I Wannabe debt free! Newbie help needed

slig

How are you funding all the costs of moving? What if your new flat needs some work doing or needs some furniture, how will you finance that? What if the boiler breaks?

Your SOA is tight as it is, and you haven't included clothing, haircuts, entertainment, presents, etc. How are you going to make sure the inevitable costs associated with a) moving house and b) owning your own home aren't just going to end up on the credit card/loans which will spiral you into more debt?

Can you really afford to do this?

Maybe you can, but you need to ask yourself questions like this now before it is too late!

Fortheloveofmoney

I think I should add that whilst I realise I haven't helped answer your original question, I'm trying to help you understand whether you can really afford this house. I don't know whether you are already committed to buying but I really feel that you need to get a better grasp of money before buying your own place.

I nearly lost my house 2 years ago because I thought I understood money and I really didn't. I didn't bugdet properly and things always cost more than I thought they would. Also things happen in life and if you don't have some money put away to help you then you end up borrowing more.

Please seriously consider paying off this loan and saving really hard for a deposit on your first place. You may then not have to rely on a shared equity scheme which seem to lock you in to a high purchase price.

The housing market is not good at the moment and prices have been dropping. Think how this would effect your finances in the longer term as properties in negative equity and shared ownership schemes are much much harder to remortgage.

adray

Bills break down as follows;

Mortgage - £350.30
Insurances and Assurances - £74 (ish can't remember exact amount)
Council Tax - £97.42
TV License - £11
Gas - £30
Electricity - £50
Food - £200
Broadband - £10 (O2 broadband, but may do without to begin with)
Factoring Fees - £66

Total - £878.72 (without broadband)
Total - £888.72 (with broadband)

Fortheloveofmoney

adray wrote: »

Bills break down as follows;

Mortgage - £350.30
Insurances and Assurances - £74 (ish can't remember exact amount)
Council Tax - £97.42
TV License - £11
Gas - £30
Electricity - £50
Food - £200
Broadband - £10 (O2 broadband, but may do without to begin with)
Factoring Fees - £66

Total - £878.72 (without broadband)
Total - £888.72 (with broadband)

Is the mortgage payment interest only? It has to be on that monthly payment unless you have a really really low interest rate and have taken the mortgage out for a term much longer than the normal 25 years. A £70k repayment morttgage at around 5.5% will be around £500 per month. I'm assuming you have a fixed rate. If so, how long for? If not, can you still afford the payments if the rates rise as dramatically as they have come down?

adray

Fortheloveofmoney wrote: »

I think I should add that whilst I realise I haven't helped answer your original question, I'm trying to help you understand whether you can really afford this house. I don't know whether you are already committed to buying but I really feel that you need to get a better grasp of money before buying your own place.

I nearly lost my house 2 years ago because I thought I understood money and I really didn't. I didn't bugdet properly and things always cost more than I thought they would. Also things happen in life and if you don't have some money put away to help you then you end up borrowing more.

Please seriously consider paying off this loan and saving really hard for a deposit on your first place. You may then not have to rely on a shared equity scheme which seem to lock you in to a high purchase price.

The housing market is not good at the moment and prices have been dropping. Think how this would effect your finances in the longer term as properties in negative equity and shared ownership schemes are much much harder to remortgage.

I totally understand where you are comming from and I have been told by mum and dad that they are going to help me get on my feet by helping cover some of my bills, just until my money increases. My problem is that due to my work I must move closer other wise I am going to be paying £350-£400 fuel a month from my mums, middle of no where on a farm so she and my dad understand and will help me.

I have also forgot to mention my dad has bought a pub and in order to make some money off it I have put a fruit machine into it which returns me roughly £200 per month which my dad is keeping for me to help either pay off my loan or with the bills on the flat to start. I am also going to be starting more work on top of my apprenticeship which is going to give me an extra £480 a month, but I never included this as I don't start this until this coming monday.

Sorry I did try my best to include everything in the first place but I have a memory like a sieve lol

adray

Fortheloveofmoney wrote: »

Is the mortgage payment interest only? It has to be on that monthly payment unless you have a really really low interest rate and have taken the mortgage out for a term much longer than the normal 25 years. A £70k repayment morttgage at around 5.5% will be around £500 per month. I'm assuming you have a fixed rate. If so, how long for? If not, can you still afford the payments if the rates rise as dramatically as they have come down?

No thats repayment (capital and interest), my friend/flat mate works for the bank so we get 3% on £59000 (well just under, this is 4 times his salary) then we have £11000 at 5.99% both fixed for 2 years

Fortheloveofmoney

adray wrote: »

I totally understand where you are comming from and I have been told by mum and dad that they are going to help me get on my feet by helping cover some of my bills, just until my money increases. My problem is that due to my work I must move closer other wise I am going to be paying £350-£400 fuel a month from my mums, middle of no where on a farm so she and my dad understand and will help me.

I have also forgot to mention my dad has bought a pub and in order to make some money off it I have put a fruit machine into it which returns me roughly £200 per month which my dad is keeping for me to help either pay off my loan or with the bills on the flat to start. I am also going to be starting more work on top of my apprenticeship which is going to give me an extra £480 a month, but I never included this as I don't start this until this coming monday.

Sorry I did try my best to include everything in the first place but I have a memory like a sieve lol

In that case, things should be a bit easier for you. It would still be cheaper to fund the extra fuel than moving but I really hope things work out and you don't end up in a worse financial mess. I can't help but feel that this is a mistake but it's yours to make so I'll stop giving you a hard time now

Good luck

adray

Fortheloveofmoney wrote: »

In that case, things should be a bit easier for you. It would still be cheaper to fund the extra fuel than moving but I really hope things work out and you don't end up in a worse financial mess. I can't help but feel that this is a mistake but it's yours to make so I'll stop giving you a hard time now

Good luck

I just need to work very hard to clear my overdraft and loan, also to build up some cash.

I know it's cheaper but I rather spend that money on something so I have something to show for it, eg a flat. I do seriously know to begin I am going to be tight on cash with my mum and dad willing to help I am taking advantage of this fact and getting on the property ladder.

Fortheloveofmoney

adray wrote: »

I just need to work very hard to clear my overdraft and loan, also to build up some cash.

I know it's cheaper but I rather spend that money on something so I have something to show for it, eg a flat. I do seriously know to begin I am going to be tight on cash with my mum and dad willing to help I am taking advantage of this fact and getting on the property ladder.

Sorry just 1 more thing. I can't resist

Have you and your friend agreed how long this arrangement will go on for? With house prices set to continue falling for a while and maybe taking quite a few years to recover, what happens if one or both of you wants out within say 2-3 years. Neither of you will earn enough to take on the whole mortgage by yourself. You may have to sell and at a loss. What then?

adray

Fortheloveofmoney wrote: »

Sorry just 1 more thing. I can't resist

Have you and your friend agreed how long this arrangement will go on for? With house prices set to continue falling for a while and maybe taking quite a few years to recover, what happens if one or both of you wants out within say 2-3 years. Neither of you will earn enough to take on the whole mortgage by yourself. You may have to sell and at a loss. What then?

We are sitting down and discussing this during the week so I shall update during the week... Hopefully I can answer that with good news during the week coming. My dad has mentioned that he is willing to buy into should Graeme move out but nothing agreed or discussed in princliple