Pitfalls of Diligent Saving

moneysavinghero

Plus, this calculator doesn't take into account how much deposit you've got already so that should bring it down a bit too I'm sure.

It does      :

Based on what you’ve told us, you can afford a property that’s
£62,359.95 – £69,696.41
with a deposit of £3,118.00 – £10,454.46 and a mortgage of £59,241.95 – £59,241.95.
These figures are indicative only and not a commitment to lend.

Ditzy_Mitzy

Saving is nice if one can do it, however it doesn't make a lot of sense in a credit driven economy where asset prices are on the increase.  In short: if it takes one ten years to save up for a house or car or whatever at today's prices, one will not be able to afford the equivalent house or car in ten years' time.  It makes better sense to buy the asset now with borrowed money as, whilst it will still depreciate and loans accrue interest, one actually gets the asset and the utility it provides.  This means we borrow ever more and prices continue to rise.  It doesn't 'work' in the real sense, but there you have it. 
One also has to consider all this 'tax efficient saving' foisted on the population.  It's a mechanism to get public money, in the shape of unpaid taxes, into the private sector.  It all started with the 'tell Sid' business in the mid-eighties and Thatcher's drive to get private savings out of banks and onto the stock market.  

Hawley_Gryphon

moneysavinghero said:

Plus, this calculator doesn't take into account how much deposit you've got already so that should bring it down a bit too I'm sure.

It does      :

Based on what you’ve told us, you can afford a property that’s
£62,359.95 – £69,696.41
with a deposit of £3,118.00 – £10,454.46 and a mortgage of £59,241.95 – £59,241.95.
These figures are indicative only and not a commitment to lend.

Ah yes I know it mentions a deposit there, but it's not one that I've told it about. I've saved up 20k to put a deposit on the house, but there was no option in the mortgage calculator they had to let them know what kind of deposit I had. It wanted to know income and any debts and that sort of thing, but didn't ask about deposit. 
It pains me that I'm spending nearly £500 a month to live in a house that doesn't belong to me and all of the almost affordable properties I've seen on property websites keep suggesting that they'd be perfect as an "investment opportunity" to buy and then rent out to someone else. There's a growing and unpleasant trend of nothing being for sale anymore, it seems like everything is only available on a subscription basis now. Bleeding people dry month by month with a ceaseless drip-drip-drip of money coming out of everyone's bank accounts. *sigh*

grumiofoundation

Hawley_Gryphon said:

moneysavinghero said:

Plus, this calculator doesn't take into account how much deposit you've got already so that should bring it down a bit too I'm sure.

It does      :

Based on what you’ve told us, you can afford a property that’s
£62,359.95 – £69,696.41
with a deposit of £3,118.00 – £10,454.46 and a mortgage of £59,241.95 – £59,241.95.
These figures are indicative only and not a commitment to lend.

Ah yes I know it mentions a deposit there, but it's not one that I've told it about. I've saved up 20k to put a deposit on the house, but there was no option in the mortgage calculator they had to let them know what kind of deposit I had. It wanted to know income and any debts and that sort of thing, but didn't ask about deposit. 
It pains me that I'm spending nearly £500 a month to live in a house that doesn't belong to me and all of the almost affordable properties I've seen on property websites keep suggesting that they'd be perfect as an "investment opportunity" to buy and then rent out to someone else. There's a growing and unpleasant trend of nothing being for sale anymore, it seems like everything is only available on a subscription basis now. Bleeding people dry month by month with a ceaseless drip-drip-drip of money coming out of everyone's bank accounts. *sigh*

Having more deposit won’t negatively impact how much they will lend you.

Illustration suggests they would  lend you ~£59,000* (would be worth discussing with a mortgage broker to see if you could get more). Edit: and to understand why you are being ‘offered’ such Wildly different amounts. 

so plus your deposit would be properties in price range of £75,000-£80,000.

*for comparison of mortgage/rent £59,000 mortgage at 2% over 25 years = £250 per month.

If you paid £500 per month (whether buy getting a sorter term or overpaying) term comes down to 11 years. 

tooldle

Is the difference between the estate agent mortgage estimate, and the online estimate from Barclays caused by one lender accepting tax credits as income, and the other not? 

caz_cardiff87

Just chiming in with my 2 cents..

I'm a single working parent claiming UC that is made up of HB, standard allowance, child benefit and childcare reimbursements. The rules apply - if i save anything over £16,001 my benefits reduce, over £16k and they stop. The reason being - you have money in the bank to live off so why should you get benefits too???

I am a week away from completion on a property but I was only able to do this as both parents passed away and left me an inheritance - UC were able to disregard it for 6 months so I could find a property but that is not guaranteed - it goes to a decision maker. I will not get HB once i become a homeowner but I earn enough part time (graduate job ive been in for 10 years) to pay the mortgage which is less than half what i am paying in rent! I will be back full time when little one starts school. My partner is moving in at some point so i'm certainly not aiming to be on benefits indefinately. 
i did read something about a call for them to reconsider benefits reductions for those who have lifetime ISA's as it is putting them at a huge disadvantage but nothing has come of it as yet. 

As unfair as it is, thats what we have to deal with. 

You can get a mortgage if you are on benefits but HB is not included and it depends on your overall income. Some lenders wont touch you, others will. 

Hawley_Gryphon

tooldle said:

Is the difference between the estate agent mortgage estimate, and the online estimate from Barclays caused by one lender accepting tax credits as income, and the other not? 

It could be... it was a while back when I spoke the estate agent fella so I can't remember how much detail we went into. :-s

Hawley_Gryphon

caz_cardiff87 said:

Just chiming in with my 2 cents..

I'm a single working parent claiming UC that is made up of HB, standard allowance, child benefit and childcare reimbursements. The rules apply - if i save anything over £16,001 my benefits reduce, over £16k and they stop. The reason being - you have money in the bank to live off so why should you get benefits too???

I am a week away from completion on a property but I was only able to do this as both parents passed away and left me an inheritance - UC were able to disregard it for 6 months so I could find a property but that is not guaranteed - it goes to a decision maker. I will not get HB once i become a homeowner but I earn enough part time (graduate job ive been in for 10 years) to pay the mortgage which is less than half what i am paying in rent! I will be back full time when little one starts school. My partner is moving in at some point so i'm certainly not aiming to be on benefits indefinately. 
i did read something about a call for them to reconsider benefits reductions for those who have lifetime ISA's as it is putting them at a huge disadvantage but nothing has come of it as yet. 

As unfair as it is, thats what we have to deal with. 

You can get a mortgage if you are on benefits but HB is not included and it depends on your overall income. Some lenders wont touch you, others will. 

Sorry about your parents. Condolences.
You seem to be muddling through all right, that's great. I'm looking forward to one day paying less each month on a mortgage than I'm paying the landlord each month at the moment.

I can understand the thought that if a person is sitting on over £16k they don't need help any more, but it really doesn't take into account the realities of the situation does it? It definitely needs reform. If a person is living life close to the bone and putting aside every spare penny they can get into a LISA then ultimately they get penalised for it and have their benefits stopped. Whereas if they frittered their benefits away on cars, TV, meals out and so on, they'd be entitled to continue to receive the benefits because they don't have enough money. Frugality is being punished here and it really ought to be reformed a little to discount LISA savings. Let's hope they do something about it as that article you read suggests.

I haven't qualified for housing benefits for about four years now since downsizing to a smaller rental property. It costs £100 less a month than my last place so I've been able to put more money into the LISA and really try and get it up there. I'm sure mortgage providers will be more willing to lend me the money if I have a decent deposit.