Realistically, what are our options?

Sarahs2020

Hiya,

Just wondering if anyone has been in this situation, or any advice..

We are stuck in the cycle of renting.

Husband, nearly 49, and earns round £90,000. He’s on a good wage.

I’am 42, self employed  and business struggling. 

We have 4 kids. (17, 14, 12 & 10).

He used to own our 2 bedroom house, but we outgrew it, the mortgage company went under, his credit rating was bad, and we couldn’t remortgage. Sold the house in 2014, lost money, paid his dad back the deposit they lent us and we were left with hardly nothing to show. We have rented ever since, never got back on the property ladder (and it eats him up thinking about it). 

His credit rating now loads better, he pays £1550 a month to rent a detached 4 bedroom house and never missed a payment or been late in the 10 years of renting.

We don't have enough money spare to save for a deposit, he earns too much to qualify for the Home Share part buy/part rent scheme as that appears to be capped at 80K, (which is such a shame as I think that option would really work)  and we just feel stuck, and time is running out.

We can afford to rent the size house we need, but can’t afford to buy. Is this just something we need to accept? 

Emmia

If you're self employed and business is struggling, is it time to find paid employment so that you would have reliable income to contribute to a mortgage / deposit savings?

Are there areas in the household budget that could be trimmed to help get to a deposit? Mobile phone contracts, Sky etc. I know this sounds like a
"Millennials should cut out avocado toast to get on the property ladder..." comment, but savings should be able to be made on a £90k salary + your income.

How much are you putting into your savings account each month at the moment?

It's hard, but to get back on the property ladder, you're probably going to need to make difficult decisions about what you're spending your money on as a household.

Edit: when are you both planning to retire and what's your pension provision like? Whether you carry on renting or are still paying off the mortgage you'll need a chunk of your income to pay your housing costs then 

lika_86

You can't afford to buy right now. As to whether you could get on the ladder, the biggest issues seem to be that you have no money to save for a deposit and that even if you were saving each month, as time goes on, the length of mortgage you'd be able to get based on your ages also reduces, meaning it would be much more expensive. You also have kids who will still be at home for a while so it's hard to compromise in size.

I'd say that right now your biggest concern is what happens when your husband retires. The kids will have left home, so you're presumably then free to downsize, but could you then afford to rent a house based on his pension and anything you make? If the answer is no or that you might struggle then I would prioritise lifestyle changes asap. As the previous poster said, it sounds like you may need to find steady employment.

If it was me, my goal would be to get into a position that when your husband and/or you are both in retirement that you can buy outright. That gives you a good 20 years to get yourself into a position to do so. 

Emmia

OP - in terms of finding areas where costs could be reduced to grow your savings, you could look at the Statement of Affairs (SOA) usually used when people are trying to find ways of reducing costs to get out of debt.

https://www.lemonfool.co.uk/financecalculators/soa.php

You can either pop it up (format for MSE) perhaps in a new thread on the savings boards, or go to any one of numerous debt free threads and compare your spending, with others to identify the savings yourself.

When you fill it out, be honest, and go through bank statements etc. to work out your real costs... Not what you think you spend which can be quite different.

There are also strategies you can employ to help you save, for example put money in a savings account not directly linked to your current account at the start of each month.

Look for something like Chip which uses open banking and AI to put money away in small blobs regularly (and they're paying a pretty good rate of return at the moment). I use Chip to boost my monthly savings a little, I  probably put an extra £100 - £150 a month aside as it restrains my spending by tricking me into thinking I have less available in my current account!

I also have a Moneybox ISA which I save into weekly. Little and often works well for me savings wise.

grumbler

To spend less, to earn more and to budget is the only option.

£90K/12=£7.5K

Every month you have £6K left after the rent is paid. Where does all this money go to?

kimwp

Hi there, I second the advice about an SOA. Sorry to add to the expense list, but are you expecting your kids to go to university - if so, have you considered those expenses? 

Bigphil1474

£90k gross is about £5k net per month or less depending on pension payments. Maybe closer to £4.5k, which leaves £3k per month after rent. That's not a lot for a family of 6 - I get about £2.3k a month after tax (no mortgage) and we manage to save about £500 a month most months, but there's only 2 of us. 

mexican_dave

lika_86 said:

....If it was me, my goal would be to get into a position that when your husband and/or you are both in retirement that you can buy outright. That gives you a good 20 years to get yourself into a position to do so. 

Don't understand this advice, if it means putting-off buying a house until you can buy outright, then this is a risky strategy. House prices are shown to go up in the medium to long term, prices do wobble a bit in the short term.
This strategy carries the risk of leaving you in renting forever!
Other advice given is good: increase your income (go employed); increase savings; cut-out unnecessary expenditure; etc.
Other more dramatic options are: try to buy in a cheaper part of the country (yes it's easy to say!) and/or buy a property to "do up". If this property is unfit to live in then you may need to put a static caravan (second hand, maybe over 15 years old) in the garden to live in - kids will have to share rooms. Your life will be simpler, but your kids will learn a lot about life & money.

Emmia

mexican_dave said:

lika_86 said:

....If it was me, my goal would be to get into a position that when your husband and/or you are both in retirement that you can buy outright. That gives you a good 20 years to get yourself into a position to do so. 

Don't understand this advice, if it means putting-off buying a house until you can buy outright, then this is a risky strategy. House prices are shown to go up in the medium to long term, prices do wobble a bit in the short term.
This strategy carries the risk of leaving you in renting forever!
Other advice given is good: increase your income (go employed); increase savings; cut-out unnecessary expenditure; etc.
Other more dramatic options are: try to buy in a cheaper part of the country (yes it's easy to say!) and/or buy a property to "do up". If this property is unfit to live in then you may need to put a static caravan (second hand, maybe over 15 years old) in the garden to live in - kids will have to share rooms. Your life will be simpler, but your kids will learn a lot about life & money.

I have to agree, house prices have risen faster than you can save,  get a deposit together and buy.

lika_86

mexican_dave said:

lika_86 said:

....If it was me, my goal would be to get into a position that when your husband and/or you are both in retirement that you can buy outright. That gives you a good 20 years to get yourself into a position to do so. 

Don't understand this advice, if it means putting-off buying a house until you can buy outright, then this is a risky strategy. House prices are shown to go up in the medium to long term, prices do wobble a bit in the short term.
This strategy carries the risk of leaving you in renting forever!
Other advice given is good: increase your income (go employed); increase savings; cut-out unnecessary expenditure; etc.
Other more dramatic options are: try to buy in a cheaper part of the country (yes it's easy to say!) and/or buy a property to "do up". If this property is unfit to live in then you may need to put a static caravan (second hand, maybe over 15 years old) in the garden to live in - kids will have to share rooms. Your life will be simpler, but your kids will learn a lot about life & money.

It's a strategy that takes into account the reality that at present, they are not in a position to buy. A deposit plus fees is thousands of pounds and currently as a family of six they are not able to save anything. A deposit will take some time to get together and major lifestyle changes, all while a potential mortgage gets more expensive as their maximum mortgage term gets shorter. My suggestion reflected what is more likely to be their reality, that they will be more likely to be able to get on the ladder when they are a smaller family and that they should aim to do so and not have a mortgage before retirement.

Sea_Shell

What is the rental market like in your area?    Are other properties available?

Is £1550 a "good deal" for a 4 bed-detached, compared to others currently available, or could you save by down-sizing to a 3 bed, to help you save more.    I appreciate if you've been there a while you might be on the same rent as a new-to-the-rental-market 3 bed.

What sex/age are the 4 children...could they go back to sharing?   eg 2 and 2 would be easier than 3 and 1

I agree that an SOA should be your starting point, to check you're not leaking money somewhere, that could go towards a deposit.   Some hard choices may need to be made though.

What are the comparable cost to buy in your area for a similar property?   3 or 4 bed?