Mortgage deposit idea

Chrisubank

TheDebtinator wrote: »

You're still missing the point that if you buy a property for over £450k, you're not going to get a penny from the Government's HTB scheme.

I'm well aware of this thanks. I'm also aware that the area we are looking, combined with the HPI between now and in 3+ years time. We have a challenge!

Candyapple

Wow, £3,250 on rent! No wonder it would be cheaper for you to get a mortgage :rotfl:

Have you thought about moving out a zone? Or even to a different area to the zone you are in such as Shepherds Bush? You would surely save a lot in rent and still be able to keep up your lifestyle. Have you looked at South Hampstead? Equally nice area and a lot cheaper.

TheDebtinator

Chrisubank wrote: »

I'm well aware of this thanks. I'm also aware that the area we are looking, combined with the HPI between now and in 3+ years time. We have a challenge!

Its cool. Indeed you do, I lived in London for a while and lived cheaply; though I didnt have ab apartment to myself. I moved 40 miles out of London and £300k should get a decent house, but again, that is also outside of the HTB scheme....

I guess the only question you need to ask yourself now that you have most of the facts is, is it worth taking out a loan based on potential HPI, ISA AER rate drops and an unknown loan APR. You will only know the complete answer in x years time.

Chrisubank

Candyapple wrote: »

Wow, £3,250 on rent! No wonder it would be cheaper for you to get a mortgage :rotfl:

Have you thought about moving out a zone? Or even to a different area to the zone you are in such as Shepherds Bush? You would surely save a lot in rent and still be able to keep up your lifestyle. Have you looked at South Hampstead? Equally nice area and a lot cheaper.

Maybe I should open a new thread...

How to convince ones wife (and yourself) to move house to save money hehe

Shepherds Bush would be fine for me, but convincing the wife is another thing. It may sound ridiculous but moving 1 mile away is almost like moving town.

Also, If we move too far away, you then need cars/bikes. Which come with their own costs. Then you need storage/parking.
Absolutely ideal is basically to buy this place off of our landlord, but that is never going to happen

JimmyTheWig

Chrisubank wrote: »

We are currently saving roughly 1100 per month.

In which case you are entirely able to max out your HTB ISA without needing a loan.
So why get a loan?

The fact that the HTB ISA return would beat the interest on the loan is irrelvant if you can get that HTB ISA return anyway.


[If as an aside you want to start Stoozing and borrow money at 0% and put it, say, into a Santander 123 account earning 3% then that's a different question.]

Strummer22

JimmyTheWig wrote: »

In which case you are entirely able to max out your HTB ISA without needing a loan.
So why get a loan?

Yep this is a very good question.

As all good savers should, you need to fill the account with the highest return first. I assume you each have/will get a HTB ISA from Halifax? So that's £400/m at 4% interest + 25% bonus.

You then have £700 left. You could open 2 regular savers at 6% that have a max monthly deposit of £300. This leaves just £100/m to do something with. I assume as you've been saving for a while you have a reasonable balance, making the Santander 123 a good choice.

Any money you borrow won't be going into the HTB ISA as you can afford to fill that each month anyway. Immediately your rate of return on the stoozing looks less attractive because technically you can't get the 25% bonus on your stoozed money.

JimmyTheWig

Stu_N_ wrote: »

Yep this is a very good question.

Thanks.
I wonder where the OP has gone, though, to answer it...

Cornucopia

The OP may have had a moment of realisation - that Stoozing the HTB ISA scheme is not the panacea they might have imagined, and that the key to home ownership is well within their ample income, albeit with the recognition that like many people living in London they will probably not be able to buy where they currently rent.

This is MSE, and there's simply no way anyone here is going to condone spending (wasting) that much money on rent on an on-going basis. If the OP & his OH are walking to work in Holland Park, then a couple of tube stops from elsewhere in West London is no great hassle or a great expense by comparison.

A little sacrifice is potentially character-building, especially when done in the name of a worthy long-term goal.

catwoman73

Oh and kids? Jeez they are for old people.. 30+ haha No plans for them any time soon, if ever.

Does 'the wife' feel the same as you?

Also, once you have spent the next 2/3/4 whatever years saving up for your deposit on your £450k Holland Park flat, you will be scarily close to being a 30+ YO 'old person' and maybe you or your wife will be desperate for children and family home and you will then need to move, save up more deposit and the £12.5k you spent on stamp duty will have been wasted.

How much does a family home in Holland Park cost if a flat costs £450k?

But going back to your original question, it is madness to get a loan to use to fund a savings account if the interest rate is higher than just saving the money up yourself, because any time that it is sat earning less money it is losing money.

By all means put the maximum amount in the HTB ISA (both of you, you can have one each) - the amount you are saving now is more than that anyway.

And just put the rest of your savings in High Interest Current Accounts - see the guide on here to see which ones to go for. From April savings interest will be tax free for the first £500 of interest for you as a higher rate tax payer, and £1000 for your wife as a standard rate one.

TheDebtinator

Cornucopia wrote: »

The OP may have had a moment of realisation - that Stoozing the HTB ISA scheme is not the panacea they might have imagined, and that the key to home ownership is well within their ample income, albeit with the recognition that like many people living in London they will probably not be able to buy where they currently rent.

This is MSE, and there's simply no way anyone here is going to condone spending (wasting) that much money on rent on an on-going basis. If the OP & his OH are walking to work in Holland Park, then a couple of tube stops from elsewhere in West London is no great hassle or a great expense by comparison.

A little sacrifice is potentially character-building, especially when done in the name of a worthy long-term goal.

My Fianc!e (so much easier on a French keyboard haha) rent cheap in a nice area, it is going to cost us around double each month to buy. We are prepared to sacrifice area for a step on the property ladder.