To buy or not to buy....a 26 year olds question!!!

Elliesmum

Wow - I'm impressed with some of the saving levels of you guys on this thread........... stick at home and save, save, save. I think someone has mentioned the magical 5% - gives you far more options on the mortgage choice front. Don't just jump in and get yourself into huge debt with an 100% mortgage.

HTH's

EM xx

Elliesmum

OH and PS - Good luck xx

alant1000

brummie_boy wrote: »

Must admit - one thing I need to sort out is my current account - still got a basic HSBC account now that my graduate account has ended (too old!)

Have the offer from my parents of putting some money down for me (c. £40k)....but they are fast approaching retirement and I don't feel it would be a good investment for them at the moment....

actually that changes things quite a bit... dependent on how quickly they would want the money back, as long as its not within the next 2 years of something silly, i'd seriously consider your parents kind offer - you might not need the full 40k, just go and see a mortgage broker and work out how much you could comfortably afford a month and see how much of a deposit you'd then require, i doubt it will be 40k, more like 15-20k. Then in say 5 years when you are earning more and the house may have gone up in value a little you could pay more towards the mortgage and buy your parents out.

Its worth looking into. Your parents are unlikely to loose out in the long term.

brummie_boy

Maybe I should just buy myself a tent and head over the local nature reserve - could set up a small MSE community!!!!

Main thing for me is whether I am being too hesitant waiting based on my salary levels....doesnt sound like I am though!

alant1000

brummie_boy wrote: »

Maybe I should just buy myself a tent and head over the local nature reserve - could set up a small MSE community!!!!

Main thing for me is whether I am being too hesitant waiting based on my salary levels....doesnt sound like I am though!

you werent being too hesitant based on the salary as its a pretty good wage even if you are buying on your own, the main issue with the lack of deposit, but like i say its deffo worth checking out the feasiblity of borrowing off your parents.

littlemissmoney

alant1000 wrote: »

...and with that 1k you are saving a month at the moment i'd use that to pay off the student loan, if you could have that finished off in 8 months it will be a big burden got rid of.

NO!!! :eek: Don't do that!!! Your student loan is very cheap debt as it only increases with the price of living. Only ever pay off what you have to. See Martin's article for more details:

http://www.moneysavingexpert.com/loans/student-loans-repay

cells

littlemissmoney wrote: »

NO!!! :eek: Don't do that!!! Your student loan is very cheap debt as it only increases with the price of living. Only ever pay off what you have to. See Martin's article for more details:

http://www.moneysavingexpert.com/loans/student-loans-repay

[FONT=&quot]
4.2% interest at the mo. that is pretty high.

if he puts his money into a high interest account he would get 6.2%, but 20% of that interest would go to tax. so that 6.2% is in fact 4.96%

so paying off that student debt isn’t that bad compared to putting the money into a high interest savings account. the difference is only 0.76% a year.


i would say to most people pay it off, but if you are good with money and can move around your money to get the best interest you might just be able to beat the student debt interest![/FONT]

cells

brummie_boy wrote: »

Evening all....

After advice really...

I'm 26 in a secure job earning total package of £35.5k, out of which I have to pay for my car with an existing loan of £265.month.

Only have £2k saved after travelling and student debts etc....although am still paying student loan off (minimum amount) - around £8k left.

Find myself able to save around £1k per month, barring any exceptional costs.

Living with parents at the moment, not too much of a problem as its a huge house and spend at least 3 days a week at my partners house. Not really ready to move in with her for a while.

So.....it seems I have 3 options - any comments gratefully recieved!

1 - buy somewhere with 100% mortgage in next couple of months. I will only buy a place if I can see myself being happy there for at least 7 years - absolute minimum cost for this will be c. £130k in my area. I'd save my £1k per month until completion to help pay legal costs etc

2 - rent somewhere cheap (alone or house-share) and limit my monthly savings, but have a bit of 'freedom'; feeling a bit old to be living with the folks!

3 - stay here for a set amount of time and save at least £10k; and hope the housing market stays level or dips.

you need a bigger deposit, buying on a 100% mortgage you will be offered interest rates a lot higher than say a 90% mortgage. so you really don’t have much of a choice if your being realistic.



i figure you should be getting 25-26k after tax. So your income is more than £2100 per month.


minus 265pm for the car and £150 for the student loan. leaves you with more than £1,650pcm


personally i think you should be saving at lest £1400 a month. considering you have no real bills to pay for apart from that car and perhaps a mobile phone.


depending on what interest that car loan is on, it might be worth trying to pay that back asap




personally id suggest staying at home and try hard to save £1400 a month.
if you do that for 2 years you should have more than 36k in your bank account (after interest). Plus you have 2k now. So some 38k in a bank.

your student loan will also be down to about £5000



that would be my suggesting, stay at home for 2 years and intensively save.





** although depending on where you live, you could do a house share with a few mates. If say 3 people share a house then the shared council tax and shared rent might be cheap. Although id still say staying at home and saving intensively will be a good idea**

littlemissmoney

cells wrote: »

[FONT=&quot]4.2% interest at the mo. that is pretty high.[/FONT]

[FONT=&quot]if he puts his money into a high interest account he would get 6.2%, but 20% of that interest would go to tax. so that 6.2% is in fact 4.96%[/FONT]

[FONT=&quot]so paying off that student debt isn’t that bad compared to putting the money into a high interest savings account. the difference is only 0.76% a year.[/FONT]


[FONT=&quot]i would say to most people pay it off, but if you are good with money and can move around your money to get the best interest you might just be able to beat the student debt interest![/FONT]

The things is, for most people, if they pay back their student loan then they will be taking out more expensive debt as an alternative e.g. a mortgage. If you have spare cash it makes much more sense to pay off your mortage (or save it so you can get a lower mortage when the time comes). Not only because of the rate but if you are not so well off later on in life (e.g. loose your job, stop work to bring up a child) then your student loon re-payments stop, but the mortage ones don't!

sm9ai

cells wrote: »

[FONT=&quot]
4.2% interest at the mo. that is pretty high.

if he puts his money into a high interest account he would get 6.2%, but 20% of that interest would go to tax. so that 6.2% is in fact 4.96%

so paying off that student debt isn’t that bad compared to putting the money into a high interest savings account. the difference is only 0.76% a year.


i would say to most people pay it off, but if you are good with money and can move around your money to get the best interest you might just be able to beat the student debt interest![/FONT]

I think its currently 2.4% however in september it doubles:mad: to 4.8%.

So after you have completed ISA's it probably is worth paying off.

The other bad thing about student loans is for an average of say 12k student loan, you need to earn around £21k just to pay off the interest. (Of course must graduates will probably have a debt of around 20k and salaries of 15k)