Looking to get on the property ladder in the near future

poppy_f1

the gvt scheme might not be around so i wouldnt take that into consideration

Jack_Johnson_the_acorn

krish123 wrote: »

thanks everyone for the advice.

i think in my situation the best thing to do is save up for at least a year and then with at least 10k in the bank i can start to assess the market and affordability etc.

Also i think my first house i buy will be one il live in so il save as much as i can which will hopefully allow me to buy a decent house i could live in.

One other question lets say within a year or 2 im ready to do this will the gov help to buy scheme still be around as they only require a 5% deposit?

In general wats everyones view on this scheme do you think its somethini should take advantage of?

No the gov scheme is crap, much cheaper to save a decent deposit and get a much better rate, I had a h/h income of around £50k and we felt comfortable with a 10% deposit on a house valued at £130k, I think you'd really struggle to have a decent lifestyle with the figures you're using.

krish123

yes i have my doubts about the gov scheme, but why do you guys dont think its worth it, im just interested to know what the potential problems are with this scheme.

Tbh im happy to wait a year or 2 and save a decent deposit say 20K/15k and see what i can do with that.

Newlyboughthouse

Hi

I also live in the Midlands and bought first house nearly 2 years ago. I was earning about the same amount as you. What is your living situation at present?

I had saved £25k by putting away £800-£900 per month into as high a yield savings/ISA accounts as possible over the course of 3/4 years whilst renting. I always shared so outgoings weren't too high. My house was £125k with no work needed. I have a 5/6 year plan of getting the mortgage paid off (partner pays rent so this halves my outgoings which does make this much easier), and I am very realistically going to achieve this, although I now earn £29k, and still have decent savings on top of the £25k deposit which were still locked away in fixed accounts when I bought which I use for overpayments when they mature.

Just be really strict with your saving. I never got myself into a position where I had to dip into savings and used credit cards to my advantage (still do). You seem to have an amazing attitude to money at your age which is great. Just keep doing what you're doing, but tighten the belt even more with your spending if you can. The higher the deposit the better off you'll be! And try to share if possible to halve your outgoings, and get a mortgage which allows overpayments is my advice.

krish123

Newlyboughthouse wrote: »

Hi

I also live in the Midlands and bought first house nearly 2 years ago. I was earning about the same amount as you. What is your living situation at present?

I had saved £25k by putting away £800-£900 per month into as high a yield savings/ISA accounts as possible over the course of 3/4 years whilst renting. I always shared so outgoings weren't too high. My house was £125k with no work needed. I have a 5/6 year plan of getting the mortgage paid off (partner pays rent so this halves my outgoings which does make this much easier), and I am very realistically going to achieve this, although I now earn £29k, and still have decent savings on top of the £25k deposit which were still locked away in fixed accounts when I bought which I use for overpayments when they mature.

Just be really strict with your saving. I never got myself into a position where I had to dip into savings and used credit cards to my advantage (still do). You seem to have an amazing attitude to money at your age which is great. Just keep doing what you're doing, but tighten the belt even more with your spending if you can. The higher the deposit the better off you'll be! And try to share if possible to halve your outgoings, and get a mortgage which allows overpayments is my advice.

thanks for your kind comments and congratualtions on your first house purchase,

if you dont mind me asking where did you buy within the midlands and what sort of property did you buy with what sort of mortgage?

i currently live with my parents and if you read above you will see my usual outgoings per month.

you mention the money you saved you put into a high yield isa? what interest were you getting from that ? i have my money in a santandee account which i recently opened so i will get 3% up to 20K so thats better than nothing.

you also mention using credit cards to your advantage and i too soon to intend to have a credit card soon, how exactly did you use on to help you ?

you mean you girlfriend pays half of your mortgage currently is that correct ?

like you say saving is the best method and i would say i save at least £600 a month which isnt bad, at the same time im planning for my future and invest in a multiasset fund which i invest in monthly.

Newlyboughthouse

krish123 wrote: »

thanks for your kind comments and congratualtions on your first house purchase,

if you dont mind me asking where did you buy within the midlands and what sort of property did you buy with what sort of mortgage?

PM'd you whereabouts. It's a mid terraced 2 up 2 down, and got a capital repayment fixed for 5 years which allows 10% overpayment per year on original loan amount.

krish123 wrote: »

i currently live with my parents and if you read above you will see my usual outgoings per month.

you mention the money you saved you put into a high yield isa? what interest were you getting from that ? i have my money in a santandee account which i recently opened so i will get 3% up to 20K so thats better than nothing.

Ah sorry missed that. Looking at your outgoings I really think you could afford to save more. My outgoings were a bit more inc enjoyment and still managed to save more than £600 per month. See below on credit cards, but please don't get into debt on them. I just shop around for best rates. Managed to get a 4% Santander ISA fixed for 3 years, and don't stay loyal to any bank account. I've switched bank accounts to get bonus loads of times.

krish123 wrote: »

you also mention using credit cards to your advantage and i too soon to intend to have a credit card soon, how exactly did you use on to help you ?

I put surplus spending onto a cashback paying credit card (lots of 5% first 3 months offers, then just ditch), and always pay off in full each statement. Then any extra I have in pay packet I use for mortgage overpayment. Again, if you haven't got good money discipline please ignore this. You have to stay on top of paying your cards off in full to never get charged interest.

krish123 wrote: »

you mean you girlfriend pays half of your mortgage currently is that correct ?

Yep + bills. He pays the same (actually less) than if he were renting somewhere else so it's perfectly fair. Only my name on mortgage though

krish123 wrote: »

like you say saving is the best method and i would say i save at least £600 a month which isnt bad, at the same time im planning for my future and invest in a multiasset fund which i invest in monthly.

That's really good keep it up!

krish123

Right guys,

Iv got another proposal to bring forward and is another route i could potentially go down using the gov help to buy scheme.

Right i have seen a new build home 2 bed in kings rise estate £114,000, my brother actually found it as he has just bought a house on the same estate in kings norton and saw this property potentially for me.

so depost would be £5700 (5%)

gov would lend me £22,800 (20% equity from gov)

total deposit down for the house would therefore be £28,500.

this would then leave me with £85,000 to borrow from a lender.

Based on my salary £23,500 my maximum borrowing capacity would be £94,000 (23,500 * 4) i thnk max borrowing is times 5 but i just used times 4. so with this in mind i should get the mortgage for 85k.

now as you receive 5 years interest free from the government my plan would be to save up as much money to pay the gov debt off (£22,800).

so that would be 22,800/60 months (5 YRS) = £380 per month would therefore be needed to be saved per month to pay off the gov.

Plus of course my actual mortgage repayment which i think would be around £380 per month too.

now of coursse if i were to do this i would want some profit.

so lets say after 2 years i built up some money to pay back the gov lets say 50% so £22,800 % 2 = £11400 i would pay but you actually pay back 20% of the property value at this time.

so lets propose the property goes up 8% for those 2 years. so value of house goes from £114k to 132,000 you now owe the gov 13,224 instead of £11,400 so fine you pay them back £1824 more.

however the increase in equity of the house has gone to £132,240 thus gaining £5016 pounds (£18,240 - 13,224)

so surely there is a profit to be made here?

now i understand there are many variables i may have not accounted for here and alot of expectations but im just roughly proposing a potential plan.

I would like you guys to see what you think of this and scrutinise it but also comment on whether you think this is viable and something i should be looking at.

I mean if i could get on the property ladder at 23/24 i think that would be amazing and surely long term i could make good money doing this.

Let me know what you guys think, like i said this is rough proposal not every single thing has been factored in but its just something iv put together.