Family home on the (distant) horizon - savings diary

*little.squirrel*

I was really thankful to find another savings diary here. We don't own our family home yet, but neither are we in debt so I couldn't start a diary there and I really need one to hold me accountable!

There's 4 of us - hubs, me and the two minions aged 2 and 4. We have been living abroad for a few years and just moved back to the UK and we find ourselves a few years behind most of our friends in terms of already having a house we own. Technically I do own a flat that I rent out, but we are keen to own a home for our family and haven't really figured out the best way for that to happen yet. Regardless we need money for a deposit, an savings in general, and 2018 is the year we really start striving for this.

Alas, aforementioned minions are demanding attention. A proper beginning will have to wait!

Westie983

Good luck in your challenge

Westie983

cjv

If your husband is a first time buyer and under 40, be sure to check out the Lifetime Isa.

Good luck with your savings

*little.squirrel*

Thanks Westie, I'm going to need it!

CJV, thanks for the tip, that is something that I'm going to look into.

We have a meeting with a mortgage advisor tomorrow so we are hoping that will give us a goal to aim for in terms of saving this year. We are probably at our lowest point financially for years, mainly because I haven't worked full time since E was born 2 years ago and then we moved continent, which turned out to be a lot more costly than we anticipated. In addition to that, because we are 'home', we suddenly found ourselves with lots of visitors, wedding invitations and other social expenses. Although we did plan not to worry too much about money last year I'm the financial manager and the sight of our savings getting lower and lower began to get really stressful as we got closer to Christmas. Fortunately I've had a big chat with the husband and we are both on the same page now. Phew.

I'm just about to decline an invitation to a wedding at the start of March which will save us a fortune. We also had plans to go away with friends for a week at Easter but we hadn't managed to book anything yet and a catch up at Christmas resulted in us agreeing to try and planning advance for 2019 instead, so that's another expense cancelled out.

We live relatively frugally, although I'm sure some would disagree, so my real challenge is actually sticking to the budget in order to save. We haven't really managed to get into a proper routine or to really find our feet since we moved back to the UK, but things are finally coming together. We have definitely been tempted by M&S a little too often at the weekend and I definitely haven't been cooking enough from scratch. We were very particular about this after C was born, but fast forward to him having a sister and attempts to home cook and meal plan really went out of the window. We really need to get that going again both for money and for our health. I'm hoping that might save us a few pounds but I was really shocked with the price of groceries here in the UK and my original budget for food on a month has really had to increase as I've struggled to make it work. Also, the husband has a job now that requires more socialisation and more travelling so the pot of money that sustains him every month has had to increase too.

Anyway, I'm really hoping regular entries here will keep me on track. Tomorrow's meeting with the mortgage advisor is probably going to be a bit depressing and we are likely looking at a 3-5 year plan for owning our own house but at least it will be a start. I hope I'll have time tomorrow afternoon to set out a realistic savings plan for the year...

bowlhead99

*little.squirrel* wrote: »

Tomorrow's meeting with the mortgage advisor is probably going to be a bit depressing and we are likely looking at a 3-5 year plan for owning our own house but at least it will be a start. I hope I'll have time tomorrow afternoon to set out a realistic savings plan for the year...

I can give you some more free time tomorrow.

Cancel the meeting with the mortgage advisor. You believe you know yourself that you are not in a position to buy a house and take on a mortgage, for three to five years. So, there's no point wasting the mortgage advisor's time talking about current lending conditions, which lenders you could place the mortage business with for certain types of personal circumstances etc. Salary multiples or affordability checks may be more generous or less generous by the time you get there in five years.

You already know the common-sense facts that you will get the best mortgage options if you have a large deposit and a high level of earned income and decent credit rating and a history of UK employment. So, your action plan coming out of the meeting will be to work on all those things. Your first action is to start working on general savings and deposit savings and you already know you need to do that. The meeting with the mortgage advisor is simply you procrastinating and wanting to say you had a meeting so you can say to your OH that things are moving along, and you want to give yourself that false impression that things are moving along to make you feel better about your progress.

But the meeting at this stage is unnecessary and takes time out of your busy day,. That time can be more usefully spent a) looking after your kids, b) cooking some meals from groceries so you don't need expensive ready meals, c) writing your savings plan, d) self improvement to make yourself more employable for when you're ready to go back to work and e) lots of other things.

If you are curious about what sort of money you could borrow for a particular level of income and a particular property value in the current lending market, or what the current mortgage rates are, you can go to one of the mainstream highstreet lenders' websites such as https://www.nationwide.co.uk/products/mortgages/our-mortgages/mortgage-calculators and check interest rates or use the 'mortgage affordability calculator'. There, I've saved you a meeting.

The mortage advisor will also be grateful that you have saved them a meeting as presumably you don't propose to pay them for their time right now or buy any financial products from them for several years (by which time they may no longer be with the firm or you might pick a different firm anyway).

You mention that you do, 'technically' own a flat. Technically is a redundant word - either you own a flat or you don't. The flat can be sold and provide a deposit or part of a deposit for the home you wish to buy. You seem frustrated that you are behind your friends in terms of not owning your home, but the average person does not own a rental property so you are not too poor really.

If the flat is mortgaged it may impact how much you can borrow on your home mortgage (because you need to be able to afford it through thick and thin) - but that is something you could worry about in 3-5 years time. If the flat is owned outright and not mortgaged you are at a disadvantage compared to the rival landlords in the area who set their rental prices for a particular value or type of accommodation knowing they can get cheap and efficient finance to do so, as well as owning a whole portfolio of properties so that they don't have the 'concentration risk' of eggs in one basket. Just being an 'accidental landlord' is not a great money-making thing to do, because it will generally be less profitable than people wo do it properly. So, some level of mortgage on the flat would be healthy. You are after all running a property rental business and should treat it as such.

If you don't see it as a business, and just as something that you 'technically' own - you could cash it in once your current tenant's tenancy expires and save or invest the money in some other product.

*little.squirrel*

Many thanks for the reply, bowlhead. You have given me a lot to think about.

We are going to go ahead and meet with the mortgage advisor though, and hope that we aren't really wasting anyone's time. DH has a decent income with a permanent contract and we have a good credit rating. We have some money saved (just the smallest amount we have had for years) and we are happy to consider selling the flat I own (you are right, no technically about it!) which would give us plenty of money for a deposit to buy outright just now. We just haven't been sure what the best option is; either selling the flat to allow us to buy a house more quickly, or to hold on to it and continue to rent it out. We have never considered it a business and it just breaks even just now, and we would need to make it work for us instead if we choose to keep it. The intention was never really to have a rental, it was just that work took us abroad and that wasn't the right time to sell it. As it stands there are 12 years left on the mortgage. We met with a financial advisor to sort out life insurance and he recommended we speak to the guy who we are seeing tomorrow. I'm hoping that it isn't a pointless meeting.

*little.squirrel*

We ended up having a pretty productive meeting with the mortgage advisor. We would be able to get a mortgage now which is really exciting. Of course, we wouldn't be able to find anything in our price range just now and we would prefer to have a larger deposit but it is giving us somewhere concrete to start.

DH and I sat down and redid the budget last night to try and make it easier to work with. He actually did the lion's share which was great, because it really feels like the first time in ages he has been on board with helping manage the finances. It took us too long last night to get it finished so hopefully tomorrow night we will get all the numbers plugged in and we can have a good idea of what we can save this year. I'm tempted to say 6k but I don't want to aim too high and then be disappointed! I do realise though that it will come down to us to make it work We are feeling motivated and that's a good start!

So DH will open a help to buy ISA. We had originally thought we would be trying to buy a house over 250k so hadn't opened one, but now we are thinking we will aim under that.

I also hadn't appreciated that we could keep the flat I own and it wouldn't affect us being able to get a mortgage that I am also on. So for the time being we are going to keep it. I do need to speak to the current letting agents and see if we can renegotiate the deal we have. When we were abroad it was hard to keep track of but we are much closer now and my sister has just moved nearby so I think there is scope to manage it ourselves if need be.

Obviously the biggest factor is income; the more income we have the more we can borrow and the more we can save. If I could do an extra shift or two at work that will actually make quite a lot of difference.

Lots to think about! I need to make time to take photos for selling online. My bag is getting full and I'm keen to get stuff listed. I shouldn't have to spend any money today; I'm taking E to a playgroup that is run by a church group and they don't charge a fee at all. It's a lovely group too and there's always cake for the Mums

I got the Tesc0 delivery yesterday and managed a good bit of veg prep so dinners will be easier for the next few nights. I work in the evening so DH and I don't cross over for long so being organised makes all the difference. Lunch is made for DH too so he shouldn't have any outgoings today either, although he did just announce he's off to London at the end of the month which we have to pay for and then he claims expenses. This is new to us and it is messing up my budget!!

AimHigh

Good luck with your challenge!

*little.squirrel*

Budget looking just about finished. It looks like we can probably save £4000 without too much effort so I'm definitely keen to try for £6000. We have done the budget based on minimum earnings for me and generally I work a little bit more than that, so if we try hard to stick to budget and make little savings here and there, plus putting aside all my extra income we could manage 6k, which would be amazing.

I'm also going to set myself a personal challenge not to buy any make up or brand new clothes. Charity shop/eb@y are acceptable. I'm conscious of waste and value as well as not wanting to spend any money. I'm also going to strive for as many NSDs as possible.

In saying that, I did go to the shops with a friend this morning. Because we don't have a car I don't often go to shopping centres and it was actually decent timing because my 4 year old is refusing to wear any trousers with rips in them to preschool. So frustrating because he comes home with a new rip nearly every day. Yesterday he dug out his nicest jeans because he likes to look 'good' (he's 4!) and I was lucky they came back in one piece. I realise I could just force him to wear the ripped jeans, but to be honest, my day starts much better without dealing with tantrums. Anyway, I told him I'll get patches for the ripped ones but in the meantime I bought a pair of jeans from Pr1mark because at least they are pretty cheap.

I also got some seeds and gardening gloves for the allotment because I don't know when we will be at the shops again, and we will just end up ordering something overpriced online. Then I took a box to the charity shop and bought a couple of tops for myself. I wouldn't usually, but they were lovely quality and in great condition.

So all in all a bit more spendy than usual, but still within budget.

rawr_

Hey - great to see you've started your saving's diary, will be following! Good luck :T

Sounds like you're not in quite as bad of a position as you thought you were!

Radiantsoul

I would sell the flat and put it towards your new house.

It will clearly have an effect on some level, if you tenant leaves and you have void periods then you will have a drop in your income. If it isn't generating any surplus at the moment then it is just a bit of a millstone that may generate a capital gain in a few decades, but it seems you might rather have the money now. If nothing else I would get a valuation, and look at when any mortgage deal expires - the rates could be a lot higher.