Is owning a house in the near future in the cards for me?

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  • DensolDensol Forumite
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    I’ll mention shared ownership. I think it is surprisingly expensive ! If you were a parent on Universal credit then UC could pick up the tab for the rent ( or most of it.) But as a single person your salary has to cover the mortgage, service charge AND the rent which is 2.75% of the un owned share. Those 3 together need be 45% or less of net salary ( including existing debts !) - that is quite an ask ! Near London you may be better off with a help to buy at 40% loan because that requires no payments until after 5 years. 
    My son is in similar to you and £30k in Sep - so thats his plan as he wants to live close to me 
  • youngmoneysavingexpertyoungmoneysavingexpert Forumite
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    Densol said:
    I’ll mention shared ownership. I think it is surprisingly expensive ! If you were a parent on Universal credit then UC could pick up the tab for the rent ( or most of it.) But as a single person your salary has to cover the mortgage, service charge AND the rent which is 2.75% of the un owned share. Those 3 together need be 45% or less of net salary ( including existing debts !) - that is quite an ask ! Near London you may be better off with a help to buy at 40% loan because that requires no payments until after 5 years. 
    My son is in similar to you and £30k in Sep - so thats his plan as he wants to live close to me 
    I had a look at Help to Buy but just doesn't seem like a good idea. I'd rather move further away and buy it normally than have get the Help to Buy loan. Just seems like a lot of hassle brewing. 
    Yeah the shared ownership properties I've seen in different areas have all been great until you see the monthly service charge and rent. 
  • youngmoneysavingexpertyoungmoneysavingexpert Forumite
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    Dreambox said:
    You are doing good with the savings, keep doing it because London is a quite expensive city!!
    Thanks. I just feel like I'm failing so hard.
  • [Deleted User][Deleted User]
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    3 people living in a 2 bedroom property doesn't sound that cramped to me and you don't want to rent so you'll be stuck living at home until you at least get your Masters.  Do you need to stay with the company you're with for a certain number of years after completing your Masters?

    If you find that you can never afford to live in London then your options will be to continue living at home, assuming your parents don't eventually push you out the nest, renting, or moving to a less expensive part of the country where you will be able to afford to buy.
    I finish my Masters next year and policy is to stay 1 year at the company or I'll have to pay back the fees but as I'm in HR I can bend that policy a little. 
    I mean, I'd prefer to stay in London, the salary for the next role I'm looking into is literally double that of salaries for the same role elsewhere. Less expensive parts of the country come with salaries of less than what I'm on now so.
    No one seems to be mentioning shared ownership and whether that would be a good idea but I'm definitely looking into it. 
    How much are properties and the general cost of living in these areas with lower salaries?
  • princeofpoundsprinceofpounds Forumite
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    Hi ymse - you aren't failing. I've been through what you've been through, but am quite a few years down the line (but not too many to be out of touch, I'd hope). Maybe a few points I can make:

    - Be careful with who you compare yourself to. The average age of a first time buyer in London is now 37. That average includes people who a) have a spouse and b) have family money such as inheritance. So the average single unassisted buyer is probably even older. Come back in 20 years and maybe we can talk about failure then. 

    - The biggest factor for your financial outcomes at your age is your career progression, by far. Getting a pound extra in (sustainable) wages is probably worth ten times a pound saved today. I know we all like to save on this site, but it's only part of the equation. Your salary may not appear low on a national scale, but I know it's almost poverty wages in London for independent living. Don't underestimate your ability to ask for routes to promotions and rises - you will have to achieve something in return, but don't stick around at a firm if you aren't developing the way you want, if you can access something better drop them like a stone. Get a patron/mentor type who is senior, it helps a lot. Look at your industry and adjacent ones, and figure out who makes the big bucks and why; if you want to go that route you need to know where you're going. 

    - The other big factor to your financial outcome is, frankly, who and when you marry (assuming that's the route you want to go down). Sorry to be unromantic about it, but it's just how it is. As I get older, I realise ever more how influential that factor is (even for men). 

    - Buying a property these days is genuinely far tougher than it used to be. Young workers these days are definitely far richer in terms of how far their wages go in purchasing consumer goods, but far poorer in terms of house ownership accessibility. There are a few reasons for this, but they are generally all large economic drivers - much lower interest rates, dual-income families and single-occupancy becoming more of a norm, higher population density due to immigration, restrictive planning policy preventing a supply response etc. Whilst I'm sympathetic to the specific complaints of millenials and Gen Y about housing costs, don't expect too much general sympathy; most generations have to face some kind of tough economic challenge, this is yours (at least for now).

    - The areas you are looking at are sensible; many want to live in areas that are unattainable in the short term. But do cast your net wider than you initially feel comfortable. So many people are quite blinkered about where they want to live, not realising that the cheaper area 5 minutes down the road isn't actually that bad. Picking a cheaper area as a springboard to ownership is the other factor that can deliver you there years earlier. 

    - No, you aren't dreaming. You have ~10k savings. You save ~6k p.a. at your current wage. At your new wage, that could be 10-15k perhaps. 3 years of that and you get to 50k total savings. Get a bf/gf with a similar status (or more!) and you get to 100k. Combined wage at that point of let's say 90k, 5x multiple means £450 of borrowing, you can look at £550k places at that point. That's the most expensive 2 bed currently available in Watford, for example. Don't take this example too seriously. You may want to rent after two years. You may fall in love with a penniless artist. You might race up the career ladder. But it shows there's nothing to stop you as long as you make the most of the next few years in terms of career, saving and relationships.
  • Unicorn_cottageUnicorn_cottage Forumite
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    How about really knuckling down and saving more per month?
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
  • wjr4wjr4 Forumite
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    I’m personally buying a shared ownership house but that’s because there’s no way I’d be able to afford a house on my own in the area I live. I used to hate the idea of shared ownership but it’s there for a reason! I’m not willing to leave everyone I know just to move to a cheaper area. I’m unable to afford rent in my town on my own either! 
    I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.
  • youngmoneysavingexpertyoungmoneysavingexpert Forumite
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    How about really knuckling down and saving more per month?
    Because I don't have more to save. Thanks for your unhelpful input.
  • vitaweatvitaweat Forumite
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    If you want to move immediately you might look at one of those professionals mortgages which increase the amount you'd be able to borrow against your current income to take into account likely future rises.  Otherwise you've got a decent amount in savings and if you can hold off until your masters is done and you're on £35k say then you should be able to afford to get a modest place like this by yourself which is the sort of thing I started off with:

    https://www.rightmove.co.uk/property-for-sale/property-68437938.html
  • [Deleted User][Deleted User]
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    How about really knuckling down and saving more per month?
    Because I don't have more to save. Thanks for your unhelpful input.
    That was uncalled for and going by your opening post there are things you can cut back on if you really want to move out of your parents' home.  Half your income goes on living expenses.  You don't pay rent, council tax or utilities so what are you spending over £700 on every month?  Do you really need subscriptions for Netflix and Spotify?  You don't really need a car either as you could probably cycle to work since your journey isn't that long.  You certainly didn't need to spend so much on a car that you had to take finance out in order to buy one.  It all boils down to how much you want to buy your own place.
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