Best way to save for a house?

[Deleted User]

Best way to save for a house?

eskbanker

Deleted_User said:

the bank on my salary will lend me about 170k

[...]

the banks are very black and white with their offerings

You might wish to discuss your mortgage aspirations with one or more specialist mortgage brokers rather than being constrained by what you've heard from banks.  Mortgage advice is usually discussed at https://forums.moneysavingexpert.com/categories/mortgages-endowments

Deleted_User said:

I want to buy a house/flat for around 300k, the bank on my salary will lend me about 170k, so I plan to save 100k and then get a mortgage for 200k (assuming my pay will rise by the time I buy and hence I will be able to lend more).

If you're factoring expected future salary increases into your calculations, it would also be prudent to consider the likely direction of house prices too, i.e. best not assume that properties valued today at £300K will still be at that sort of price point in 3-5 years time.

csgohan4

At present you can only lend x4.5 of your gross salary, so at the moment that 300k is out of your budget sadly. Save more or choose somewhere cheaper. 

MaxiRobriguez

Your options are:
1) Save more, somehow.
2) Reduce the budget.

Unfortunately the housing market is not favourable for those looking to get on the first rung, what with prices at high multiples on salary.

[Deleted User]

eskbanker said:

Deleted_User said:

the bank on my salary will lend me about 170k

[...]

the banks are very black and white with their offerings

You might wish to discuss your mortgage aspirations with one or more specialist mortgage brokers rather than being constrained by what you've heard from banks.  Mortgage advice is usually discussed at https://forums.moneysavingexpert.com/categories/mortgages-endowments

Deleted_User said:

I want to buy a house/flat for around 300k, the bank on my salary will lend me about 170k, so I plan to save 100k and then get a mortgage for 200k (assuming my pay will rise by the time I buy and hence I will be able to lend more).

If you're factoring expected future salary increases into your calculations, it would also be prudent to consider the likely direction of house prices too, i.e. best not assume that properties valued today at £300K will still be at that sort of price point in 3-5 years time.

Thanks I made another thread over there.

I did consider that the house prices will rise, so if they move too fast, I will have to buy somewhere else or just keep saving. I hope to catch up fast enough!

[Deleted User]

csgohan4 said:

At present you can only lend x4.5 of your gross salary, so at the moment that 300k is out of your budget sadly. Save more or choose somewhere cheaper. 

MaxiRobriguez said:

Your options are:
1) Save more, somehow.
2) Reduce the budget.

Unfortunately the housing market is not favourable for those looking to get on the first rung, what with prices at high multiples on salary.

Thanks I did also come to that conclusion but wanted to double check there wasn't a miracle cure so to speak. 

I think I will always aim for 300k budget, even if it means I have to save for longer, or the house 300K will buy in five years will be smaller, I will likely have to abandon London or anywhere near it, but I will see. It could crash, I could find a partner etc, but yeah, I am just going to keep saving until I am in a better position. 

eastmidsaver

hi.  firstly i think you right not to consider a shared ownership, as based on your circumstances you will eventually be able to get a place that is wholly yours (other than mortgage).   in terms of saving, a cliche answer but i think it;s just a case of really analysing your spending and see where you can cut down,  even if it's not a lot each month,  over the years it will really add up.   i note that you not are keen on this option, but as you still waiting 3 or 4 more years until you do it,  i would consider doing some sort of investment, even if it's just £50 a month.  there are no guarantees, but generally over a longer timeframe it will be more likely that you will beat inflation rates than just leaving it in a bank account. 

[Deleted User]

eastmidsaver said:

hi.  firstly i think you right not to consider a shared ownership, as based on your circumstances you will eventually be able to get a place that is wholly yours (other than mortgage).   in terms of saving, a cliche answer but i think it;s just a case of really analysing your spending and see where you can cut down,  even if it's not a lot each month,  over the years it will really add up.   i note that you not are keen on this option, but as you still waiting 3 or 4 more years until you do it,  i would consider doing some sort of investment, even if it's just £50 a month.  there are no guarantees, but generally over a longer timeframe it will be more likely that you will beat inflation rates than just leaving it in a bank account. 

Thanks, I do save £50 a month in investments but I don't count that much.

MaxiRobriguez

Cutting your £50 investments and £250 pension (presumably that's post tax?) and putting them as savings towards your new house brings you to your target a year faster, although you'd lose £10k+ of tax efficient investments...

How old are you and what is your relationship status? Is there any possibility of moving back in with mum and dad for a couple of years which could turbo charge your savings if you're renting?

Eco_Miser

Since you are saving, you should keep around £500 extra in your current account, and avoid going into overdraft. The money saved on overdraft (is that around 40% interest?) should be more than you lose on interest elsewhere (2% if you're lucky).

[Deleted User]

MaxiRobriguez said:

Cutting your £50 investments and £250 pension (presumably that's post tax?) and putting them as savings towards your new house brings you to your target a year faster, although you'd lose £10k+ of tax efficient investments...

How old are you and what is your relationship status? Is there any possibility of moving back in with mum and dad for a couple of years which could turbo charge your savings if you're renting?

The pension I believe is pre tax, it is deducted from salery before tax.