House buying

krustylouise · 14 May 2018 at 8:58PM

Hi all,

Its been a long long time since I've posted on here and life has been hectic! My husband and I are hoping to, in the near future, but our own home.

We are both working full time and earning an okay income. I am self employed and husband is employed.

We stupidly started looking at houses with a view of keeping our eyes on the market, and have now started feeling impatient and wanting our own house NOW. We are looking at being able to get a mortgage of approximately £170,000. We currently save but we only have £2000. I have a help to buy ISA and hubby has a share save scheme through his work. We save £450 per month but have scope to save more.

We have a car on finance to pay off, I have a credit card with £1800, a sofa on 0% finance to pay off. Our debt to available credit ratio is approximately 40%.

We rent and our rent is very low. We have two children and don't pay childcare.

We have received a lot of advice, some good and some very bad and so thought I would come here to keep us on the straight and narrow!

We both keep a close eye on our credit scores which seem to be doing well and have slowly increased.

Any advice and helo if very much appreciated.

Thanks in advance.

steampowered · 14 May 2018 at 9:14PM

It is great that you have a goal. However it sounds like you need to save much more to have a viable deposit.

The best advice I can give you is to stop buying things on finance.

If you buy something on finance, you are usually both overpaying for the basic product and paying through the nose for the finance.

If you need to use finance to buy a car or a sofa - you can't afford it.

Save for it instead. That way the money you are spending will seem much more 'real' than a monthly payment, so you'll think more carefully before spending.

csgohan4 · 14 May 2018 at 9:29PM

Stop looking for houses as this will give you false hope, you need to hammer your own debt and start to save, 2000 is not enough to even cover the stamp duty and solicitor costs e.t.c.

Try the debt free wannabee forum, patience is key here

krustylouise · 14 May 2018 at 9:31PM

I can see exactly what you're saying. The car we bought was a 7 seater, I needed it for the job I do and having it has allowed me to earn more money.

The sofa - totally unnecessary buy but we have it and are paying it off now.

Credit card has been transferred to a lower APR one and I'm paying it off monthly.

Realistically what deposit should we be looking at? Would 5% be enough? Obviously I know the bigger the better in terms of deposit but what is the general consensus?
Any advice is greatly appreciated - thank you.

hazyjo · 14 May 2018 at 9:55PM

So you've only really been saving 2-3 months, or do you keep dipping into your savings?

Some things week can want and buy immediately (as you've experienced!) but you really will have to dig deep for a lot more patience when it comes to buying a house.

Clear the debt before saving a penny. Counterproductive otherwise. You're paying to borrow what you already have!

Cakeguts · 14 May 2018 at 10:42PM

You don't have £2000 in savings. You only have £200. That is the differecnce between the debt on your credit card and your savings. The debt almost wipes out all of your savings. Debt cancels out savings.

To buy a house worth about £170k you are going to need a 10% deposit plus around £2k in money for buying costs so you should probably aim to save around £20k. However you will never do this if you keep buying on credit or taking out car finance.

Out of that £20,000 so far you have managed to save about £200. If you want to buy a house you need to do some serious saving.

There is no point in looking at houses to buy now. Have you really only been saving for 4 months? If so this is much too soon to be looking at houses. To be buying a house now you needed to have started saving several years ago.

krustylouise · 15 May 2018 at 10:26AM

csgohan4 wrote: »

Stop looking for houses as this will give you false hope, you need to hammer your own debt and start to save, 2000 is not enough to even cover the stamp duty and solicitor costs e.t.c.

Try the debt free wannabee forum, patience is key here

You're absolutely right. I think we have been naive in our quest. We didn't even consider stamp duty.

krustylouise · 15 May 2018 at 10:28AM

hazyjo wrote: »

So you've only really been saving 2-3 months, or do you keep dipping into your savings?

Some things week can want and buy immediately (as you've experienced!) but you really will have to dig deep for a lot more patience when it comes to buying a house.

Clear the debt before saving a penny. Counterproductive otherwise. You're paying to borrow what you already have!

Yes we only started saying 4 months ago. My husband had a lump sum come out of his wages every month, this will be saved over a period of 3 years and at the end of the 3 years we have the option to get it all out or put it in shares and hopefully see growth. The amount is guaranteed so we can't lose money we have put in. I also have a help to buy isa that I transfer £200pm to. I also have money that I pay off the credit card with.

krustylouise · 15 May 2018 at 10:29AM

Cakeguts wrote: »

You don't have £2000 in savings. You only have £200. That is the differecnce between the debt on your credit card and your savings. The debt almost wipes out all of your savings. Debt cancels out savings.

To buy a house worth about £170k you are going to need a 10% deposit plus around £2k in money for buying costs so you should probably aim to save around £20k. However you will never do this if you keep buying on credit or taking out car finance.

Out of that £20,000 so far you have managed to save about £200. If you want to buy a house you need to do some serious saving.

There is no point in looking at houses to buy now. Have you really only been saving for 4 months? If so this is much too soon to be looking at houses. To be buying a house now you needed to have started saving several years ago.

Wow really? Several years? That's a real bump back down to reality!

Cakeguts · 15 May 2018 at 10:58AM

krustylouise wrote: »

Wow really? Several years? That's a real bump back down to reality!

Well you can work it out. Realistically to get a mortgage you are going to need to have 10% of the purchase price saved in the bank so that for a £170,000 house is £17,000. So you need £17,000 in savings just for the deposit. Then on top of that you also have to have saved to pay for the stamp duty, solicitors fees, removal costs, and fees for surveys so you can work out how much that would be. That has to be saved before you start to look at houses. So you can work out how long that will take at £450 per month say £5000 a year roughly. At that rate you are looking at 4 years. The only way you can make it quicker is to save more.

At the rate you are saving at the moment you will be ready to buy in about 4 years time if you don't buy anything else on credit and if you don't buy another car on finance.

There is no point in looking at houses now.

hazyjo · 15 May 2018 at 11:01AM

Cakeguts wrote: »

At the rate you are saving at the moment you will be ready to buy in about 4 years time if you don't buy anything else on credit and if you don't buy another car on finance.

Presuming prices stay roughly the same (or drop!) or in line with your pay rises, etc. My last house nearly doubled in price in 3-4 years.

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