How on earth can two FTBs raise 20% deposits?

Egg_custard_2

You don't need a 20% deposit, that's just an 'ideal' scenario, like the 2-bedroomed house. Personally, I would stick with your aspiration of buying a 2-bed place. 1-bed places are difficult to re-sell, and if you already know that would be smaller than you want, it would be silly to tie yourself to a 1-bed and then not be able to sell at a later date.

With a 10% deposit mortgage, even though the rates are not so good as the 20% deals, you may still find that the repayments are not dissimilar to the monthly rent on a similar property (this varies depending on where you live).

If you need a 20% deal to keep the repayments manageable I'm afraid you will need to get saving.

Procrastinator333

firsttimetom wrote: »

After tax, you each earn £1330 a month. Thats nearly £2700 a month. If your rent is £600 and everything else is maybe £700, then you should be able to save £1400 a month, nearly £17,000 a year. I don't know where you are looking to buy but that is larger than a 10% deposit in many parts of the country. 2 Years of that and you are at £34,000.

It may mean you can't go out so as often, but you have to make sacrifices if you want to buy a house. That's the way it has always been.

I was also doing the math and couldn't really see what the complaint was. I did think of it slightly differently.

Firstly, £40k per annum, you are likely to only get a 3.5X mortgage, so that is £140k of mortgage plus your deposit as your max property price. I would also say that while at present it is imo worth saving to get to 20% as the rates drop off so much, that may not be true by the time you get to 10%. If the rates are no longer much different, or if you can't wait, then buy with 10% deposit. But either way, not quite sure you need £40k.

As for how you get there. With a take of about £2.7k and rent of £600, personally I would have thought spend £1.7k a month (allowing for any big spends across the year). That gives £1.1k for travel, food, bills and probably a bit of spending money each month. You are then saving £1k per month. Throw in any odd windfalls you get (presents from family - ask for cash), sell some stuff on ebay, etc, and you could probably stash £12-£15k per year.

If you only use a 10% deposit, that is probably enough after 18 months, if you do wait for 20%, that is more like 2.5 Years after allowing for other moving costs.

So I don't see the problem. Yes, you are correct, you can't just go out and buy a house tomorrow. You have to save for quite a long time and quite frankly scrimp during that time. It is hard work. But hey, that is the price you pay. You have the choice between how hard you scrimp or otherwise, but the harder you scrimp, the shorter the wait. With some extreme mse'ing, you could probably hit more like £1.6k-£1.8k per month. You could get second jobs. Personally I don't think you should become a complete hermit and I think targetting a £1k per month save (based on your salaries) is a fair goal, but go extreme and don't spend a penny for 12 months and you will save much more than you ever thought possible.

kk20

It's simple really. Save for a house. You cannot expect to get a decent house first time or indeed the best ever deal. I remember my first scummy house in lancashire, it had an outside toilet, no indoor bathroom and wasnt in the best area. I needed an interview with the bank manager (funeral suit on) to get a mortgage. I think the interest rate was about 8% at the time. 10% deposit trackers are about 5% ish? I'm estimating that at £600 rent you are looking at circa 150k-200k properties? 10% is 15k-20k. That should be achievable in 2 years for both of you, get a 10% mortgage with redemption clause of about 2 years (buy when the time is right) then aim to save another 15-20k and remortgage to a 20% deal.

wannabehermit

Saving for a deposit isn't a new thing by any means. Some people live at home so that they can throw every penny at their savings but that isn't an option for you. You're not going to have children to worry about so that £2700 take home is all yours giving you more to save than if you did have children. Lower your standards a little, you may have to nuy a place that needs a bit of work or is in a 'less desirable' location, but if you really want to buy you have to start somewhere, gradually you can work your way up into your ideal home with all your ideal furniture.

Have a good look at what you are spending, what can you cut back on? Put what you save into an account and leave it there. e.g. if yoiu go out weekly cut it down to fortnightly, if you would usually spend £100 on those nights out put it into the savings account - there's £200 a month straight away. Do you really need all the furniture etc? Sell what you can bear to get rid off, yes you'll have to sell for a heck of a lot less than it's worth but if you want that deposit you'l have to take the hit. Really knuckle down for a couple of years and you'll have the deposit if you really really want it.

I do get what you mean about renting though, people who own don't seem to get it, (having owned and rented I know what I'd rather do). In 25 years time with a mortgage that house is yours with only minimal housing costs, whereas renting means that in 25 years time the landlord is sitting cosy with no housing costs and you're still paying into your retirement. You can get things fixed when they need doing when the house is yours instead of constant nagging of the landlord and still sitting there 2 years later without the repairs having been done. I totally get wher you're coming from but would love to be in your position of having the income to be able to save without the extra expense of having children.

pararct

You both earn enough to be able to put together a sizeable deposit in a couple of years if you adopt some fiscal discipline. Your only real outgoing is your rent and someone has highlighted the figures above. To dismiss the comment about living in a studio flat the way you did simply shows you want it both ways.

Of course that would mean no foreign holidays, no latest tech from Currys and no new or updated car every couple of years. No one ever said saving up for a house is easy some sacrifices have to be made. Make your mind up its one or the other.

custardy

G_M wrote: »

The obsession with ownership is a (relatively) new one, and is very British. Up till the 80s/90s renting was far more common. And across the Channel in France, renting is still the norm.

It gives much more flexibility/mobility, and releives you of all the maintenance issues.

I'm not saying aspiring to home-ownership is wrong, but there are pros and cons.

for me the real plus point for ownership is reaching mortgage free
up till that pioint rent/own has plus & minus points
however,how many really reach that point compared to those who keep topping up the mortgage

Running_Horse

wannabehermit wrote: »

I do get what you mean about renting though, people who own don't seem to get it,

Most people who own once rented, so get it exactly. I don't want to sound like an old fart, but we have been there and it wasn't easy. You choose what matters to you most.

You would think the government would introduce a scheme for those too poor or lazy to save up a deposit...oh wait, they tried that. You would think lenders would introduce 125% mortgages to cover the cost of the loan, furniture, and a nice foreign holiday...oh wait, they tried that too and most of them are stuck with negative equity and unable to switch to a cheaper mortgage.

That just leaves going without and saving up for a few years...which is where we came in.

poppysarah

G_M wrote: »

The obsession with ownership is a (relatively) new one, and is very British. Up till the 80s/90s renting was far more common. And across the Channel in France, renting is still the norm.

But they have longer tenancy security there don't they?

milliebear00001

poppysarah wrote: »

But they have longer tenancy security there don't they?

That's just it. Comparing the UK rental system to overseas is comparing apples and oranges. Most countries with high levels of renters also have very strong tenancy laws and long term tenancies, protected in law, where tenants can treat the place as their own during their time there.

Gwhiz

Do what people have been doing for generations - live well within your means, in a place that's not perfect and save.

This "I want it all now" attitude is what got us all into the !!!! in the first place.