Buying 2016?

Bodders11

I am currently saving for a deposit on a property. By the end of 2016 I will have enough for a 10% deposit on a flat priced at around £130K.


I am currently employed with an annual salary of £27K and living at home with my parents which enables me to save around £700.00 per month.


One of the options I have is to buy the property and live in it myself gaining independence until I meet a partner and eventually buy a house at which point I will have already paid off some of my mortgage and hopefully the value of the property would have increased.


Alternatively, I could buy a property, remain at home with my parents, rent out the flat I purchase and, in the meantime, continue to save. If this was the case having bought a property and with an additional 12 months of savings I could have a further £8400 + interest in the bank (even more when I open a H2B ISA in April) plus some of my mortgage paid off by January 2018 when I turn 28 at which point I will certainly be anxious to leave home.


What are the pros and cons to each of the above and if you were in my position what would you do? With the exponential property growth I am anxious to take my first steps on to the ladder.

Rain_Shadow

Bodders11 wrote: »

I am currently saving for a deposit on a property. By the end of 2016 I will have enough for a 10% deposit on a flat priced at around £130K.


I am currently employed with an annual salary of £27K and living at home with my parents which enables me to save around £700.00 per month.


One of the options I have is to buy the property and live in it myself gaining independence until I meet a partner and eventually buy a house at which point I will have already paid off some of my mortgage and hopefully the value of the property would have increased.


Alternatively, I could buy a property, remain at home with my parents, rent out the flat I purchase and, in the meantime, continue to save. If this was the case having bought a property and with an additional 12 months of savings I could have a further £8400 + interest in the bank (even more when I open a H2B ISA in April) plus some of my mortgage paid off by January 2018 when I turn 28 at which point I will certainly be anxious to leave home.


What are the pros and cons to each of the above and if you were in my position what would you do? With the exponential property growth I am anxious to take my first steps on to the ladder.

I don't think you will get a BTL mortgage.

mrsammyp

Well 'Option 2' isn't really viable without getting a buy-to-let mortgage and that would require a deposit of 20-25% minimum.

mcpitman

Most BTL mortgages requie a ~25% deposit.

Pixie5740

If you earn £27k and are still living at home I would have expected you to be saving a lot more than £700 a month.

AlistairM

Pixie5740 wrote: »

If you earn £27k and are still living at home I would have expected you to be saving a lot more than £700 a month.

That's what I was thinking. Me and my other half live together renting (till we exchange and complete) and we save more than that each and that's with me being paid less than £27K. You should be able to save at least £1000 a month.



If you're serious about getting a house you should be building up your credit score by paying utility bills, paying off debt, using a credit card and paying it off each month.

user1168934

Pixie5740 wrote: »

If you earn £27k and are still living at home I would have expected you to be saving a lot more than £700 a month.

I was thinking exactly that. Several years ago I started on a similar salary, was living in a house share paying rent, bills etc and I was saving around £1200 on average. You need to try and save more mate. Ofcourse I know nothing about your other financial commitments like other loans etc so do what makes sense to your situation.

mrsammyp

Mirroring what others have said, maybe try and save what you would expect to pay for mortgage + service charge + utility bills etc.

Bodders11

Thanks for the responses. Option 1 it is. My target is to buy by April 2017.

After tax, national insurance, local authority pension and student finance repayments I take home just over 1600. Then my breakdown is as follows:
Rent to parents - 250
Phone Bill - 45
Petrol (on credit card) - 80
Food - 60
Premier League Football tickets - 67 (average per month)
Disposal allowance for a social life per month - 300

All of the above should allow me to save around 800 per month and I can always decrease my social allowance.

Through experian I have a very good credit score so I think all that will be fine so now it's just a case of saving hard and fast.

Pixie5740

A very god credit score on Experian would only mean something if Experian were to lend money but they don't. It's your credit history not the made-up-by-Experian credit score that is important.

If you are serious about buying somewhere then there is lots of fat that could be trimmed quite easily from your budget.

£45 for a phone bill? :eek:

Pixie5740

A £130k property with a 10% deposit and you'll be looking at mortgage repayments of circa £500. Budgeting the way you are that will only leave you with £200 a month to cover your council tax, utilities, maintenance, emergencies, insurances, etc.