Is it worth it, help me decide.

solventblackbird

Hello all

I'm posting in this forum because I am considering starting to save towards a deposit on my first home, and I'd like some advice. First a little bit about my personal situation. I am a single mother, and I rent a three bedroomed house at the moment where I live with my daughter, and a family friend who contributes towards the bills. The house comes furnished, and while most of the furniture is perfectly serviceable, I've been wanting to move somewhere unfurnished and choose my own nice things for a while. I went back to work almost a year ago, and since I started work, have saved what money I could, and invested the rest in driving lessons. I've now passed my test and have a car, and this has enabled me to be in a position to take up the offer of a more lucrative position. I'm not in any debt (no credit cards or overdraft) beside student loans, which I am not paying back at the moment but I anticipate I will start doing that in the next couple of months when I start my new job. My household expenses are minimal - I don't have any expensive hobbies, don't have a television and buy second hand and borrow books and DVDs from libraries. My savings are at the point now (nearly £2000) where I am starting to look at other houses to rent and choosing what nice furniture I would like.

However, it has just struck me that, should I stick where I am for another two or three years, save harder and carry on living at my current income, while putting everything extra gained from my payrise into my savings account, I could manage to tuck away another few thousand and perhaps be in a position to put a deposit on a small house. I'm not after luxury, but I have just realised I am lining my landlord's pocket and might, in a few years, be able to start building up equity of my own. This decision might seem like a no-brainer to some, but on the other hand, I'd really like to live somewhere nicer, be able to use some of my savings to treat my little girl, and have her grown up in the pleasant surroundings she deserves.

What I'd really like to know is, is it worth it? How much savings would I need? Would I even get enough of a mortgage to be able to buy a house on a single salary? (Even with the payrise, I am by no means wealthy, and although I am doing well in my career, I'm public sector and am not likley to be earning much above average any time in the next five years or so). Am I, as a young single mother, pipe dreaming, and would it be more sensible of me to loosen up on the penny pinching to provide a nicer standard of living in the short term, rather than enduring privation in the hopes of becoming more financially secure in the future?

Just have this nice packet of money in the bank, and am tempted to blow it on a couch and wardrobe and a cooker that works, but realising it isn't likley to go very far and I might, in fact, regret it once it was gone.

Thanks for your opinions.

SB

Gorgeous_George

I'd recommend staying where you are (depending the area of the UK) and continue saving with your family friend.

In two or three years time, the future direction of house prices should be clearer and you could get more bang for your buck.

That said, in some areas, it may still be a good time to buy. 100% mortgage and a 5 or 10 year fix with your friend helping to pay your mortgage and you could have a home of your own.



GG

wecanhelpu

I admire your prudence and wish you all the best.

But 2k is not going to get you very far at the moment and you may struggle to do everything you want at the moment.

I would either stay put or even move into a smaller rented house and carry on saving for another year or two.
You may find that your money will go further then.

solventblackbird

Thanks for that.

I don't think my friend will be staying with me much longer - he is thinking about making a move to another city to live with his girlfriend in the next few months. While this would mean a cut in income for me, moving somewhere else to rent on my own would also mean a significant rise in expenditure.

I do have a boyfriend, and we have been talking about moving in together at some point in the future. It isn't a new relationship, but I am still wary and he knows that my financial security is very important to me - it is a decision we'll be taking very slowly.

One more question - if I did choose to buy a home and had someone living with me (either partner or lodger) to contribute to expenses, would that mean that when the house was sold, the other party would be entitled to some of the equity?

And one more thing - even on 100% mortgage, I doubt I'd be able to borrow enough to afford a house on my own. Would I be able to borrow more if I could demonstrate that I'd be able to rent out one of the rooms for a couple of hundred pounds per month - just enough so as not to fall foul of the tax?

Thanks again

SB

cattie

You won't get very far with high street lenders by saying you'll be taking in a logder to boost your income to be able to afford the mortgage. It will go against you in fact. You actually need a proper income to sustain the mortgage that you would be asking for.

If a partner lived with you & was paying towards the household expenses then yes they would have a claim on the equity if you broke up, which is only fair really if they have been paying their share.

Don't think about a mortgage untill you've got good solid savings behind you & I'd be wary of thinking about trying to rent an unfurnished house & buying your own nice furniture. What happens if at the end of the rental contract you are given notice to leave & have a houseful of furniture to accomodate & can only find furnished properties to rent?

When buying a house you should always try to ensure that you have at least enough in savings to cover you for 3 months should you become unemployed or too sick to work, but 6 months is a more ideal period to be buffered against.

Remember, when owning a home you have to pay out for all repairs & maintainance & believe you me there is always something needing repair or replacement when you have your own home.

solventblackbird

Thanks again for the info - I have decided to stick where I am and hassle the landlord for a few repairs which should make me feel easier where I am. I'm putting aside a portion of my wages each month, but I've just done a budget today and I've realised I could put away more, and with the rise in income from the new job, starting soon, should be able to save a substantial amount in the next three years or so. Even if I decide not to go ahead and buy after three years, I'll still have a nice wad of cash and nothing is lost. Also, leaving more time for me and partner to decide on living arrangements and finances, is no bad thing.

Thanks again