Never mind the house prices, I'm saving a deposit.

WTF?_2

neverdespairgirl wrote: »

OH and I each earn well north of £30k. We have a car between us, a 2 door R reg Fiat. No need to shovel money down the drain!

It all depends on how much you value a car - some people do really like to have a nice one and are willing to pay.

However, judging from the sheer amount of new and hi-spec cars out there (even the regular new cars these days seem to be top-of-the-line versions) I'd venture that many are spending - and most likely borrowing - a lot more than they need to.

Personally, I tool around in a 12 year old 3-door small car. Does the job for me and the low running costs (paid off in full many years ago, cost about 250 quid in maintenance/servicing for the whole of last year, averages between 50-55 mpg of diesel, can run off biodiesel at 90p/litre) mean I have lots of extra savings every month.

Although I have to admit, when it finally comes time to get rid of it because of increasing costs I'll probably spend about 10k+ on a replacement (funded from my savings of course, no loans thank you). Won't be new though, that's a license to throw money down the drain. Will be 2-3 years old in immaculate condition and top-specced.

mr.broderick

!!!!!!? wrote: »

It all depends on how much you value a car - some people do really like to have a nice one and are willing to pay.

However, judging from the sheer amount of new and hi-spec cars out there (even the regular new cars these days seem to be top-of-the-line versions) I'd venture that many are spending - and most likely borrowing - a lot more than they need to.

Personally, I tool around in a 12 year old 3-door small car. Does the job for me and the low running costs (paid off in full many years ago, cost about 250 quid in maintenance/servicing for the whole of last year, averages between 50-55 mpg of diesel, can run off biodiesel at 90p/litre) mean I have lots of extra savings every month.

Although I have to admit, when it finally comes time to get rid of it because of increasing costs I'll probably spend about 10k+ on a replacement (funded from my savings of course, no loans thank you). Won't be new though, that's a license to throw money down the drain. Will be 2-3 years old in immaculate condition and top-specced.

What you got !!!!!! a robin reliant?
Kinda reflects your personality, throw a football in the back of it rodney and call it a whistle..

neverdespairgirl

!!!!!!? wrote: »

It all depends on how much you value a car - some people do really like to have a nice one and are willing to pay.

Absolutely, people choose to spend their cash on different things - we spend a lot on holidays and travel, our choice.

But what I think is a bit odd is the earn X, therefore spend Y on a car.

carpy

i'm going to be 32 this year:eek: :eek: and still live at home:o

i earn a very modest salary of under £20k but have minimal outgoings (basically just board and petrol:mad: ..........which on what i earn is enough!!!)

after 14 years of this i've built up quite a nice nest egg (probably equivalent to about 3.5-4 times my salary:beer: )

i've decided i probably need to move out before much longer and i'm hoping to take advantage of a big dip in the property market. hopefully, with a bit of luck, try and buy and the right time when it's 'bottomed' out.

i know this will be my only chance of getting a decent foot on the ladder without crippling myself, as i don't imagine my earnings will ever increase substantially. hopefully then i'll have a modest mortgage which i can comfortably be able to afford on my salary:T

regarding a deposit, is it a simple rule of putting as much down as you can? what is the maximum percentage of your savings should you use?

thanks for any advice and please excuse my ignorance in any of the above.:o

kunekune

Another month, more money in the bank, a house a little closer. The only thing is, when I look at the houses that are 220K (ie, the ones we could afford with a 10-20% price drop) they just don't grab me at all. The local style for semis has a boxroom, not a third bedroom - the smallest I have spotted is 5ft x 6ft, and it was called a bedroom in the blurb!!! So, the goal has changed a little: perhaps a 20% deposit on a cheaper house (not necessarily smaller but not in such a 'nice' area), followed by massive overpaying, and then once the children are both teenagers, if we want something fancier, we can do it without increasing the mortgage. Am I right that we will pay less in the end, even with a move, by having two smaller mortgages in succession than one big one?

WTF?_2

kunekune wrote: »

Another month, more money in the bank, a house a little closer. The only thing is, when I look at the houses that are 220K (ie, the ones we could afford with a 10-20% price drop) they just don't grab me at all. The local style for semis has a boxroom, not a third bedroom - the smallest I have spotted is 5ft x 6ft, and it was called a bedroom in the blurb!!! So, the goal has changed a little: perhaps a 20% deposit on a cheaper house (not necessarily smaller but not in such a 'nice' area), followed by massive overpaying, and then once the children are both teenagers, if we want something fancier, we can do it without increasing the mortgage. Am I right that we will pay less in the end, even with a move, by having two smaller mortgages in succession than one big one?

It's nearly always cheaper to just buy the 'good' house that you really want in the first place - usually not an option though due to financial constraints and crazily high house prices.

In a rising market it makes sense to get a foot on the ladder as you can benefit from equity increase in your home to put down as a good deposit on your second property.

In a falling market, hold off buying for as long as possible (ie. Until you think the market has bottomed) so you pay the lowest price. Save like billy-o to get a good deposit. This means that you get a really affordable 'first' house and can get max benefit from any equity increases when the market turns. You might even be able to skip the 'starter' home and get the 'good' house that you really want straight off the bat if you manage your finances right and there's a large enough drop in prices. This would be the best solution if you can afford it. Don't stretch finances to the limit though, especially if the recession looks like it will be a long one.

MrSafeGaz

carpy wrote: »

regarding a deposit, is it a simple rule of putting as much down as you can? what is the maximum percentage of your savings should you use?

I have never bought a house so take this as you will but I would factor the following into account: -

• To a point, the more you put down as a deposit, the lower the LTV (Loan To house Value ratio) will be therefore it gives you access to products with better rates.
• The more deposit you put down, the more likely your application will be accepted by the mortgage company.
• How much money would you need to put aside for any furnishing and other costs after moving into the house.
• How much money would you need to put aside in terms of any emergency funding you would potentially need in the future.
• Can you put some of your savings in a savings account (ISA etc.) which would yield a better AER than your mortgage APR, therefore being more profitable for you.
• Would you just prefer to knock as much off the mortgage right away just because psycologically it would just feel good to see a lower balance.

Just a few things to consider

kunekune

!!!!!!, should explain this isn't a starter home situation (and our total savings aren't £5000, either!). We sold in another country 18 months ago, so we're a bit like the STRs, except that we never benefitted from the crazy uk hpi. Holding off is exactly what we're doing, but we can't hold off for too long because of the need to have stable housing by the time son starts secondary school.

Nightmare scenario: our LL decides to sell up, we have to move in a hurry, just before the annual admissions round, can't get anything in the right zone ... son has little choice but to go to a school which is ranked by OFSTED as failing (90% a different ethnicity from ours - and, less importantly, dominated by a religious group we're uncomfortable with, being atheists). Um, that's true of most of the schools around here, so we have to be very careful (no insult meant, but he has enough problems without being in a failing school). Hence the mad saving. And, in a town with, normally, only 1 or 2 three or more bed houses available to rent at any time, that isn't so unlikely a scenario.

Also we're not young and can't take too much of a gamble, if we get it wrong and prices go up (unlikely but we've never been lucky before), then we'll never own a house again - a disaster in 19 years when retirement hits.

I'm on this thread because saving gives us a better choice (and proof to ourselves of affordability). But we have fewer choices than younger people, with no children (or younger children) and with job mobility. The choice we will have to make is as much about what kind of house/how expensive a house as about when we jump. Obviously, the less we spend the better - I'd like to buy more years on my pension (USS, final salary still). But we can't compromise too much on size because the children aren't babies, and you can't put a teenager in a boxroom (or at least, I wouldn't choose to ... and it's not as though we can't afford the bigger houses if we wanted to).

beerhunter

born_again_saver wrote: »

We can all boggle at the house prices of today. How do you buy your own, albeit modest first place as a young, single person earning less than 20k? Or as a couple earning £30-£40k between you? "Priced out" first time buyers young and old, what are we to do?

Save, save, save.

It's the only thing that makes sense to me right now. It's what our parents did. It's what a lot of people on here and elsewhere are recommending, even people who might have said "buy whatever it costs" not so long ago. The mortgage lenders are changing their rules, once again they'll want a sensible deposit before they'll give you a mortgage with sensible interest rates.

I'm in my late twenties and on below £20k. I'm renting a room in a shared house - and I'm single. I'm going to save up a deposit of £20,000 to buy myself my first home, plus costs, with a view to buying in late 2011. I've already got nearly £4,200 to get me started.

My savings target is now in my signature. It will take me a few years of hard saving, and there's no guarantee I'll be able to afford anything in 2011 either, but you have to aim for something.

That is a good view to take and I'm doing the same... save save save!

I'd like to add bit of advice, more about mindset.. and something I wish I realised a longtime ago as a FTBer.

Treat your rent as interest payments on your "future mortgage".

Sounds complicated, but it isn't really.

It simpley means if your renting and not saving your doing yourself a big injustice for your future.

Cheers
BH

born_again_saver

beerhunter wrote: »

That is a good view to take and I'm doing the same... save save save!

I'd like to add bit of advice, more about mindset.. and something I wish I realised a longtime ago as a FTBer.

Treat your rent as interest payments on your "future mortgage".

Sounds complicated, but it isn't really.

It simpley means if your renting and not saving your doing yourself a big injustice for your future.

Cheers
BH

Hi Beerhunter, I'd never thought of rent payments in that way but it's a helpful way to think about it. Just as rent may be "dead money", mortgage interest is kind of the same, it's a cost you have to bear while repaying the all-important capital, you don't ever get it back so in that respect it's not so different from rent. At £220 pcm I think the rent or "interest on my future mortgage" is actually fairly competitive and so it leaves me with enough spare cash to save up to something like a third of my take-home pay each month.

Thanks to the new well-wishers on this thread, and hi to all the other deposit savers out there. I hope your savings are coming along nicely, let us know how you're getting on?

This month is not looking so great for me so far, as I've been away for a few days over the Easter period and spent a little more than I'd budgeted/saved for, although of course it was still well within my means (before I get accused of taking a holiday I didn't deserve!) Still, I put away £300 last month, and have some annual interest to look forward to from my ISA and a couple of savings accounts on 31st March. Onwards and upwards my savings will go!