? House purchase.

wincheter45

Currently i rent a house at £500 per month. I'm fed up of throwing money down the drain.

Currently I have a £8000 deposit, and am very keen on a house at £100k. I really don't want to rent much longer and the deposit I have is from parental help and savings. I do have £3500 in a pension fund from the last few years of work and a salary of £24,000. Net pay after tax, NI, pension is £1360 per month. I work full time for the NHS. I'm 25 years old.

The question is, does it seem reasonable to use my pension fund money as the rest of my 10% deposit? Credit wise I have little debt, owe £500 on a credit card interest free i'm paying back from my student loans, and an excellent credit rating.

Cheers, James.

DannyboyMidlands

James

Couldn't you just keep your head down and save £500pcm for the next 6 months or a year rather than raid your pension?

Remember you're also going to need some cash for solicitors, surveys, moving costs, mortgage fees etc. A small contingency fund wouldn't go a miss either rather than using every penny that you have. Financial advisors tend to recommend 3 months salary.

Yorkie1

Firstly you need to double check whether the pension fund is in fact accessible. They are generally not 'savings accounts' and therefore not accessible until a certain age.

Secondly, even if you raided your pension fund, I don't think you have anywhere near enough money. As DBM says, buying a house is not a cheap process. You will need a minimum of £10K deposit. Mortgage arrangement fees are commonly over £500, often nearer £1K. Solicitors fees and legal costs you're looking at probably £800. Survey a few hundred pounds.

And then costs of running a house. I rented a house before buying my current one but my utility bills have gone up considerably. I have to cover building insurance for a start. There have been unexpected expenses including a leaking roof - and I knew the house well before buying it.

Yes you should have a contingency fund in place, though I've often read that 6 months' salary is better than 3.

I know that renting seems like dead money but, believe me, there's a lot to be said for not having all the responsibility for decisions and paying out on capital expenditure.