Should I stop paying into teacher pension to save a deposit?

Dinopaws

I currently pay around £270 into my teacher pension per month.
My wife is a nurse and pays around £200 per month into an NHS pension.

We live in the south east and currently pay £1100 per month in rent. We are fed up with renting and really want to buy a house to provide some stability for our young children. We are finding it really difficult to save for a deposit and was wondering if it would be a good idea to take a break from paying into our pensions for 2-3 years and save a deposit.

I realise we will not save all this after tax/NI relief. However, I am 37 and concerned if we don't buy a house soon. It will be more difficult to get a mortgage after the age of 40.

Any advice appreciated.

dunstonh

Should I stop paying into teacher pension to save a deposit?

Good grief no. You will be giving up so much.

If you cant afford the pension then you cant afford a house. The small amount you gain from opting out wouldnt make a difference and then when you have a house, you will have plenty of excuses to not opt back in.

taking_stock

simply NO, it will never be worth it to leave those schemes.


on the bright side, with your professions, you could work elsewhere in the country and, despite what the media may have you believe, there isn't a property boom anywhere outside of the South East!

greenglide

Can you guarantee 100% absolutely that you will be allowed to rejoin what are two of the best pension schemes around?

Saving the deposit and ongoing mortgage payments will take more than a couple of years.

Can you say honestly with hand on hand that you would have the financial sense to rejoin rather than put it off for "another couple of years"

As a tax payer I think leaving public sector pensions is a wonderful idea but as a member you need to look really, really hard.

Question. If you cannot afford to live in the south east why do you? The massive lunatic bubble in house prices is a south east phenomenon. Move somewhere more affordable where the quality of life is so much better.

Edit: Three other postings while typing this. Does this tell you something?

I think we should stop paying pensions to teachers. They don't appreciate just what a good deal they get. And they all expect to retire at 55!

Dinopaws

The problem is we need a deposit. This is difficult to save when you have rent, childcare etc to pay. We will probably be able to afford the monthly repayments since we are paying about the same in rent. Wouldn't it be better to have a house and have a few less years in the pension?

jamesd

Look at the properties that you could reasonably buy on your incomes with a deposit you could raise. How do they compare to the one that you are renting now? I'm asking because you may be renting a place that would be unaffordable if you tried to buy it or something similar. If so, one step you could take is to move to a place that would be affordable.

What sort of deposit amount do you think you will need? Do you think that affordability for a mortgage will be a problem? One thing that can be done to get a deposit more quickly is to use 0% for purchases credit cards and balance transfer deals for normal spending while you save that normal spending money for the deposit. This does a swap of reduced affordability calculation due to the borrowing for increased deposit that may let you buy more quickly.

You can also shop around for properties that are in less than ideal areas and hence which are cheaper. Depending on just where you live you might find that there are significant savings in rent or purchase price to be made from things like living a mile or two outside a town instead of inside it.

taking_stock

move to devon or Norfolk and have a better quality of life, for you and your children, and you'll get a better house for what will seem ridiculously cheap for anyone used to SE prices!

Dinopaws

Greenglide/taking stock - Our children are in schools here and our families are also in the south east. Both of our pensions are going to change in 2015 and will no longer be as good as they were previously. I just feel we don't buy a house soon we will be stuck renting into retirement.

Dinopaws

Jamesd - The house we are currently renting is cheaper than we would pay in mortgage but we really want some stability for our children. We would consider a smaller house, less bedrooms but the mortgage repayment will still be similar to what we pay in rent.

Rents have also gone up in the last year, whilst our rent has stayed the same. So downsizing will still probably cost us the same in rent.

Our children currently go to a good school and are happy there. If we were to move away we would have to change schools. School places are like good dust here, so we would be very reluctant to do this.

Our family also sometimes provide childcare which helps.

dunstonh

You do realise that the contribution you see on your payslip will not be what you get if you opt out?

The small amount wont make much difference to being able to get a deposit up. A month or two at best.

Both of our pensions are going to change in 2015 and will no longer be as good as they were previously.

Still better than what most of the country can still get.

kangoora

taking_stock wrote: »

simply NO, it will never be worth it to leave those schemes.


on the bright side, with your professions, you could work elsewhere in the country and, despite what the media may have you believe, there isn't a property boom anywhere outside of the South East!

There's plenty of places in the Northeast of England where you can get a 4 bed house under £200k (mine is valued around the £175k mark), where I live you can get a 'posh' estate 'executive' style 4 bed detached for under £350k. This is 5 miles from the Yorkshire Dales national park.


I've lived in Devon, Didcot, Basingstoke, Sheffield & Swindon (plus some others) and I'm now back living close to the house I grew up in and I wouldn't swap the life up here to move back down south for virtually any wage. I remember the traffic down south from 12+ years ago and still shudder every time I think of it.


I'm used to moving around so it may not suit you. Why not google a few estate agents and even consider a holiday to some areas that might interest you. Even a move along the M4 or M40 corridor would probably reduce any rent/house prices by a third at least.


It may be a drastic step for other people and of course there may be family or friend reasons for not moving but both your jobs are extremely portable I'd assume.


Just an option you might not have seriously considered?