Just started saving £500 a month

MARKMAKAVELI

I know everyone's situation is different but this is mine...

I have a secure job, but low paid. I am 25yrs old and after travelling I am back living with my parents paying minimal rent.

After clearing travelling debt I have started saving minimum £500 p/m comfortably. It may sometimes be £600 but will stick to £500 as the figure.

I read and hear all about how house prices are low etc but wouldn't afford one on my own.

I know my options are:

1) Sit tight an save more.
2) Get into shared equity property.
3) Buy sub 80k house (potentially with a friend who already has a house/mortgage) and do it up, then either sell or let.

I know I make those options sounds simple, I'm fully aware they are not.

Option 1 is my least favourite lol. PI want to make my disposable income work for me now rather than wait a year or so. Also paranoid about missing the boat in terms of low house prices etc.

Just wonderin what people's thoughts are on this situation? What would you do?

paint

House prices aren't low - they're historically still extremely high, and likely to stagnate for a few years yet, I expect, as interest rates rise and the economy makes a slow and perilous recovery. You won't miss the boat - I'd be tempted to save up for a couple of years - either living with your parents, or in a house share with some mates. Enjoy your twenties.

CloudCuckooLand

Seconded. No rush.

Better to save well and get something that will last you, that try to do a joint/shared arrangement that ends up tying you into something you eventually don't want to be tied to, or that the other partner wishes to get out of at just the wrong time.

On low income you need to be careful about attempting to buy, do up and sell on, as selling and buying adds up to thousands just in costs and fees. It only takes one poor profit margin to erode an entire deposit.

And you won't want to stay with the folks indefinitely, so need to focus on getting your own place, I'd have thought.

gingertips

Stick with the saving for as long as possible - property prices are at ridiculous levels & a lot of people believe that prices will fall once interest rates start to creep up.

You really need 25% as deposit to get your hands on the best mortgage rates.

Shared equity might seem like an option, but you end up paying same/more than if you mortgaged the property yourself as you still have to pay rent.

Going in with someone else without prior experience will be challenging

Niowrtt

I too started saving at 25 and finally bought at 30. Money dribbled in very slowly at first, not helped by the need to buy fast cars (not recommended!).

Two things helped me:

• Increasing pay - I made some risky job moves from very secure companies into unknown waters, but it paid off.
• The final year and a half was in complete devotion to saving. I spent on nothing that wasn't essential and the only night out I had in that period was the fully paid for company Christmas party.

Don't worry too much about the housing market or prices, just aim to buy somewhere to live.

quantic

I'm 25 too, started saving when I was 23 and have just bought this year. My advice would be to concentrate on saving up. Even if you decided on renting in a few years time at least you would have a sizable bank balance which would give you some choices. Don't go buying into a shared equity deal, they are always massively inflated prices. We looked at one which offered us a house for £130k (75% share) - actual price £173k, but the trouble is, they are only selling for £130k and less now, so most of the buyers are about to make a big loss.

Also, don't be too narrow minded in what kind of house you want, or think you can afford now. By the time you have saved your deposit up you might find you are on a bigger income then when you started, which is what happened to me. When i set out saving I had my mind set on a 1 bedroom flat in the centre of town, by the time I had finished (and looked at rightmove for 3 years) I ended up buying a 4 bedroom townhouse.

Svenena

I'd wait and save. In fact, that's what I am doing.

Round my area, the cheapest you can get a house is around 140k, and that would be in a village several miles out from the city, but that's the way things are. I expect to spend several years saving, and can't really see the problem with that. I don't really want the expense and responsibility of a house right now anyway, especially as I'm not in a settled relationship, and you don't know what will happen in the future. There'll be plenty of time for investing in the future, once my own permanent home is secured.

Queen_of_the_Hive

I'd also echo what other posters are saying by save save save!

Its amazing how quickly your savings go when you buy! I was definately court out with that when I bought back in 2006. Now saving up for bigger place! Its pooh saving but worth it.

Brallaqueen

Do not look now - you might fall in love with something and never be able to get it.

originalmiscellany

Save away Within a year you could have 6k, plus say a promotion etc, in 2 years time it'll be say £15k (with a good following wind). House prices are going to stagnate something rotten for a few years, so I think you'll be in a stronger position in 2 years time by saving than if you had gone and had bought a house. Think long term as opposed to short term gain!