Have £5000 saved, whats my best option?

joocyglutes

I'm a single guy, currently working and studying at the same time, so I don't have a set career yet.

Currently I'm in a shared house, costs me £300 a month with all bills included. I have £5000 saved.

What would be my best option financially, would it be possible to buy with such a small deposit? I'd like to be putting £300 into equity rather than someone elses mortage.

Thanks

zagubov

Need much more info, especially about where you are and how long you're planning/hoping/wanting to stay there.
Are you studying for x years at a local uni/college or 2x years via the OU? 
How easy is it to change jobs and will your degree/diploma/certificate increase the range and salaries of jobs?
What part of the country are you in? (Clearly not London at that rental price).
Are job prospects good in your current locale and will they also be good when you're more highly qualified?

joocyglutes

zagubov said:

Need much more info, especially about where you are and how long you're planning/hoping/wanting to stay there.
Are you studying for x years at a local uni/college or 2x years via the OU? 
How easy is it to change jobs and will your degree/diploma/certificate increase the range and salaries of jobs?
What part of the country are you in? (Clearly not London at that rental price).
Are job prospects good in your current locale and will they also be good when you're more highly qualified?

I'm located in Stoke-on-Trent.
I'd say probably 5 years maximum, as I don't think I'd be able to afford a great property with such a small deposit. So I'm buying just as somewhere to live for the time being, with the assumption it's better to be paying a mortage than rent.

I've got 2 years left with the OU, I study full-time around full time employment.

Job availability and salary will hopefully be greatly increased with the completion of the degree (human bio) at the moment I seem to be restricted to warehouse jobs, there's not much else in this area without a degree.

numbercruncher8

The most obvious option will be to wait until you get a better job - banks will be willing to lend more then and more properties come into the price bracket, although you may need more as a deposit.
If you want to buy somewhere now, and assuming the job is minimum wage, you could probably pick up something like this: https://www.rightmove.co.uk/property-for-sale/property-65567706.html
Chain free, and already reduced by 25% in price, it may be amenable to offers.
Or maybe for a bit more cash: https://www.rightmove.co.uk/property-for-sale/property-65629362.html, down from £70,000! 
There are a load of houses up for auction at lower, but that is more complex. It seems that someone is being liquidated or cashing out.
Obviously, this stuff is at the !!!!!! end of the market, but that's pretty much what the budget dictates. On the plus side, mortgage payments will be much less at these levels, but then you become responsible for the bills.

On the negative side, the rent money probably gets you a better standard of property than this, in nicer areas as well. There is a intangible downside of shifting to a worse area.

zagubov

Good, you're doing a STEM degree and possibly one that could lead to NHS employment or an educational post which are both likely to be reliable future employers in whatever's to come after this ordeal we'e all soldiering through. 

[Deleted User]

Is £5,000 all the money you have saved or do you have additional money for a solicitor and a survey(s) set aside?  Remember that when you buy it's not as simple as comparing rent payments with mortgage payments.  As a home owner you'll be responsible for insuring the property and all maintenance and repairs.  Your rent also includes bills which you'd have to pay on top of making your mortgage payments.

Honestly, I wouldn't be rushing out to buy a small property in an already rundown area given the uncertainty at the moment. It wouldn't even by my first choice in more normal times.  I also wouldn't want to spunk my FTB SDLT relief or my LISA bonus (hopefully you are saving your deposit into a LISA to get the 25% government bonus) on such a small, cheap property. I'd keep saving until I at least finished my OU course.

joocyglutes

Lover_of_Lycra said:

Is £5,000 all the money you have saved or do you have additional money for a solicitor and a survey(s) set aside?  Remember that when you buy it's not as simple as comparing rent payments with mortgage payments.  As a home owner you'll be responsible for insuring the property and all maintenance and repairs.  Your rent also includes bills which you'd have to pay on top of making your mortgage payments.

Honestly, I wouldn't be rushing out to buy a small property in an already rundown area given the uncertainty at the moment. It wouldn't even by my first choice in more normal times.  I also wouldn't want to spunk my FTB SDLT relief or my LISA bonus (hopefully you are saving your deposit into a LISA to get the 25% government bonus) on such a small, cheap property. I'd keep saving until I at least finished my OU course.

Thank you for your replies.
I understand the additional costs and would be using my Help to Buy Isa bonus to cover the solicitor fees.

I just think if I'm saving £200 a month in there, which brings a £50 bonus, it is being outweighed by effectively paying £300 interest each month renting instead of paying a mortage. So buying would financially be better than continuing to rent and save?

That was my thinking, although it may be flawed so I'm asking here. I'm also unsure about the current situation and how it will effect the market.

[Deleted User]

joocyglutes said:

Lover_of_Lycra said:

Is £5,000 all the money you have saved or do you have additional money for a solicitor and a survey(s) set aside?  Remember that when you buy it's not as simple as comparing rent payments with mortgage payments.  As a home owner you'll be responsible for insuring the property and all maintenance and repairs.  Your rent also includes bills which you'd have to pay on top of making your mortgage payments.

Honestly, I wouldn't be rushing out to buy a small property in an already rundown area given the uncertainty at the moment. It wouldn't even by my first choice in more normal times.  I also wouldn't want to spunk my FTB SDLT relief or my LISA bonus (hopefully you are saving your deposit into a LISA to get the 25% government bonus) on such a small, cheap property. I'd keep saving until I at least finished my OU course.

Thank you for your replies.
I understand the additional costs and would be using my Help to Buy Isa bonus to cover the solicitor fees.

I just think if I'm saving £200 a month in there, which brings a £50 bonus, it is being outweighed by effectively paying £300 interest each month renting instead of paying a mortage. So buying would financially be better than continuing to rent and save?

That was my thinking, although it may be flawed so I'm asking here. I'm also unsure about the current situation and how it will effect the market.

Is your HTB ISA bonus enough to cover solicitor fees and surveys?

Your rent is not effectively like paying £300 interest.  Your rent includes bills and you're going to have to pay those whether you buy or rent.  At I guess I would say that the accommodation portion of your rent payment is probably on par with mortgage interest and other sunk costs of buying.

No one has a crystal ball to say what property prices will be doing when the time comes for you to sell.  What I will say is that those properties at the !!!!!! end of the market are the ones that get hit the hardest when property prices fall.  You've only got two years of studying left, who knows where your OU qualification will take you so why tie yourself to Stoke-On-Trent?

onwards&upwards

£300 a month is very very good for a place to live and all bills.  If I were you I’d keep saving as much as possible and reassess in a year.  See what the lay of the land is after the worst of this is over.

joocyglutes

Ok thanks guys, appreciate you taking your time to help me.

I'll keep saving and see what happens in the future 🙂

princeofpounds

Just wanted to add to this - at your age it's really, really important to focus on what matters. That's deciding on your future career and progressing as well as possible. You need to be as open to opportunity as you can be, including having the flexibility to move (I recognise everyone has constraints) and, as lovely as it is, Stoke is not going to be that place for most people. Nor is any other area where you can buy with a deposit of 5k, at least in the UK.

You will see ~ ten thousand times the rewards from getting a 1% better career than a 1% better outcome on your 5k savings. I know on this site we all tend to be people who love careful husbandry of our savings and investments, and we all like to own out own homes. But don't get blinded to the fact that your biggest asset right now is the option value of your own future income. 

Best of luck!