My situation - advice welcome if possible?

krazyk

Hello,

Wondered if anyone can give any advice. Basically I want to buy a house after many, many years of renting and moving around a lot but I’ll go through everything (so sorry for the long message):

I currently live and work in West Berkshire, but want to move closer to London and closer to my family & dog (Richmond, Hampton, Twickenham, Teddington or around there somewhere). Am I renting a 2 bed new build semi-detached house for £775 a month, which I can comfortably pay. I am also looking for an IT/telecom job, again near London. I don’t want to commute if I have to and if I do I definitely don’t want a journey longer than, say, 45 minutes door to door. I don’t own a car so my only transport is bicycle or the ‘wonderful’ public transport – my bike has been great for travelling around Thatcham and Newbury. For me a car is luxury but I can’t deny that I would love to have one to get around and travel and see more places - the trains are a nightmare. I am situated very near a train station atm that links directly to Paddington and takes about 50 minutes if I don’t have to change at Reading. So my current house and location is very good and if I could I would buy the house I’m currently living in.

Prices in the areas mentioned above seem very high. If I wanted a 2 bed house again in Richmond, for example, it would cost me £289k (a figure found from having a quick look on rightrmove.co.uk today). I don't want to move back into a flat and the extra room here helps so much. It was very cramped in a one bed house previously but could fit into one again if I had to (my previous one bes house was a 1990’s house and I know they can be small compared to the norm.). But without the extra room there would be no potential to have a house mate.

I have been on a shared ownership scheme list for West Berkshire for a few years now. There hasn’t been many opportunities to purchase a house on the scheme and is basically too late. However, I have been sent details recently to quote (which, ironically would have been my best opportunity with 13 houses up for grabs this time). For a 2 bed end of terrace house, the full market (for a new build in Newbury) is £175k, I would buy 40% and rent would be £306 a month.

As for work, I am a contractor and hoping to say contracting as long as possible. My day rate is £150 a day, which is about £35k a year taking holidays and days off into account. My weekly wage including VAT is about £880. I have 2 years accounts under my belt now but I am 11 months away from gaining the all-important 3 years accounts. I have an IT/computer games industry background but currently doing ‘data’ stuff (spreadsheets, reporting, databases and the like) within a project environment for a very big mobile telecoms company on a very big project. If I’m completely truthful to myself I don’t feel that I’m management material, I like being in the background anyway, so my day rate probably would never hit anything above £200-250. But who knows?

I pay the usual things, VAT is £1.8k per quarter, corporate tax will be £2.4k next May. My tax (PAYE and NICS) is about £190 per quarter and I pay my accountant £111 a month who does everything for me for this price (including tax returns and annual accounts). I have a pension but do not pay into it – another thing I need to look into and would like advice on my best option for money for retirement (I am a single 30 year-old). I can give more figures if required. As I’m a bit of an Excel expert so have lots of spreadsheets covering all sorts of finance things for myself.

I have a savings account which currently only has £275 in it. I pay £20 a month atm, though are thinking of upping that to, say, £100 a month. This is the only savings I have, so I have very little to put down as a deposit on a house. My only option would be a loan (which I really don’t want to do) or a cash advance from one of my credit cards (which is even worse).

I have credit card debts of about £26k with a £2k catalogue debt. On average this year I have paid about £1100 a month off the debt. This is likely to drop and it will probably be more like £700 a month as my day rate dropped last month from £190 a day. But, for example, I have pay nearly £2k towards the card in October, an average figure for the year so far. I have 7 cards but 2 are now paid off. I try and balance transfer whenever there is a 0% rate and currently have £2.5k on one card with no interest to pay till next year. The total figure has come down a lot over the last year or so. It was about £35k and its great that I have a little control over it. Every little spare cash I have goes on paying the debt off and if my situation doesn’t change I feel confident that I will have it all paid off in 3 years time, at least. I would like to get down to 2 cards, one as a spare. cahoot is my best card and would like to keep this and my Egg Money card.

I have not checked my credit rating for a while but I haven’t applied for any credit cards, loans, etc. for a long time now and don’t want to. I think I get the odd check here and there though.

On top of this I’m looking to take courses in drawing/painting and photography. I want to get back into pencil drawing (a love and addiction of mine when I was a school boy) and into photography (which is a recent interest). I would like to gain an income that will supplement by current income and eventually become a full-time photographer/artist if I can earn enough money from it. The courses from the Open College of Arts are expensive. I would start with the drawing courses, there are 2 and would cost £407 each, 6 months each. The painting course the following 2 years would be £536 each. If the drawing courses went well (I’ve never tried home-study courses before) then I would like to take on the photography courses at the same time. Each of these courses are £536. Each would be roughly for a year and so again would take me 3 years to complete. I would possible gain a Diploma of Higher Education in Creative Arts from doing this though not currently available from the college, it is something they are working on. To just gain the credits I would need to submit all my work for each course for assessment, this being about £80 each.

I have already purchased an entry-level digital SLR and snapping away. I have created a simple web site at https://www.squashyfrog.com that has just a few of my better photos (though not great quality it’s a start) and have set-up a DeviantArt account and a few of my better photos are available to buy as prints (though I’m unlikely to sell any atm). Plus I share lots of my photos (the good and bad) on Flickr.com which I try to link to my other sites to gain interest. I have a e-lusion.co.uk site that seems to get lots of hits so will look at trying to redirect visitors to the new sites mentioned above or at least promote the new sites. I do own a batch of our domains, but so far have not followed through any ideas I had for them (could do with a friendly computer artist/web designer J).

It’s either this route or stay doing desk jobs which I’ve grown to dislike a lot of the last 1-2 years – I don’t like sitting at a desk and in front of a computer screen all day and I like to travel (especially by bike) and take photos. I know a lot of people are like this but I want to do something I enjoy. I would need to take Microsoft, Cisco, etc. courses to further my career and these are even more expensive. If I did stick it out I would probably take the MCSA route as I would like to be a systems administrator and not go down the route of technical support (which is definitely stuck at a computer or on the phone all day). If I bought a 20 day gold “pass” with Global Knowledge it would cost me £2395. I would be able to take all the courses I need though within this time so the remaining cost would be 4 exam fees and books if required.

I would like to take a Prince2 Foundation exam early next year. It’s supposed to be a fairly easy course and exam and could help with further project jobs/gain better day rates. Any course, however has been postponed due to my day rate cut last month and I’m unlikely to start anything until January at the earliest.

My long term goal was to have my own company but being self-employed contractor if fine to me and not far off it. I wouldn’t mind picking up the odd job here and there (i.e. a bit of web site maintenance or build a PC computer) but nothing crops up atm.

Any advice on what I could do? Would a lender be willing to lend me enough for me to buy a house? Should I move anyway or should I wait for my debt to go down, say, in a year’s time? Should I take the courses? What should I do about a pension?...

Krazy K.

Elaine_Wilson

I'm no expert but I'm sure someone will be along soon with excellent advice.

However, my thoughts are that you are suggesting taking on a mortgage with no deposit available whilst you are carrying about £28,000 of unsecured debt. I expect this is possible but is it really the best move? What is your opinion of the likely change in house prices over the next two years?

You seem to have a number of options of how to develop your career. Would taking the various courses you indicate mean a drop in your earnings? Or would you study part time so maintaining your current income?

My gut feeling would be that you should continue to aggressively reduce your debt (except, maybe, for any 0% deals) and perhaps put something by as a deposit for a future property purchase. But I might be missing something.

As far as pension provision goes I would normally advocate putting as much by as you can afford as early as possible. But with possibly high interest rates on some credit cards you are effectively borrowing to invest. You are still young so clear the debt in just over two years and reconsider the position then.

I don't think you have a clear strategy for your future career development. You are in that delightful stage where you have identified a number of ways to progress but are not ready to commit wholeheartedly to one of them. Get rid of the debt, maybe take one or two of the cheaper courses and re-evaluate the position. I think you have a bright future.

Glad

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

krazyk

Hi Glad,

Thank you very much. I was toying with the idea of posting it into a mortgage/homes related board but reading my message back I do go into other topics too so thought it best to post in the initial board. Thanks again.

Elaine, I get back to your post in a little while, thanks for your reply.

KrazyK

freebo_2

I can only comment generally but I'm also an I.T. Contractor (Unix Systems Administrator but with nearly 20 years experience).

1) Mortgages - easisly available to contractors, do a google on "contractor mortgage" 3 years accounts are now NOT required by most lenders.

2) Daily Rate - I'm not in management but have stayed purely technical but if you get the right skills (I'd suggest networking, database administration, programming or even sysadmin) rates right now can be 2-3 times the figures you mention - more again if you can get into Corporate Banking in the City. The key thing is to work in highly commercial environments. I understand games programming is very poorly paid, as is most public sector work.

3) Courses - I would advise against paying for courses yourself at this stage, they are expensive and on their own won't get you a job. MCSA's are 10 a penny IMHO and pretty much anyone with some computer literacy and a little time & money can pass one, I don't think it proves much to many organisations, work experience does. Far more important than courses to prospective employers is your career history and if you choose to stay in I.T. the jobs you take are by far the most important decisions you will make and will govern your earning potential. Ideally get your courses paid for by your employer if you are permie (I've even been put on courses as a contractor, and been paid to attend them).

3) When I fist started in I.T. as a programmer I lived in Twickenham, which was a great area but now I beleive most of the big firms are in the M4 corridor around Reading, Maidenhead, Bracknell.

HTH,

lynzpower

Hi there
your post struck a real resonance for me, as this was exactly the same sort of thing I wouldve writen a couple of years ago.

similarities are in plenty of debt, and wanting to take on more, and wanting lots of change & movement in your career.

A mortgage doesnt really support you wanting to embrace lifes changes, as I have found with mine. If you want to play around with your career and explore loads of other ( not as well-paid) options, then a mortgage really doesnt allow for that, especailly full-time courses.

You are in a lot of debt. Great effort for trying to pay that off as quick as you are, but the fact remains you dont have a deposit or any money for sols fees, moving costs, stamp duty and so on. getting a loan, or drawing money off a CC is silliness, as you point out. Also most lenders will reduce the amount of mortgage theyll lend to you, if you have debts too, the halifax took my debt & multiplied by 3- then subtracted from what they would lend me, so do beware.

Also bear in mind you have a pretty cheap rent there for a 2 bedroom house. You pay less than I do on a 2 bed flat, that I bought 2 years ago, on a low interest only interest rate, and of course the property was worth less then than is now. You would be paying a significant amount more in mortgage, I would expect plus you will of course have the maintainence costs to bear as well.

Im not too sure why youve "missed the boat" with shared ownership? Although they do say you have to have 5k in savings and proof before they will consider you, I know I had to "prove" that when I put the holding deposit down on this place which is shared ownership.

It also sounds like you want/ need a car. At some point you will probably buy one, and thus have these costs as well.

Whether the maths stack up is one thing ( personally, from kinda guesswork, I guess they dont stack up well) but really what you wnat from life, be it the flexibility to pursue a completely different career from the bottom up, may not sit well with the demands of a mortgage.