependants get lump sum or pension if I croak so my money won't be wasted it seems.

EdInvestor

mstopham wrote: »

I am leaning towards keeping the pension now, it would seem to be transferable if I move jobs and dependants get lump sum or pension if I croak so my money won't be wasted it seems.

The projection and terms indicates a fund value of around 200k at age 60 (that's using the whole thing to provide the income.) The 50% spouse benefit and particularly the inflation linking are expensive.

But you can take a pension like this at age 55, and you can take 25% of it in tax free cash.If you put it into "income drawdown" when you start taking the income, rather than buying an income, if you then die before age 75, your spouse can take the fund in cash minus 35% tax. You can also extract an income of 120% of the level annuity rate, which will be much higher than the pension level indicated incorporating all the bells and whistles, which may not be necessary as spouse gets a cash fund instead of an income, and invested drawdowns are expected to rise to cover inflation. .

Check the Pension Annuity tables here for the level rates : https://www.fsa.gov.uk/tables

This is quite a considerable benefit to bring to the household for the long term. The pension will also become an even better deal if your income in future goes into the higher rate tax bracket.

Since there's no immediate urgent plans in the housing area, I would continue as you are now and perhaps feel a little more confident about explaining what you're bringing to the partnership in the long term - though what the G/F says about debt is obviously quite right, as you accept. .

mstopham

The projection and terms indicates a fund value of around 200k at age 60 (that's using the whole thing to provide the income.) The 50% spouse benefit and particularly the inflation linking are expensive.

Yes I see that now thanks! Looking at that table as really helped. I was thinking the projected amounts weren't the best and perhaps other retirement planning would be best.

Having seen the figures on those tables it all makes much more sense and as you say, quite a lot I can bring to the table in terms of lifetime value. (G/F hasn't got a pension yet, any advice you can give me to offer her in terms of getting one?)

As your sig says! You made it simpler

EdInvestor

mstopham wrote: »

(G/F hasn't got a pension yet, any advice you can give me to offer her in terms of getting one?)

First you should both check how much you will get from the 2 state pensions and when your respective retirement ages are.

Does G/F's company offer a pension with free money like yours?If so she should join it.

If not, is she a higher rate taxpayer? It may be worth opening a personal pension or SIPP to mop up the 40% tax relief available on the H/R part of her salary. This makes sense because she's likely to pay basic rate tax in retirement, thus she gets 20% extra tax free (and she gets it now).

IMHO basic rate taxpayers with no company contribution should invest instead in stocks and shares ISAs, which offer the same or better investment options as a pension but are much more flexible. Bear in mind pension income (including state pension) is taxable, ISA income is not.

Retired people get a higher tax-free allowance, so you should be able to get 10k in pension income each tax free in retirement. So after deducting the forecast state pension amount, see what is left and aim to create a fund to provide income to fill that gap. You might be surprised - the gap could be quite small in her case, yours will probably be larger due to the salary sacrifice effect on your S2P.