Should you get a mortgage or pay cash for your home?

getmore4less

moneysavinghero said:

Maybe they are Youtubers / Instagrammers / Influencers.

If there is a source of income the uni references are redundant.

Buy ASAP with a mortgage.

lookstraightahead

Op - are you paying for accommodation? 

Caramac

Don’t be in too much of a hurry to tie yourself down. Renting makes it easier to travel for a year or to move to a different area.

Mickey666

AdrianC said:

Mickey666 said:
Also, don't confuse ambition with having a solid plan because without ambition it's difficult to plan in the first place.  

"I want to go school->uni->school and stay there until I retire" is not very ambitious. Especially if, as seems certain, "school/uni/school" are all in the same town or city.

Oh I don't know, leaving uni with a degree in a subject you enjoy plus the financial independence to then be able to do whatever else you wanted without being burdened by having to work for decades seems pretty ambitious to me.  As we've discussed many times, 'retirement' is only the end of working for a living, not the end of living itself and the earlier you retire the more time you have to 'live'

Crashy_Time

YoungFIREman said:

Hello everyone!

Context: My girlfriend and I are 19 years old and are currently university students saving at least 75% of our income each month which means we will finish our 4 years at university with over £100,000 saved and invested (in stocks and shares ISAs). We will then be able to save to pay cash for a home (£200,000) in 2 years after graduating - of course depending on how quickly we manage to get a job (both of us want to become teachers). 

We have an emergency fund already saved and we have never been in debt and don’t want to get into debt because we would prefer the freedom of a paid-for home. It is crazy that we are likely to have the money saved for a home by our 25th birthdays but we’ve started very young and it is more than possible for us. 

Once our home is paid for, we will then be looking at weddings/marriage and any home renovations that may need doing before having children in our late 20s. 

And then we will continue saving for retirement which we aim to have the option to do by the age of 40. 

I understand our financial situation is extreme but we have been together nearly 3 years and we are still 19 years old and so we are starting very young. 

Question: are there any obvious downsides to this plan that you can see regarding the financial aspects and is paying cash for a home a smart thing to do or is it more risky than it appears? 

Thank you for your help and I hope you have a lovely day! 

LOL. Are you living together now?

Crashy_Time

FaceHead said:

moneysavinghero said:

How do you plan on going from £100,000 to £200,000 in 2 years. Starting salary for teachers is £30,000 - after taxes that would be about £23,500. So even if you put every single penny of your salary into savings that is only £23,500 * 2 * 2 = £94,000. Can you live on £0 each per year?

They are university students who are each earning c.£44k gross, so make £33k net, of which they save £25k, and live on the other 12k (each, so combined living expenses of 24k p.a.). Given that most people accumulate debt at university, and most 19 year olds don't make £44k, particularly when studying most of the time, something does seem.......unusual.

Once graduated, their net income will double, so they will each be making just over £100k gross, to make c.£66k net. In the first year grads in even the most competitive front office jobs in investment banking grad schemes don't make that for at least a couple of years, so something about the projection seems.....unusual.

It's a blatant wind up for a moneysaving forum. The point that it's possible to be on the property ladder in your early 20's with two incomes from top grad jobs, isn't untrue. OP - next time do it with remotely believable figures, as the figures being way off the mark reveals that you're not in this position. 

LOL. However there is one thing that many posters will tell you never to try and save money on?

george4064

Firstly, open LISAs for both you and your gf. Save the maximum you can into them.

After uni, rent a place with your gf so you live together for a while and know for sure that you two can get along fine. No point rushing into buying your first home.

When you are both ready, buy with a mortgage and 25% deposit (incl LISA), use the remaining cash for pensions and Stocks & Shares ISA.

Good luck.

Crashy_Time

Decent advice.