Raising a deposit?

samson131313

I'm not sure weather this is the correct forum for this but here goes!
My mum wants to help me and my sister get on the property ladder as we are both throwing away money renting.

She is retired and mortgage free and has a house worth aprox £180000 we are just trying to work out the best way of raising a deposit for me and my sister not a fortune probably about £20000 between us.

The equity release scemes all seem a bit dodgy if you know what i mean! so just wondered if anyone had any suggestions

As she is retired i dont know weather they would let her take a small remortgage would they? both me and my sister work full time so could we go up as garantors or something?

Any help or suggestions would be much apreciated
Thanks

InMyDreams

samson131313 wrote: »

as we are both throwing away money renting.

Renting is no more dead money than interest paid to a bank. In addition to this you either need to pay off the capital (if you have a mortgage, although hopefully this will be included within the one payment, although it's good to pay more) or save (if you are renting). Additionally if you own a home, there are all sort of other (often unexpected and/or large) expenses that can stand in the way of you saving. Renting is NOT dead money - you are paying for a roof over your head and don't have the financial risks (as well as the perceived benefits) that owning a home brings. It's not to be sniffed at.

samson131313 wrote: »

She is retired and mortgage free and has a house worth aprox £180000 we are just trying to work out the best way of raising a deposit for me and my sister not a fortune probably about £20000 between us.

Save! If you think it's impossible to save while you are renting, then how are you going to budget for all the extra expenses of home ownership?

samson131313 wrote: »

both me and my sister work full time so could we go up as garantors or something?

This would have major impacts on trying to get your own mortgage for the place you want to buy.

My advice (if you really want to own your own home) would be to be really frugal for a few years, renting the smallest, cheapest place you could manage to live and learning how to budget and save, making sure your credit rating is squeaky clean, before taking on the responsibility of home ownership.

maninthestreet

If you act as guarantor for any mortgage taken out by your mother, this will affect you ability to re-pay any mortage you subsequently take out yourself

samson131313

Sorry i think renting is dead money, i could rent for the next 25 years and have nothing to show for it other than paying someone elses mortgage off for them! At least if i pay my own mortgage it is a long term investment.

I currently pay £600 a month in rent, the houses i'm looking at are around the £85000 mark so with a £10000 deposit that would leave me with a £75000 mortgage so monthly repayments of around £400, £200 less than my current rent.
In addition to this i currently rent a storeroom above a factory for my business (i've run a fairly successful online record shop for 7 years) that costs me £270 a month, the property i buy will have enough space so i can get rid of the storeroom cost, i also have a business loan which is almost payed off theres about 4 months left which costs me £245 a month

So £600 + £270 + £245= £1115 plus i would have no petrol expenses as i all my business would be under one roof saving me a further £100 -£150 a month

I would have no problem paying a mortgage and all the bills i just cant raise the deposit at the moment cause my current outgoings are too high, i would actually be about £600 a month better off in my own house with a mortgage!

So i pose the original question again! is there a way of raising the £20000 deposit money that myself and my sister need for a deposit using my mums current property which is mortgage free and worth an aproximate value of £18000?

pmlindyloo

If you are set against renting then the only realistic way is for your mum to sell her current property and buy a smaller one and give you and your sister any profit she makes.


If this is not possible could you and your sister rent together so you could both save more?

Southernman

samson131313 wrote: »

Sorry i think renting is dead money, i could rent for the next 25 years and have nothing to show for it other than paying someone elses mortgage off for them! At least if i pay my own mortgage it is a long term investment.

I currently pay £600 a month in rent, the houses i'm looking at are around the £85000 mark so with a £10000 deposit that would leave me with a £75000 mortgage so monthly repayments of around £400, £200 less than my current rent.
In addition to this i currently rent a storeroom above a factory for my business (i've run a fairly successful online record shop for 7 years) that costs me £270 a month, the property i buy will have enough space so i can get rid of the storeroom cost, i also have a business loan which is almost payed off theres about 4 months left which costs me £245 a month

So £600 + £270 + £245= £1115 plus i would have no petrol expenses as i all my business would be under one roof saving me a further £100 -£150 a month

I would have no problem paying a mortgage and all the bills i just cant raise the deposit at the moment cause my current outgoings are too high, i would actually be about £600 a month better off in my own house with a mortgage!

So i pose the original question again! is there a way of raising the £20000 deposit money that myself and my sister need for a deposit using my mums current property which is mortgage free and worth an aproximate value of £18000?

What is your income. You mention you're self employed. Also i'm confused how you've calculated £400, what interest rate are you basing that on? Do you have any other debts?

Fire_Fox

Welcome! You are getting short shrift because this issue has come up many times, run a search.

If you had bought any time since 2008 you'd have lost money, maybe even been in negative equity and it's far from the first time the housing market has crashed. You can't just compare mortgage to rent, you need to factor in buildings insurance and maintenance costs, service charges if leasehold, costs of buying and selling (legals, estate agent, survey, mortgage), increases in interest if you don't get a lengthy fixed rate.

If you can't save up for a deposit you cannot afford to own your home, you need three months outgoings set aside in case of illness or redundancy or your business going under. That is on top of survey, legals and deposit! There is a ton of advice all over MSE on how to cut back your outgoings. Sounds to me like you'd be better off renting one property instead off home plus business.

Your mother should see a mortgage broker but I don't rate your chances. You can't guarantor your mother's mortgage and then get your own unless you have enough income to cover both. Basically what you are suggesting is a 100% mortgage just split into two parts: lenders are onto that and don't permit it, they expect to see no strings cash gift or better still evidence of responsible money management.

samson131313

Ok cheers my income after tax is about £25000, unfortunatly i like to party a little too much which is where a fair bit of my income currently goes and i'm not prepared to put my life on hold while i save (i know this is like trying to have your cake and eat it but ah well!)

the £400ish a month repayments are based on using various mortgage calculaters on the net using a £75000 mortgage as a basis using a 5% rate

plus my local council are running a help sceme for 1st time buyers where you put up 5% deposit and they will add up to a further 20% if i qualify for this monthly repaymets will be even lower


I know there are oviously other costs when getting a mortgage from legal fees etc etc

Basically what i'm saying is getting a house would drastically reduce other costs i currently have which would mean i could then afford the mortgage plus bills, council tax etc, i would basically be in about the same financial situation i am now except i would be in my own property paying off my own mortgage instead of paying rent which is just paying off someone elses mortgage.

I understand there are possible pitfalls as well as benefits to owning your own property with a mortgage but i have thought hard about it all and taken these into account.

My credit rating is excellent the last time i checked my score a few months back it was 976 so theres no real issue here, i owe a couple of grand on a credit card which is interest free for about 18 months yet and am just waiting to hear back from Lloyds about a ppi claim which if successful will be enough to clear the outstanding debt on the credit card or possibly i will just put it towards the mortgage deposit i havnt yet decided.

Once my business loan is clear in about 4 months i would then be able to save about £350 a month but i'm not prepared to rent for another 3 years while i save the deposit if theres another option i'm just looking for a way to raise the deposit, and as my mum has offered to help i was just looking for an option!?

I will book an appointment with a mortgage adviser and see what they say i guess, i'll also try searching the topic on here to see what previous posts have to say
Thanks

Fire_Fox

You need to clear the credit card before you buy, your deposit is your total savings minus your total debt.

Seems to me the obvious solution is renting somewhere larger whilst you save, somewhere that is your home, business and party central all rolled into one. Almost every bill outgoing can be reduced without giving up your social life, simply by being open minded and spending time trawling through MSE.

Yorkie1

There are stories on here about people who make real sacrifices to raise their deposits. It does rather sound as though you want your cake (with extra cream!) and to eat it, if you are not prepared to give up a party lifestyle at all in order to achieve something which is clearly important to you.

If you become serious about money saving to raise the deposit money, you can go over to the Debt Free Wannabee board and post a statement of affairs - they will help you to cut out unnecessary spending.

InMyDreams

samson131313 wrote: »

Sorry i think renting is dead money, i could rent for the next 25 years and have nothing to show for it other than paying someone elses mortgage off for them!

Not if you are saving at the same time too.

samson131313 wrote: »

At least if i pay my own mortgage it is a long term investment.

There are plenty of other long term investments to chose from.

samson131313 wrote: »

I currently pay £600 a month in rent, the houses i'm looking at are around the £85000 mark

You are paying £600 a month rent for a house with a value of £85K??? Or are you renting somewhere much grander than what you would buy?

samson131313 wrote: »

so with a £10000 deposit that would leave me with a £75000 mortgage so monthly repayments of around £400, £200 less than my current rent.

Are you really comparing like-for-like though?

samson131313 wrote: »

In addition to this i currently rent a storeroom above a factory for my business (i've run a fairly successful online record shop for 7 years) that costs me £270 a month, the property i buy will have enough space so i can get rid of the storeroom cost,

So you are saying that you could buy a property for £85K that would be big enough for all your needs? How much would an equivalent property cost to rent?

samson131313 wrote: »

i also have a business loan which is almost payed off theres about 4 months left which costs me £245 a month.

So £600 + £270 + £245= £1115

The business loan has nothing to do with your accommodation comparisons, I think you are confusing the issue.

samson131313 wrote: »

plus i would have no petrol expenses as i all my business would be under one roof saving me a further £100 -£150 a month

You could achieve the same buy renting a property like the £85K one that would provide all this.

samson131313 wrote: »

I would have no problem paying a mortgage and all the bills

Then you should have no problem saving the £10K.

samson131313 wrote: »

i just cant raise the deposit at the moment cause my current outgoings are too high, i would actually be about £600 a month better off in my own house with a mortgage!

Have you calculated how much better off you'd be just renting your £85K house off someone else for a few years?

samson131313 wrote: »

So i pose the original question again! is there a way of raising the £20000 deposit money that myself and my sister need for a deposit using my mums current property which is mortgage free and worth an aproximate value of £18000?

I realise I've not been very helpful in answering your actual question, but I don't think there is any magic wand you can wave. I'm sorry I can't be more help, other than to urge you to look again at your figures. I do think you are looking at all this through very rose-tinted spectacles.

samson131313 wrote: »

Ok cheers my income after tax is about £25000, unfortunatly i like to party a little too much which is where a fair bit of my income currently goes and i'm not prepared to put my life on hold while i save (i know this is like trying to have your cake and eat it but ah well!)

I think that says it all, really. You have to work out what's most important to you and take it from there.