Really want to buy a home in the next 5 years, advice please

dazcouz

Hi, Just wanted everyones opinions (preferly people with their own homes) on how I'm doing with my situation. I have managed to save up around £22.5K over the past couple of years from my job which pays around £15K a year. I have been saving up as I want to eventually have my own place to call home and am currently still living at home with parents paying £200 rent a month. I want to get a property around £120K eventually but know I will not get a mortgage as my income is too low so am trying to save up as much as I can. Currently I can save between £650-£850 a month and want to lay down a deposit by the time I'm 25 which will be late 2011.

What is the best think to do with my savings for the next few years?

Is it worthwhile getting a buy-to-let mortgage and renting out a home for a number of years and then move into the home?

Thanks

poppy10_2

You have done really well so far. But don't buy to let, it's financial suicide at the moment.

Just carry on saving, wait while prices fall and jump in in a couple of years time when sanity has been restored.

maninthestreet

dazcouz wrote: »

Hi, Just wanted everyones opinions (preferly people with their own homes) on how I'm doing with my situation. I have managed to save up around £22.5K over the past couple of years from my job which pays around £15K a year. I have been saving up as I want to eventually have my own place to call home and am currently still living at home with parents paying £200 rent a month. I want to get a property around £120K eventually but know I will not get a mortgage as my income is too low so am trying to save up as much as I can. Currently I can save between £650-£850 a month and want to lay down a deposit by the time I'm 25 which will be late 2011.

What is the best think to do with my savings for the next few years?

Is it worthwhile getting a buy-to-let mortgage and renting out a home for a number of years and then move into the home?

Thanks

What are you living on if you are managing to save at least £650 per month, plus £200 rent, from a gross salary of only £15K??

whitewing

From checking the new incometaxcalculator, his net wage would be £1023 monthly (assuming no pension).

Also assume OP has all bills/food included if living with parents.

£1023 - £850 stills gives £173 a month to play with. And perhaps OP does overtime too.

(Anyway, I just wanted an excuse to play with the new calculator)

torbrex

Treat your savings as if you were paying a mortgage, dont touch them, ever, or at least until you are ready to lay them down as a deposit and by that stage you will be used to paying £650-850/month and you will find paying the mortgage easier.
As to where to put your savings, find a regular savings account, possibly from this thread, and go for it.

barnaby-bear

dazcouz wrote: »

Hi, Just wanted everyones opinions (preferly people with their own homes) on how I'm doing with my situation. I have managed to save up around £22.5K over the past couple of years from my job which pays around £15K a year. I have been saving up as I want to eventually have my own place to call home and am currently still living at home with parents paying £200 rent a month. I want to get a property around £120K eventually but know I will not get a mortgage as my income is too low so am trying to save up as much as I can. Currently I can save between £650-£850 a month and want to lay down a deposit by the time I'm 25 which will be late 2011.

What is the best think to do with my savings for the next few years?

Is it worthwhile getting a buy-to-let mortgage and renting out a home for a number of years and then move into the home?

Thanks

Congratulations - just keep plodding away and it'll happen.
I somehow suspect though with this type of common sense and attitude you may well find in 5 years your salary may well be substantially higher.
You've clearly got common sense and staying power - many employers desperately need these skills and reward for such - any side plan to improve your career and salary?

Pssst

Obviously we dont know you so its pure speculation but given your lowish income,do you have future prospects to increase this possibly with promotion?

Why not invest some money is getting some nice clothes,looking good,meet a nice girl who you can live with and who has a good income,and buy a house together ?

dazcouz

Thanks for the replies guys. I work as a security research analyst in Hampshire. I will hopefully get a decent payrise this year (around £20K hopefully). I'll keep saving them till I'm ready to move out

whitewing

Because I'm sad, and didn't know anything about budgeting when I was young, if I were you I'd have some fun with my approach to saving.

How about rather than just saving x as a lump sum, you cost up the equivalent of a mortgage payment, a council tax payment, and electricity payment etc each month, and 'pay' them individually to your savings accounts, even set up different savings and allocate the electric bill. That way you save but you also have experience of household expenses without the real pain of handing your hard-earned money to someone else.

Towelie

Hi Daz, my situation is similar but I've got less deposit than you've saved up (only 15k). On a 15k salary the best mortgage for my circumstances at the moment is 60k paying about 380pcm back (for a property value of about 75k max) and although I can get a larger mortgage I can't afford to pay it back and do all those things like feed myself and heat the house as well!

From this it looks like you'd do well to try and up your salary bearing in mind the value of house you're after but if you are already expecting a raise in your current job it's a tricky situation. You need to find out how much you can borrow, work out your max monthly mortgage payment, and also work out how you could cope if interests rates rise (to about 10% or so?) and your monthly payments increase. Most mortgage providers have easy calculators on their websites to help you work this sort of thing out.

I'd say if you want a house at £120k you'll need a bit less than half of that saved up as a deposit, but this is just based on my limited experience, you should really get onto a fees-free mortgage broker like Martin's friends at London and Country (I thought their service was exceptional) as I have a feeling by having a big deposit you'll get access to the best mortgage deals.

First things first though, without knowing your income it's hard to make these sort of estimates so if I were you I'd wait to see if you get the raise and at that point either start speaking to mortgage brokers if you get the raise or look at a possible new job or getting a house at a lower price if you stay in the same job at the current salary.

As for where to save your cash I can't be much help I'm afraid, all my savings live in a mini cash ISA but I've little idea how good it is, check the other forum boards on savings accounts and get advice from the guys in the know over there.

I hope everything goes well anyway, good luck with getting that raise!