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

drrobert

Well done to the OP! Can I reassure you that you are doing exactly the right thing. House prices are falling, and will do so for several years. Your timescale of buying in 2011 is very realistic and might enable you to buy at the bottom of the market so you can enjoy the next house price boom. Prices fell for six consecutive years in the 1990-1995 house price crash - this crash might be a little faster and steeper due to the effect of the international credit crunch and a rapid unwinding of 'buy-to-let'.

One of the reasons that house prices will be so much lower in a few years' time is that credit will be much more difficult to obtain. It simply won't be possible to buy unless you have a secure job, a large deposit and are asking for a realistic salary multiple (3 - 3.5x). Your savings plan will position you well to take advantage of this!

I'd encourage you to invest your savings wisely. Choose large, stable financial institutions and use tax-free savings: make sure you use up your annual cash ISA allowance, and consider the National Savings and Investments Tax-Free Inflation-Linked Bonds if your savings exceed your ISA allowance in any given year.

Good luck!

born_again_saver

Drrobert - thanks for the support for my plans and the savings advice. My current savings are in a fixed rate cash ISA with the Nationwide (still waiting to see the best deals for this coming April), and I'll be maxing out my cash ISAs in the next few tax years too. I'd not yet considered the index linked bonds from NS&I so will look into those.

Ivrytwr3 - Look at my first post and you'll see my salary range and money saved so far which are both fairly low. If I did qualify to buy anything now it would be the dregs of the market (e.g. tiny bedsit in bad area) - so I'd rather rent for now and enjoy the far superior living conditions. If I still cannot afford to buy in 2011 my situation will be no different to now, except I'll have a nice pot of money which I can go around the world with for a few years if I am cheesed off with it all by then

Neas, Lavendyr and Ivana B Rich - congrats on your deposit savings so far, good amounts saved already and I hope we'll all be in good positions to buy within the next couple of years. It'd be great if we could support each other with our deposit quests via this thread, and keep up to date on our savings. Anyone else want to join us?

Neas - it's a good idea about using a percentage as a target rather than amounts saved, as people will be saving for different amounts which they may not want to disclose. Just worked mine out and it's 20.86% :beer: still a long way to go, but it's more than I thought I had, and I feel more optimistic already. I'm going to alter my signature to include the percentage now, feel free to join me in this

neverdespairgirl

We are also waiting to buy (aged 30, with a 2 year old son). We are paying £1k a month in rent, and saving a good chunk as well. The difference between the rent we are paying and hte mortgage we'd have to pay on a similar place means we can save lots AND have the odd nice holiday.

Running_Horse

At the risk of sounding harsh, if prices are too high, you can either save up, or not save up. While I applaud the OP, by his/her own admission, it's nothing unusual or strange. Or at least wasn't until Northern Rock changed the rules.

Best of luck to you all. I was in the same position many years ago, and have worked my way up to a nice 3 bed house in the country. Not sure when people started thinking they had a right to own a house without saving first.

kunekune

It is a tricky balancing act, isn't it: if we buy now, we might get a higher LTV without massive penalties, but if we wait and save up, the amount of deposit we need might go up so that even 10% isn't enough!

But, for the time being, I'm in the deposit saving stage (it helps that we haven't decided exactly where we want to live, even with the help of a nifty spreadsheet designed by OH). The initial goal is 10% of a house at the lower end of our range: I won't look at anything 'in the flesh' until we have that. But if it takes longer to find something, then our deposit will continue rising, and so will our maximum price for a while (the problem is deposit, not our maximum loan).

There's another aspect to this that might help us all out when the credit crunch arrives; if the sum of our regular savings plus our rent exceeds the likely mortgage payments for months on end, we have also established affordability. What you "can" borrow and what it is wise to borrow are not the same thing.

selectcase

The guy who bought our house has saved for 8 years and had £70,000 in savings, he is 28. He has a long term partner but opted to live with his parents to save -basically saving 10 grand a year. he had always wanted to live in this area and have a large garden in the country - I dropped 10% and the deal was struck. Incidently he still drives about in and old 1988 car and has a cheap pay as you go mobile. So many of the students I teach moan about not being able to afford anything but drive around in cars under 10 years old, with contract mobile phones and go out every weekend.

Cemetery

I am in a fairly similar position, Single bloke, saving like mad & have been for the past few years with an eye toward never over extending myself madly on a mortgage. Was just getting to my original deposit target & then the market started getting shaky so have now sat back & am just growing the deposit. Going to sit on it for another year I think (which is a pain as I am back living with the parents after a period of renting) and see what things are like then...if things are still hovering then I will need to make a decision about trying to hop onto the bottom rung, if things are starting to take a major dip then I can hold off & be ready to hop on a few rungs up.

My wage isn't bad (I think) and looking at my pay slips I have earnt about £5k gross more through the silly amounts of overtime I have been doing (when I get my last pay cheque this year). I aimed to save about 10k this year & have done that & a bit more, hoping for a pay rise soon via a promotion so should be able to continue that rate hopefully without so much overtime.

Deposit savers of the world unite :beer:

izzybusy23

Lavendyr wrote: »

Absolutely agree with you, OP. We too are saving like mad for our deposit while watching what house prices are doing. By the time we are ready to buy, we hope to have a very substantial amount of money put aside. Between us we save at least a third of our take-home salary every month which adds up to quite a considerable amount.

I would willingly join you in a deposit-saving thread

Me too!!

In this present climate thats all any would be FTB can do is save save save. I am not able to save too much this year, but next year my daughter starts school so my savings will dramatically increase by saving on nursery fee's each month. I really hope to have £30k saved by end of 2011.

I don't agree with the poster who says 'Id buy now and start paying off the mortgage'.. a bit of an off the cuff remark to make considering the present climate. That remark may well cost somebody negative equity and be further behind than if they saved for the next 4 years.

izzybusy23

Running_Horse wrote: »

Not sure when people started thinking they had a right to own a house without saving first.

I am 36 and have never had the inclination to buy a house without saving for a deposit first. I've owned 3 houses in my lifetime (don't ask, bad choice of men was my downfall, lol) and each time a deposit was saved and put down. I think the lowest deposit ever put down was 5%.

I wouldn't dream of going for a 100% or more mortgage. I am aiming to have a 30% deposit saved by 2011, thats all according that house prices go down and play to my tune!!

The young people of today seriously want everything handed to them on a plate without any hard work. I get downhearted about the state of the housing market, but I can't change things, so I just get on my life and chip away at the debts knowing that in 4 years time I will be in a stronger position, financially, not age wise mind..

Ivrytwr3

Hopefully when the prices drop

Exactly, hopefully. What if they don't and they continue to rise? You will be ven more priced out of the market. I hope they do come down and i can afford a nice family home. But they way things have been i see a small rise, and certainly not the crash some people are forecasting.