Currently Renting but need to save for a Deposit

deb_buffy

Hi

Me and my partner are currently renting a flat for £500 a month but are looking to buy our own place. We have been given a mortgage promise of £98,000, which is great, but they have told us we need to save a min of 2% deposit. We have just 6 months left on our rental agreement. I was just wondering if any one had any ideas on how we can manage to get the 2% in just 6 months. We have total monthly outgoings of £1470 and have incomings of £1600. Our outgoings are already at the smallest I can make them as far as I can see. Any ideas would be grateful.
Outgoings are as follows:
Rent: 500
CT:100
Credit card: 100
Payment to parents:70
Money for work for petrol me and partner: 200
Food: 200
Bills:150
car insurance: 150

Thanks

Deb_buffy

dips_3

I'm no expert on this but perhaps you may be better posting this on the DFW board.

The first think that stands out to me is the food bill (£200) a month. Is this for two of you? If it is you could slash this by half if you were careful.

Another point - tell everyone you are saving for a house. Tell all your friends and family. Christmas is coming up. Make a pact with people that for this year alone you will not be buying expensive gifts. You could also hint that help towards the deposit would be a good christmas gift to you rather than presents.

If you focus on the next six months as a short term 'batton down the hatches' time and get everyone on board you may be surised what you can do.

Account for every penny - sell anything you don;t need. Look at taking on part time work over Christmas.

Also - what is the payment to parents for? If this is to repay money you have loaned is it possible they could give you a repayment holiday for six months until you get on your feet.

lypsey

If I was you I would not rush to the property market. I did the same as you 2 days before double MIRAS (tax relief) finished and then the house market started to go down . I was in negatve equity for 8 years . And could not afford to move up the ladder
I believe the house market is going to go into free fall (at least 50% down). We have rising unemployment , rising inflation , most importantly to you rising interest rates , the largest amount of debt on record , largest amount of bankruptcies for a decade , largest ratio of salary to mortgage in history (about 6.8 times) .
Just sit tight enjoy life and save as much as you can for a deposit

deb_buffy

DFW board? sorry am new to the site.

Christmas has already been taken car of because we use the Park savings programme which is included in the bills. Good idea about hinting for a desposit hadn't thought of that one at all.

The food bill is for the 2 of us. We try and buy less but it always seems to be around the same, £50 per week.

I already sell items on Ebay and in the local free paper but am running out of things we dont need or want. My partner is doing over time at the moment but is limited on what he can do.

The money to the parents could be stopped yes, i guess i could ask them.

Angela_D_3

They are saving money by buying at £98,000 seems like a good deal to me.

barnaby-bear

deb_buffy wrote:

Hi

Me and my partner are currently renting a flat for £500 a month but are looking to buy our own place. We have been given a mortgage promise of £98,000, which is great, but they have told us we need to save a min of 2% deposit. We have just 6 months left on our rental agreement. I was just wondering if any one had any ideas on how we can manage to get the 2% in just 6 months. We have total monthly outgoings of £1470 and have incomings of £1600. Our outgoings are already at the smallest I can make them as far as I can see. Any ideas would be grateful.
Outgoings are as follows:
Rent: 500
CT:100
Credit card: 100
Payment to parents:70
Money for work for petrol me and partner: 200
Food: 200
Bills:150
car insurance: 150

Thanks

Deb_buffy

Presumably you have money in that 0% savings acocunt known as the rental deposit - if your landlord's not scum and you haven't trashed the place and you are confident you'd get that back - you can at least consider that if you borrowed of family etc, but to be honest if you are only just thinking of saving 2% that's a tiny deposit and fees and moving costs stack up.

deb_buffy

The moving costs and all other fees can be sorted out without a problem. Most of them are being included in our mortgage promise. The rent deposit should be got back as we haven't broken anything and the land lady is quite nice, but wouldnt we get that back after we had left the property? so wouldnt be able to be used towards the new property?

barnaby-bear

deb_buffy wrote:

The moving costs and all other fees can be sorted out without a problem. Most of them are being included in our mortgage promise. The rent deposit should be got back as we haven't broken anything and the land lady is quite nice, but wouldnt we get that back after we had left the property? so wouldnt be able to be used towards the new property?

but if confident getting it back could borrow off family or stick on CC - however I still think you are a bit naive on costs, you don't get stuff like

£80 for bloke to connect gas cooker, £60 mail redirection for two, £50 van hire for a day, £100 new locks (if do yourself), building+contents insurance (£250+), paying all outstanding bills at current place, car insurance might charge for change of address,

before you even get a sofa, bed, washing machine, fridge, curtains, lawn mower....

when people say moving is expensive it sounds patronising but it's true it's just constant bits of expense

with a 2% deposit you'd be probably be getting a rubbish rate or some cash-back/discounter for FTBers with revert to SVR tie-in - If you have so little savings that you're trying to get £2k together in 6 months - I don't think you have great security - why not wait and save a bit harder/longer? They quote 3months of savings to live on as minimum buffer although a lot of people say 6 because usually takes >3 months to find a new job.

deb_buffy

The flat is unfurnished so we already have furniture and curtains etc.
You have to pay for mail redirection???? i was just going to contact the people i have things with, with my new address when we move.
the thing is if we stay renting longer then the 6 months left, isn't that just more dead money rather then money which could be going towards the mortgage?
We used all our savings when we moved into the flat to buy the furniture and the money hasn't been put back yet.

Sarahpuggy

There are also other costs that we were unaware of (we aren't buying now, but thats another story)..

Things like, the flat we were going to buy was leasehold..we had to pay £200 + Vat for the vendors solicitors costs, and £50+ VAT for a notice of transfer cost to them..these were all little hidden costs. Also, if its a leasehold property, the solicitors fees will be extra and there will be a maintenence/ground rent charge.

What % interest rate are you getting with a 2% deposit?

Anyway in total, you'll need the 2% deposit plus probably another 2-3k for fees, but im sure you know all that.

As for money savings..you seem to be heading in the right direction. Just cut out any luxuries for 6 months, no takeaways, make your own lunch at work..all those kinds of things do help.

Good Luck.

barnaby-bear

deb_buffy wrote:

The flat is unfurnished so we already have furniture and curtains etc.
You have to pay for mail redirection???? i was just going to contact the people i have things with, with my new address when we move.
the thing is if we stay renting longer then the 6 months left, isn't that just more dead money rather then money which could be going towards the mortgage?
We used all our savings when we moved into the flat to buy the furniture and the money hasn't been put back yet.

If you have white goods (fridge etc... ) that's less to think of.

Dead money is a bit debatable

http://www.fsa.gov.uk/CONSUMER/07_MORTGAGES/calculator/interest_only_calculator/iocalculator.html

on 98k on 5.3% you'd pay 432.83 a month

on repayment it would be
596.99

so you are talking £160 paying off the capital...

So all a bit debatable, if you believe prices will rise significantly, or have some argument on interest rates, how much maintainance do you have to factor in (flats always have service charges/ houses have things like gutters you have to buy ladders to get the leaves out of gutters (personal bugbear £150 on ladder because water pouring just after moving)) )

But if you have a bigger mortgage you get better rates especially ifd you avoid the fee back FTBer deals and have 95 or better 90%.

Given rent = 500 and IO 430, that's 70 you'd be paying off capital (or dead money), whether that covers maintainance costs or the costs oh HLCs because such a small deposit - not convinced.