Future Proofing my life: Deposit saving then MFW journey in under 13 years

savingholmes

I think on the purchase part - consider future stamp duty if you are thinking of moving within 5 years. Not sure how much you get stamp duty free for as a FTB but definitely one to bear in mind. 

On the 2 bed - if having a lodger is a central part of your emergency fund - then the rooms need to be big enough to support that.

As people said to me - you need to work out what your must haves are and to a degree why - as part of working out what you are willing to compromise on - that then won't come back to bite you in the future.  

LadyWithAPlan

@Karmacat Your niece sounds well organised - and one of the plus points of having a flat of my own is I can have a dog or a cat again - cant have any where I live now or before so been a decade without my own pets. My cats were live in though before - safer for them and wld life in London- and I have always wanted a dog of my own but then I need to decide on travelling ... though my parents would have it - but a dog would change my life unless I had a smaller one and informed everyone it was a support dog (unlike that Philadelphia guy who has a licensed emotional support alligator  called Wally  - google it - its a thing -  he even sleeps with it!

FLAT HUNTING starts today
So my new higher rent has gone out this month -  so that has refocused me..  An extra £500 a month  .. ouch... I have it waiting but ouch ... plus all my other bills - I was on an amazing rate before though ... So today I am seeing about 5 flats with one EA and 2 with another - in the £375k-£475k range. The £375 is small but small garden and share of Freehold... and a lot cheaper - or do I buy a bigger place - the £475k one looks amazing  and more me - and I hope to not move for years. 

I will report back. Not sure I am mentally 100% ready I do know if I have a huge mortgage it will focus me as I always need big external goals in life - eg having to pay X a month for 20-odd years - will get me on fire - rent is less stressful though and I do have a big money cushion which helps me sleep - so i need to not put so much down  as a house deposit that  I dont have a decent EF... Borrowing £260-£330k means I will not easily hit my 10% OP the first year anyway so... Big grown up decisions happening over here at LWAP Mansion - who is an eternal child and good time girl  

I could not sleep last night - stressing about whether anyone will give me a mortgage ever, the ding on my credit due to the energy company going against the Ombudsman decision -  so I did email their complaints dept to start the process if i can get that removed or altered - I saw I emailed them last June on it and no response again - I have been dragging my feet as I still don't have a meter so it was agreed til I did I am only paying gas for the standing charge - which saved me a fortune last winter - so have been loathe to rattle that cage but this new rent going out every month ouch. So if they have not responded in 8 weeks I will open a new Ombusdsman complaint 
I dont have any debt at all - I did get a cc to at least show I can manage debt and I am always on time paying ... however if I buy then its the pressure of having to make a big payment a month - 

Frogs re house buying
Do tax returns early for April 23 - get to chartered acctant and filed 
Sort paye out
Get invoices paid up to date
Get this credit ding off
Talk to broker re this contract mortgage
get people in place eg solicitor/surveyors etc
learn process (FTB) 
declutter flat
Look in 2 areas - one north, one east london to get idea of market now and whats available 
Get a new contract  or extra client with more monthly work or even a short term FT job - to pay this sudden house cost increase

Hair
I posted this on Merlins but as I seem to also be giving beauty recommendations I will post on here 
I have a pot for my hairdresser -  as I go approx every 10 weeks. I am lucky as he is a lovely friend and get a reduction... cos otherwise ouch...... but my hair has no chemicals, bleach etc on it..
 K18 Hair mask is amazing - expensive - but last for ages and takes my hair to a whole new level, it makes it look glossy, smooth, fuller  and expensive.
I also gather that Olapl*x works similar wonders - and Mr ALD* does a bonding range of shampoos etc that my friend has switched to which are far more MSE which people may want to try - I am not buying any new toiletries at present as trying to get the amounts of things I need to move down ... I have a lot of bits. However the K18 is a definite have in the flat even if I only use for special going out times-

Food - I cooked one of the Hello Fr*** meals yesterday - a chicken thigh, black bean rice bowl thing with chipolata etc . As I only paid £10.99 as I had a voucher for first 3 meals free + £4.99 buy I added a 4th meal.. it works out at  £2.75 per meal - which is 2 portions - I do have a few extra codes for a free Hello frE if people want to dm me. So that makes a meal pretty cheap and fun to try a new recipe - I added loads of extra spinach into it to bulk it out and make extra healthy - was tasty but I could easily recreate it - you cook the chopped up chicken thighs and beans in some chicken stock, chipolta sauce and then add bbq sauce and spinach and grated cheese at the end.

NSD yesterday so 2/16

Minimalism - only did 5/9 things yesterday so need to pick that up

LadyWithAPlan

savingholmes said:

I think on the purchase part - consider future stamp duty if you are thinking of moving within 5 years. Not sure how much you get stamp duty free for as a FTB but definitely one to bear in mind. 

On the 2 bed - if having a lodger is a central part of your emergency fund - then the rooms need to be big enough to support that.

As people said to me - you need to work out what your must haves are and to a degree why - as part of working out what you are willing to compromise on - that then won't come back to bite you in the future.  

I get £425k FTB Stamp duty so thats super helpful.
The help to buy isa - have £11k in at moment and that gives me an extra  25% so £2750  or up to £3k once i get it to £12k ... but that only kicks in at flats under £450k - hence £450k is a sweet spot.

The must have is outdoor space (ideally garden)  and then either a 2nd bedroom OR share of freehold. I think 2nd bedroom edges over freehold but if i can get all 3 then its a winner - which is why i am looking quite far North London... I definitely will not be buying one of those new build £250 per month Service charge flats - I can accept £100 a month or so - so ex council  but I would rather then wait and save up more otherwise as I really don't think flat prices are going up much in the next 6 months and my new rent is now fixed til April or so I think.. I think I need to save the extra each month I will be spending on the mortgage and CT - so probably £2100/month  so I can feel the new costs in my budget.


I need it within 10 mins walk of a tube and also safe to walk home at night from tube or a local bus. 

I could have had a lodger in this flat now - and saved £500 a month -  but I like to live on my own so having a lodger would be emergencies only - this  flat is too small to consider even though I dont really use my second bedroom beyind a study and dumping ground - but you make a good point about size of rooms. plus my family are getting older so you never know when a second bedroom is useful

South_coast

What is the driver for wanting a share of the freehold? From what you've said it sounds like it might be to avoid a monthly service charge? Just be aware it doesn't necessarily work like that, my block of flats all technically have a share of the freehold, but we are all also individual lessees and have service charges and annual ground rent still to pay. Don't want you to rule places out without checking all the details. Also, check what's included in the charges before dismissing them, as you might get more than you think. I'd expect grounds maintenance, lift servicing, buildings insurance, cleaning etc etc, but mine also includes heating and hot water, so it sounds high but actually removes a whole bill to pay

Karmacat

Glad you mentioned ex-council, that's what my niece's is, and I think her service charge is very reasonable (my house is ex council, come to that, but there's no service charge, of course 😂

Listing in terms of wants/needs and competing against each other is really important too.  I always ignored the value of a quick walk home till I moved here, and its life-changing!  My previous house was really impressive as you walked in (a winding corridor rather than ground floor hall and first floor hall, very high-ceilinged) and a lovely area, but it was 25 mins walk from the train station, up a dirt track, which meant late at night it was more than half an hour, very unsafe to walk that track at night.  And only one train an hour on Sundays.

Merlin's_Beard

I'm not sure you're ever 100% mentally ready to buy, you just make the decision after doing all your careful consideration and jump off the cliff!

My trick with he!!ofresh/goust0/m!ndful chef is to cycle round them, take advantage of the offers, then cancel once the offer is up. They send you a new offer in about 4-6 months and the cycle starts again. I know the whole concept isn't particularly MSE but it's nice not to have  to think about it some weeks!

LadyWithAPlan

South_coast said:

What is the driver for wanting a share of the freehold? From what you've said it sounds like it might be to avoid a monthly service charge? Just be aware it doesn't necessarily work like that, my block of flats all technically have a share of the freehold, but we are all also individual lessees and have service charges and annual ground rent still to pay. Don't want you to rule places out without checking all the details. Also, check what's included in the charges before dismissing them, as you might get more than you think. I'd expect grounds maintenance, lift servicing, buildings insurance, cleaning etc etc, but mine also includes heating and hot water, so it sounds high but actually removes a whole bill to pay

Yes South coast - I am trying to limit any leasehold charges and also not have any control over the increases - had various friends in London had their service charge jacked up w/out any control from external cladding changes, new gardening fees, one has a swimming pool in her building that keeps leaking!!  etc etc. One  has been 'gifted' to the tune of a quarter of a million pounds additional  service charge (yes!)  for external works -they are going through legal stuff to try to resolve.
Thanks for the heads up on the freehold charges as well and whats included I will look

@Karmacat that old walk sounds like a nightmare - I am always dashing out and a 15 min plus walk is too much. I don't have a car at present either.

Merlin's_Beard said:

I'm not sure you're ever 100% mentally ready to buy, you just make the decision after doing all your careful consideration and jump off the cliff!

My trick with he!!ofresh/goust0/m!ndful chef is to cycle round them, take advantage of the offers, then cancel once the offer is up. They send you a new offer in about 4-6 months and the cycle starts again. I know the whole concept isn't particularly MSE but it's nice not to have  to think about it some weeks!

I think you are right on the mentally ready ... especially since I did my updated figures below. More sense it feels for me to rent right now and save more more.. hoping the flat looking will get me more focused..

Good idea on Hello F - I enjoyed yesterday but to be honest the meals do seem a bit samey- I love to cook and am a decent one so. It might be I had to avoid all ingredients with Gluten in .. however tonight I just made up a spicy veg bean mix rather than using my meals.
I may not even order my next lot of £10 off the next 4 weeks after ..


Flat hunting
I saw 6 flats today - a £425k and £400k maisonette both with gardens and one with a conservatory - but too far from tube - I will be walking home at night solo  so I need a short safe walk home - one with just a £350 pa leasehold charge  .. proving SC point - interesting but not quite.
I now know if it does not have proper outdoor space its not for me  - saw one with communal garden but no real place to have ones own herb garden and chairs except right outside on the steps.. £415k  but if I am buying I need something that will work for me and has outdoor space as otherwose it feels pointless moving ..

Two stand out flats
 - a just reduced  £375k 2 bed with a small garden and a bit dark  in parts as lower ground but newly done  -and definitely a place I could live in but I would be looking  to move again in 2 years or so. Pro is its cheaper than I expected  - if I did not have my current decent rent i would run into it but .....

- I have seen a fall in love with -  so me it hurts - completely fresh so nothing new needed -  2 bed on 2 floors flooded with light, skylights and a  terrace  with a great view v near  the tube . but £475k ouch
i love it - however at £475 its a bit high . I was thinking 450k was my max. 
I am checking on lease   - think EA said 90 odd years so  and about £1k .pa
So I am thinking ..

Looking at my figures  - my current new rent (exc all bills from utilities, bband,  council tax)  minus the interest I am gaining on my house deposit (minus taxes on that) is £500  - I can however claim most of this £500  if not all  - as use of home as office as I work from home and have a 2 bed -  to myself  - a study and I also work in lounge cos of light - so  effectively my rent is coming out very low as in ZERO or a £100 per month  max
No stress and a large EF. i can keep saving
However I am at the mercy of a landlord who might put prices up again in April  and on a short tenancy -
plus I keep buying things and no pressure to save more
Not yet got into the housing market... (I have promised myself by Oct 2024 latest)

Cost of buying £8.5k as
Stamp duty £2500 (ftb on 475k) 
Mortgage fee £1000
Survey/solicitors/moving £5k - guesstimate

Plus I will need a EF of say £6k minimum 
So £14.5k needed 

House deposit now £109k - increase to £125k - £16k more saved needed

So  if I get saved more £30.5k (£14.5k + 16k)  needed to get to  via my invoices paid after taxes...
House £475k - £125k deposit = £350k loan so 74% LTV
Rates  4.8% - 5 or 6 year fix

Monthly payment over 21 years £2,207                 - interest starts at £1400 per month and if no OP £ 202,743.20 Interest
Monthly payment over 26 - til 80  years £1.966      -interest starts at £1400 per month and if no OP £ 235,896.52

I might look at a part interest only, part repayment mortgage to get montly figure lower though I will be planning to get OPs as soon as possible.

Pros - 
- I could claim a larger amount   as use of home as office and get proper sound proofing in the spare room  so 
I would be in the property equity game so long term no rent issues.
I would be in a home that I think I could easily rent out if i wanted to travel and would also be happy to live there for a long time .... its a perfect London flat with outdoor space, views and I do love it - only one bath though.
A big mortgage would make me save and earn more, demand my invoices - I like this kind of pressure
The OP game could start
Seller completed elsewhere so wanting to sell so may take less
I dont need to buy anything - apart from  dishwasher maybe  and a bigger dining table if I wanted - I already have  everything here inc wardrobes, oven, fridge, w/machine etc
I coud have a pet!

Disad
Over £450k so lose my h2b isa £3k bonus
No BIG EF and would lose my interest on deposit
Could I get all my paperwork done in time - as they want to sell  and invoices paid up?
Stress of a £2k pm bill vs half that practically

I will think over night and suggested my mum comes down to see it ... as if not this week we cant view for 2 weeks ...
However a friend suggested I say to EA that if it comes down to the £450k/£460 mark - to let me know - apparently it sold for £480 a couple years ago ..  lots of stairs to the flat which is fine for me .. but not for some people.

Solution could be
- buy now this gorgeous  £475k and get stressed on paperwork and money but I do have to get focused on this  v important next life task
- or try to save as much as possible for another 6 months - however house prices I think will go up next spring/summer
- I plan to save the xtra as  if I had a mortgage per month of £2k + bills to see how I would cope.

£62.84/£200  + £2.70/74.51 bulk 
Spending - £1 sweets  (in treats pot) and £1.79 grocery

Minimalism game - need to find my 10 things - found about 4 so far

South_coast

LadyWithAPlan said:

Yes South coast - I am trying to limit any leasehold charges and also not have any control over the increases - had various friends in London had their service charge jacked up w/out any control from external cladding changes, new gardening fees, one has a swimming pool in her building that keeps leaking!!  etc etc. One  has been 'gifted' to the tune of a quarter of a million pounds additional  service charge (yes!)  for external works -they are going through legal stuff to try to resolve.

Yes, I can see that cladding and swimming pools could lead to some excessive charges, but they would be the outliers! Any increases should be reasonable and leaseholders can hold the managers to account on it if they think the charges are excessive, but you'd need to have a good relationship with your neighbours/some of you having the energy to pursue it or any challenge will just die a death. Personally, the benefit of never having to think about organising the grass cutting/insurance/what happens if the roof leaks outweighs any savings I might make by just having to contribute to costs on an as-and-when basis (which I can imagine there would be endless arguments about when residents are asked to actually cough up money they haven't bothered to set aside for repairs)

Also, I don't want to be too much of a party pooper, but I'd be wary of a flat with a 90-ish year lease if you think you might sell again in the next few years, as I think 80 years is the point at which a lease is considered to be "short" and mortgage companies (for your buyers) start getting twitchy. Could be something you could use as a bargaining chip when you're looking to negotiate the price though

DrCarrie

Amazing day and financial planning (as ever of course), a £500 rent increase certainly does focus the mind. 

I had a mortgage broker, that cost £450, the survey was just over £780, solicitors looking like nearly 2K, and searches are about £450 too apparently. 

Karmacat

LadyWithAPlan said:

Merlin's_Beard said:

I'm not sure you're ever 100% mentally ready to buy, you just make the decision after doing all your careful consideration and jump off the cliff!

Merlin's Beard has it right!  I know the sums are big, but it sounds affordable for you.

- I have seen a fall in love with -  so me it hurts - completely fresh so nothing new needed -  2 bed on 2 floors flooded with light, skylights and a  terrace  with a great view v near  the tube . but £475k ouch
i love it - however at £475 its a bit high . I was thinking 450k was my max. 
I am checking on lease   - think EA said 90 odd years so  and about £1k .pa
So I am thinking ..
I do think you're right to be thinking of living there long term, instead of just a couple of years.  Fees to move now are so high, it's not easy to make that back and make it worth the strain of moving.  As mentioned, there *might* be issues on the length of the lease, but that's solvable in the future.

Not yet got into the housing market... (I have promised myself by Oct 2024 latest)
That's a year - and you say you think the market will rise again before that, ie next summer.  Don't let your fear put you off, please.

I might look at a part interest only, part repayment mortgage to get montly figure lower though I will be planning to get OPs as soon as possible.
That's not a bad idea, not at all.

Pros - 
- I could claim a larger amount   as use of home as office and get proper sound proofing in the spare room  so 
I would be in the property equity game so long term no rent issues.
I would be in a home that I think I could easily rent out if i wanted to travel and would also be happy to live there for a long time .... its a perfect London flat with outdoor space, views and I do love it - only one bath though.
Is there space to instal a second?
A big mortgage would make me save and earn more, demand my invoices - I like this kind of pressure
The OP game could start
Seller completed elsewhere so wanting to sell so may take less
I dont need to buy anything - apart from  dishwasher maybe  and a bigger dining table if I wanted - I already have  everything here inc wardrobes, oven, fridge, w/machine etc
I coud have a pet!

Disad
Over £450k so lose my h2b isa £3k bonus
No BIG EF and would lose my interest on deposit
Could I get all my paperwork done in time - as they want to sell  and invoices paid up?
Stress of a £2k pm bill vs half that practically
I know this sounds an insane thing to say, but in terms of £475k, £3k isn't really very much - I can't work out the percentage, I'm terrible at that.  I'll stick with "Not Really Very Much".

I will think over night and suggested my mum comes down to see it ... as if not this week we cant view for 2 weeks ...
However a friend suggested I say to EA that if it comes down to the £450k/£460 mark - to let me know - apparently it sold for £480 a couple years ago ..  lots of stairs to the flat which is fine for me .. but not for some people.
I'd suggest the more active path: getting your mum to see it and *offering* what you decide to offer.

Solution could be
- buy now this gorgeous  £475k and get stressed on paperwork and money but I do have to get focused on this  v important next life task
- or try to save as much as possible for another 6 months - however house prices I think will go up next spring/summer
- I plan to save the xtra as  if I had a mortgage per month of £2k + bills to see how I would cope.

There are other beautiful flats and apartments out there, of course, but you have particular areas and needs and wants - it could be a while before another one comes up.  Lack of a second bathroom isn't a bar: even I, in this little ex-council house, had a nice modern toilet installed, the very first thing I did, because I knew I'd be having clients in the house who'd need to use the toilet.

Best of luck, whatever you decide to do!