So it would appear I need to raise £90,000...

gotoguy

Hi All,

Long term lurker (years) but first time of posting...

I have decided that due to having recently had a pay rise of around £5000pa gross, the time has come to start thinking seriously about buying a house

I am currently renting near work at a total cost of just under £900 per month including all house related bills but have given in to my mothers constant nagging to come home and save up when my lease ends in December.

I am about to turn 26, financially single, with a good income of £1830 per month net, no savings but also no debt. I will be paying £300 per month rent to my mother all inclusive. My brother who is younger than me also pays £300 per month to her so between the two of us we are paying all of her household costs as she has no mortgage, so I don't feel like I'm taking advantage.

My ideal property would be a 2 bedroom house but given the expensive area I suspect it is more realistic to look at a 2 bedroom flat with a long lease. This would currently cost around £185,000 (although worryingly I keep hearing about 20% increase in the next 2 years)

I have arrived at a savings target of £83,580.00 from the following:

Lifted from money advice service website:
Mortgage Setup Fee - £250.00
Mortgage Arrangement Fee - £2,000.00
Valuation Fee - £1,500.00
Mortgage Account Fee - £300.00
Higher Lending Charge (1.5%) - £1,850.00
Searches - £300.00
Legal Costs - £1,000.00
Stamp Duty 1% - £ 1,850.00 (need to check info on ftb relief)
Survey - £500.00
Moving Costs - £200.00 (van + beer for helpers)
Telegraphic transfer fee - £50.00
Contingency - £1,000.00
(Section total - £ 9,100.00)

Deposit 30% - £55,500.00
6 month pay in bank - £10,980.00
Replace Car currently 7 years old - £8,000.00

I am surprised by the amount as I find it hard to believe even a couple could raise that much money and be buying in there mid twenties so will need to see if I can reduce the figure.

I fear the first thing people will say is "you don't need an £8,000 car" but I feel if I buy a house I won't be able to afford a car for a long time after so need to buy something that will last.

My cash flow spreadsheet indicates saving £900 a month so currently looking like 92 months. I would really like it if I wasn't still living with my mother and saving for my first home at 33 so I suppose I'm looking for advice on whether the amounts are realistic and if there are ways to bring that target down and increase the rate at which I can save.

gotoguy

Have I posted this in the wrong place?

C4Tim

I wouldn't know if you have posted in the wrong place, but being a 25-year-old married man; I fully agree with you!

It is now very expensive to find any sort of property outside of renting. My wife and I pay £400pcm for a one bedroom place in the town centre. We can't really afford to move because we have car debts (my single-days mistakes) and after bills each month, we are luck to have anything that even slightly resembles savings.

The only thing that I have ever managed to conceive as being realistic would be to buy a very cheap and run-down house. Then, from there you spend a little bit of extra cash renovating. But, as will all things, unless you know what you're doing you can run way over budget.

Realistically, all I would recommend, is sitting down with your elders and people you trust and see what they would recommend. On top of that, I would also arrange an appointment with your bank and have a look at your financial portfolio.

The_Magnificent_Spoon

I think you've way, way, way overestimated things there!

There is zero chance your costs will be anything like that. As an example, I'm just sorting my mortgage out on a property costing £107,000.

My costs are basically:
Fee free mortgage (completely fee free)
Survey (£300)
Solicitors legal costs (£495)
Searches and other things (£450)

Apart from that, I'm putting down a 25% deposit (Next drop below that is 40% deposit...) to get a crazy low 2.5% rate on a two year fix (Halifax).

Obviously you would have on top of that, stamp duty and moving fees.

The car is a personal choice I guess, as is wanting six months in the bank (you could just get income protection for a year if you wanted peace of mind?).

Yes, the amount our generation need to save is crazy, but don't set yourself goals too far out of reach!

gotoguy

Thanks guys, and apologies its taken so long to reply.
Interesting to hear that the interest rate doesn't change much between 25% and 40% deposits.

Brings the deposit amount down to £46,250.00 on what I've estimated a flat will cost. (and brings the total months to save down to 82, saving almost a year)

Regarding the car and having cash in the bank, I think it comes down to my experience of renting being very expensive. I was basically unable to save any amount each month that would ever add up to a replacement car (few hundred on a good month) and according to the mse calculator mortgage payments would be £830pcm at 2.5% over 25 years.

If I could hardly save when paying £600 rent and half the bills, the thought of paying out double bills and more on mortgage than rent on roughly the same salary is worrying without added worry of what I'd do if a knackered car died.

The logic being that if I get a decent car when I buy the house, and can save a few hundred each month then I can update it every few years, rather than having to start saving from scratch on top of house bills. In 5 years time my current car will be worth literally nothing (worth about £1500 atm, bought it when it was nearly new a few years ago).

The 6 months pay in the bank is the same sort of thing, I wasn't necessarily thinking about it in terms of job loss but more just about having cash to hand for emergencies, although I know if I spent any of it I'd struggle to replace it.

TMS are you also buying alone?

gotoguy

Based on the posts above, and a bit more reading around the banks websites, I've come up with a revised, more optomistic target of £69,330, with the assumption that I will take any other costs out of up to a maximum of 3 months of the 6 month contingency.

Mortgage Setup Fee - 0.00 (Find a fee free)
Mortgage Arrangement Fee - 0.00 (Find a fee free)
Mortgage Account Fee - 0.00 (Find a fee free)
Higer lending charge (1.5%) - 0.00 (Hoping 25% deposit will avoid this)
Valuation Fee -£500.00
Searches - £500.00
Legal Costs - £500.00
Survey - £500.00
Telegraphic transfer fee - £50.00
Stamp Duty 1% - £1,850.00
Moving Costs - £200.00 (van + beer for helpers)
Contingency - 0.00 (Take from 6 month contingency if necessary)
(Section total - £ 4,100.00)

Deposit 25% - £46,250.00
6 month pay in bank - £10,980.00
Replace Car currently 7 years old - £8,000.0
Revised target - £69,330 (77 months, 6.5 Years at £900pcm)

That takes me to around February 2020, aged 32.

I am hoping my salary will have increased by then and I will be able to avoid having living costs increase in that time but would like to come up with ways to save extra each month around my full time job.

The_Magnificent_Spoon

Hi mate,

Thats looking a lot more realistic i think now! I completely understand your reasonings, and as somebody whos been caught out myself, I see where you're coming from.

Yes, I've saved up to buy on my own. My story is a little more sad than yours though I'm afraid, my thread is on this board a few posts down.

Sammie22081

Hi I noticed that you posted this quite a few months back. I wondered how you were getting on and whether you could provide an update, hopefully you subscribed to the forum!

gotoguy

Hi Sammie,

I do still read the forums but haven't really posted on this thread as I've been having a real problem prioritising, especially after the December move, the dust from which has only just settled.

I will post an update in the next few days when I can get enough peace and quiet to write everything out.

GTG

ABetterLife

Wow, this is depressing (not you personally, just how much it all costs).

ShootForTheMoon

In very much the same boat here...

Unfortunately, moving home with the Parents isn't an option as they're just under 100 miles away and I work nightmare shifts at my job... However, if I could move back, I definitely would though!

My OH and I pay £650 a month for a 1-bed flat in Bristol. We are both in decent jobs and have no debt, but saving for a deposit is a real mission!!

Will follow your progress with interest - best of luck!