Don't want to waste anymore

Mastivision

I'm renting a property paying £800 every month from last 2 years, so that's mean I have given away or in other words wasted £20,000 in those years.

Question is I have savings of around £5000 and want to buy my own property so instead of paying someone house I can pay for my own. I understand my savings are not enough as a deposit but there must be something you can advice me in that to get onto the property ledder.

Please advice me openly and I work full time and earnings nearly 28k a year.


Cheers

Gwhiz

Assuming you cannot save more now then I would suggest moving to a cheaper rental and build up a sizeable deposit (20% ideally) as quickly as possible.

There is no magic solution.... just numbers.

MrsAmanda_2

It's frustrating, but don't look at it as having wasted that money - it's provided you with a roof over your head.

Agree that you're better off finding yourself cheaper digs for the time being. At your salary, you must be spending around half your take-home pay on the rent. I don't know which part of the world you live in, but if you're renting on your own, perhaps a flat-share would give you the option of saving more.

Running_Horse

Well done for saving so much since arriving in our country. If only some of our own people worked so hard.

£800 a month seems a high rent. Are you living in London? £28,000 won't buy you much. Are you getting all the benefits for your child?

If outside London, start looking for somewhere cheaper while you save up.

There is no real alternative to saving a deposit, increasing your earning power, and living as cheaply as possible.

ClareyFairy

I take it you havent got family you could move in with for a while, while you save?

Have you considered a smaller rental place with cheaper rent, or a flat/house share.

The bigger the deposit you are able to save, the better the rate you will be able to get on a morgage.

Try the other boards for other ways to save money, get cashback through quidco/topcashback, use clubcard and nectar and earn points on your shopping, take lunch to work instead of buying lunch out, try signing up to survey sites to earn a few extra pounds.

MPH80

Ok - here's how to work out if renting is a waste or not for you right now.

Take the house you are renting - get a rough purchase value for it - you can do this using rightmove or other sites and look for houses nearby.

Work out the monthly costs of a 90% interest only mortgage on that property. Interest only is very important as this is effectively expenditure - not savings.

Add to this cost all the other costs you are currently not paying for - buildings insurance, maintenance, boiler servicing etc.

Now - if amount to "own" house > amount to rent house - renting is the sensible way to live in the house for the short term. If you are worried about gaining an asset - you could also look to be saving, every month, the amount that you would otherwise be paying in the repayment mortgage into a high interest or investment account (to counteract any HPI effects)

The catch on all this is that the amount you 'save' on a repayment mortage goes up every month and the 'waste' (the interest) goes down - where as the amount you 'waste' on rent also goes up year on year.

So this only works as a pattern in the short term - but if you cannot afford the amount in sum 1 (mortgage + insurance + maintenance etc) - then you either have to compromise where you live or continue renting.

M.

evoke

Another option to speed up your deposit would be to downsize and rent somewhere a lot cheaper for a couple of years. If you are in London then you're going to struggle to buy anything at your current salary, i'm afraid, even with a huge deposit.

G_M

Not really 'wasted'. You've had somewhere to live in return.

I 'waste' money every day on food. Maybe £100 per week. That's £5200 each year, and at the end of the year what have I got to show for it? Nothing!

Must stop eating.....

HAMISH_MCTAVISH

Mastivision wrote: »

I'm renting a property paying £800 every month from last 2 years, so that's mean I have given away or in other words wasted £20,000 in those years.

Sadly, you are a victim of the mortgage rationing that has become endemic since the credit crunch.

Unless things change, you'll be forced to keep renting and waste another £20,000 or £40,000 or £60,000 until you save a larger deposit.

A recent survey found that around three quarters of all renters that wanted to buy listed the current high deposit requirements as the biggest barrier to ownership, so if it's any consolation, you're not alone. An entire generation of young people are being forced to enrich their landlords rather than themselves.

Keep saving, and try taking in a lodger or working a second job to increase your income. You could also consider shared ownership, which has lower deposit requirements.

On a positive note, there is a lot of political pressure building to get the banks lending sensibly again with higher LTV mortgages, so things will almost certainly get better before the next election.

Gwhiz

HAMISH_MCTAVISH wrote: »

On a positive note, there is a lot of political pressure building to get the banks lending sensibly again with higher LTV mortgages, so things will almost certainly get better before the next election.

Personally I'm not seeing that as necessarily a positive move. Look where it got us before. Making people behave responsibly with their money, to save a decent deposit, cannot be a bad thing.

Not everyone can buy, that's life.

HAMISH_MCTAVISH

Gwhiz wrote: »

Personally I'm not seeing that as necessarily a positive move. Look where it got us before.

Look where what got us before?

UK mortgage lending was not the reason for the global financial crisis.

Making people behave responsibly with their money, to save a decent deposit, cannot be a bad thing.

Quite.

But a "decent deposit" is 5% or 10%, not the absurd 25% that is required to get a sensible rate these days.

Not everyone can buy, that's life.

True.

But anyone on a decent income should be able to buy, rather than being forced to enrich their landlord.

The current situation only benefits the BTL brigade.