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

Badger_Lady

meanmachine wrote:

So this property fan "made" 13% in 2 years.

Meanwhile their next property will ALSO have risen by 13%.

Meanwhile you'll need to pay X amount more in stamp duty because your next property has risen.

Er, yeah, that's really a cause for celebration.

Oh, and what about the opportunity costs on your poor parents' investment? I presume you're now going to pay them back with interest?

So that means you'll be WORSE off thanks to property inflation.

Doh.

Hey, be nice!

In actual fact, my property beat the surrounding area (which only rose around 4% in the same time) by clever selection when I bought it... and my next home was bought in a completely different part of Britain where property is currently much cheaper and likely increase much more sharply in the immediate future.

I'm not suggesting "just buy anything" will help, but "buy the right thing" will...

And, even if all the houses in the world had gone up 13%, I'd still be better off than someone who hadn't bought anything, who would now find all the houses were even more expensive than they had been before!

I'm afraid you have to explain to me what you mean by "opportunity costs" on my parents' investment - they gave me £4k and they got back £4.5k, what's wrong with that?

brummie_boy

Seems to have sparked a nice healthy debate here....I don't think there is a correct answer at the end of the day! Thanks for all the input!

Won't ever pay my student loan off before necessary; I just view it as an extra tax I am paying as a result of my education - still glad I went!

I'm not convinced about the state of the housing market; and firmly believe that even if I was saving £600 per month, I'd still be better to build up some cash!

In terms of how much I'm saving....

take home pay (after student loan and a bit of extra tax for medical insurance) is just over £1950.

less...

Car- £261
Petrol - £200
Ins (although i pay yearly, still have to accrue for it) - £55
Tax - £10/month
Phone - £25
Gym - (£75 - shortly about to become £35 though!)
Board - a pathetic £150 but they won't accept any more!
'Spending' - £200

Leaves me with give or take, £1k to save.

Opinions....is this a sensible amount of am I missing something glaringly obvious?

wolvoman

brummie_boy wrote: »

Seems to have sparked a nice healthy debate here....I don't think there is a correct answer at the end of the day! Thanks for all the input!

Won't ever pay my student loan off before necessary; I just view it as an extra tax I am paying as a result of my education - still glad I went!

I'm not convinced about the state of the housing market; and firmly believe that even if I was saving £600 per month, I'd still be better to build up some cash!

In terms of how much I'm saving....

take home pay (after student loan and a bit of extra tax for medical insurance) is just over £1950.

less...

Car- £261
Petrol - £200
Ins (although i pay yearly, still have to accrue for it) - £55
Tax - £10/month
Phone - £25
Gym - (£75 - shortly about to become £35 though!)
Board - a pathetic £150 but they won't accept any more!
'Spending' - £200

Leaves me with give or take, £1k to save.

Opinions....is this a sensible amount of am I missing something glaringly obvious?

The numbers seem about right, perhaps the fuel seems a bit high - how many miles do you do? Even in my 3.2ltr Flat-6 I'd have to do a lot of mileage to spend £200 in fuel per month. Oh what about other car costs? Servicing, new tyres, repairs etc.?

And if you 'can' save £1K or more per month, how come you only have saved £2K so far? That would suggest to me you haven't been too good at saving to date, which doesn't bode well going forward.


As to buying - well that's up to, but you could buy a place, rent a room out and use that income to pay off some of the mortgage which will quickly get you down to a 95% LTV. Oh and if you do an offset mortgage, the monthly savings could quite quickly start to erode into the mortgage debt, especially if your salary increases too.

brummie_boy

My place of work is 25 miles from where I live, and my gf lives the same distance in the opposite direction. This in a relatively frugal Golf TDI. Car costs low as have free servicing, other stuff has to come out of my savings allowance or my spending.

Also, I've only been earning this much since April, and have has some hefty c card stuff to pay off following a lengthy period of travelling - hence only £2k in the bank!

chelseablue

Im in a similiar position to you. Im 24 and live with my Mum and Dad (and brother!) :rolleyes:

Im saving for a place with my boyfriend. We try and save £3,000 per month, which is tough sometimes

I would say save as much as you can for a year or two.

Would your girlfriend be in a position to buy with you then?

Encourage her to save too!

Good luck

offbeatgirl

No one else has suggested this, but would renting really be such a bad idea? Admittedly you'd not be able to save as much, but it would give you some independence and a sense of having your own place, while you still should have enough to save a good proportion out of your salary. It might work as a compromise solution? I'm guessing from your user name that you are based near Birmingham, and am pretty certain that you'd be able to rent at a reasonable price if so, as so many new flats have been built in the last few years, and most of those have been snapped up by BTL landords, flooding the rental market.

I have a reverse scenario - similar age and salary, with savings but only contract work. I'd probably buy if my job was secure but in the mean time I don't mind renting - I have my own place and when things break the landlord fixes them Meanwhile, I can put money aside into my savings and not get too stressed.

Having said all that, I wish I'd brought a flat back when I started a PhD aged 21, with my parents acting as guarantor. But it's much riskier now as house prices have more than doubled in my area since then!

meanmachine_2

Badger_Lady wrote: »

In actual fact, my property beat the surrounding area (which only rose around 4% in the same time) by clever selection when I bought it... and my next home was bought in a completely different part of Britain where property is currently much cheaper and likely increase much more sharply in the immediate future.


I'm afraid you have to explain to me what you mean by "opportunity costs" on my parents' investment - they gave me £4k and they got back £4.5k, what's wrong with that?

I've yet to meet a homeowner who's own property hasn't risen much more than "the average".

Funny that.

But then, all homeowners are such genius investors it must be me who can't add up, not them.

Anyway, how about we advise the OP not to try to "play the system", but just do what's best for their personal circumstances?

Paying massively over the odds for a 100% mortgage - have you SEEN the interest rates on those things??? - sounds like moneylosing behaviour to me.

alant1000

Mr._H wrote: »

Do not ever pay off your student loan faster than you have to. It is a unique type of loan that has very different characteristics to standard loans. Yes, this year there will be quite a high interest charge, but it'll go down again next year. The amount you owe does not appear on your credit reference, you can't get into arrears as payments are taken straight out of your pay before you get your money, and it is written off when you are 60. Basically, ignore the student loan and it will disappear eventually.

The extra money that you might use to pay off a student loan faster than you have to will always be better used elsewhere.




I'm 27 and have an income of about £12k. I save £350 a month and have a mortgage to pay! I don't have a car, but allowing for that and your additional income, I see no reason why you shouldn't be able to save £1500 a month.

Saving up a substantial deposit (15 - 20%) will give you access to much better mortgage deals than 100% ones.

so you think its a good idea not to pay off a loan then and encourage someone to write it off??? Thats not a very good and honest example is it?? Borrowed money should be paid back, thats my philosophy. As student loan may have a different make up to a bank loan, but they have one thing in common - its not your money, its some one elses.

Mr._H_2

alant1000 wrote: »

so you think its a good idea not to pay off a loan then and encourage someone to write it off??? Thats not a very good and honest example is it?? Borrowed money should be paid back, thats my philosophy. As student loan may have a different make up to a bank loan, but they have one thing in common - its not your money, its some one elses.

As I said, a student loan is unique. I certainly would not suggest people to take out loans, p*ss away all the money, and then declare oneself bankrupt in order to write off the loan, if that is what you are suggesting.

My point was to not pay off the loan faster than you have to. The government structured the student loan the way that they did on purpose. The calculations have been done carefully, and if you don't earn enough during your working life to pay off the loan, it is written off. I did not suggest at any point that anyone be deceptive and attempt to pay the loan slower than they are meant to (for example by not declaring income).

alant1000

Mr._H wrote: »

As I said, a student loan is unique. I certainly would not suggest people to take out loans, p*ss away all the money, and then declare oneself bankrupt in order to write off the loan, if that is what you are suggesting.

My point was to not pay off the loan faster than you have to. The government structured the student loan the way that they did on purpose. The calculations have been done carefully, and if you don't earn enough during your working life to pay off the loan, it is written off. I did not suggest at any point that anyone be deceptive and attempt to pay the loan slower than they are meant to (for example by not declaring income).

ahh i see i saw the bit where you said i will get written off anyway at 60 and jumped the guns maybe . I thought there was some rule that you pay off 9% of anything that you earn over 15k or something, and the OP is on 35k so he's probably not going to get away with writing it off.