So it would appear I need to raise Ј90,000...

A question about : So it would appear I need to raise Ј90,000...

Hi All,

Long term lurker (years) but first time of posting...

I have decided that due to having recently had a pay rise of around Ј5000pa gross, the time has come to start thinking seriously about buying a house

I am currently renting near work at a total cost of just under Ј900 per month including all house related bills but have given in to my mothers constant nagging to come home and save up when my lease ends in December.

I am about to turn 26, financially single, with a good income of Ј1830 per month net, no savings but also no debt. I will be paying Ј300 per month rent to my mother all inclusive. My brother who is younger than me also pays Ј300 per month to her so between the two of us we are paying all of her household costs as she has no mortgage, so I don't feel like I'm taking advantage.

My ideal property would be a 2 bedroom house but given the expensive area I suspect it is more realistic to look at a 2 bedroom flat with a long lease. This would currently cost around Ј185,000 (although worryingly I keep hearing about 20% increase in the next 2 years)

I have arrived at a savings target of Ј83,580.00 from the following:

Lifted from money advice service website:
Mortgage Setup Fee - Ј250.00
Mortgage Arrangement Fee - Ј2,000.00
Valuation Fee - Ј1,500.00
Mortgage Account Fee - Ј300.00
Higher Lending Charge (1.5%) - Ј1,850.00
Searches - Ј300.00
Legal Costs - Ј1,000.00
Stamp Duty 1% - Ј 1,850.00 (need to check info on ftb relief)
Survey - Ј500.00
Moving Costs - Ј200.00 (van + beer for helpers)
Telegraphic transfer fee - Ј50.00
Contingency - Ј1,000.00
(Section total - Ј 9,100.00)

Deposit 30% - Ј55,500.00
6 month pay in bank - Ј10,980.00
Replace Car currently 7 years old - Ј8,000.00

I am surprised by the amount as I find it hard to believe even a couple could raise that much money and be buying in there mid twenties so will need to see if I can reduce the figure.

I fear the first thing people will say is you don't need an Ј8,000 car but I feel if I buy a house I won't be able to afford a car for a long time after so need to buy something that will last.

My cash flow spreadsheet indicates saving Ј900 a month so currently looking like 92 months. I would really like it if I wasn't still living with my mother and saving for my first home at 33 so I suppose I'm looking for advice on whether the amounts are realistic and if there are ways to bring that target down and increase the rate at which I can save.

Best answers:

• Have I posted this in the wrong place?
• I wouldn't know if you have posted in the wrong place, but being a 25-year-old married man; I fully agree with you!
  It is now very expensive to find any sort of property outside of renting. My wife and I pay Ј400pcm for a one bedroom place in the town centre. We can't really afford to move because we have car debts (my single-days mistakes) and after bills each month, we are luck to have anything that even slightly resembles savings.
  The only thing that I have ever managed to conceive as being realistic would be to buy a very cheap and run-down house. Then, from there you spend a little bit of extra cash renovating. But, as will all things, unless you know what you're doing you can run way over budget.
  Realistically, all I would recommend, is sitting down with your elders and people you trust and see what they would recommend. On top of that, I would also arrange an appointment with your bank and have a look at your financial portfolio.
• I think you've way, way, way overestimated things there!
  There is zero chance your costs will be anything like that. As an example, I'm just sorting my mortgage out on a property costing Ј107,000.
  My costs are basically:
  Fee free mortgage (completely fee free)
  Survey (Ј300)
  Solicitors legal costs (Ј495)
  Searches and other things (Ј450)
  Apart from that, I'm putting down a 25% deposit (Next drop below that is 40% deposit...) to get a crazy low 2.5% rate on a two year fix (Halifax).
  Obviously you would have on top of that, stamp duty and moving fees.
  The car is a personal choice I guess, as is wanting six months in the bank (you could just get income protection for a year if you wanted peace of mind?).
  Yes, the amount our generation need to save is crazy, but don't set yourself goals too far out of reach!
• Thanks guys, and apologies its taken so long to reply.
  Interesting to hear that the interest rate doesn't change much between 25% and 40% deposits.
  Brings the deposit amount down to Ј46,250.00 on what I've estimated a flat will cost. (and brings the total months to save down to 82, saving almost a year)
  Regarding the car and having cash in the bank, I think it comes down to my experience of renting being very expensive. I was basically unable to save any amount each month that would ever add up to a replacement car (few hundred on a good month) and according to the mse calculator mortgage payments would be Ј830pcm at 2.5% over 25 years.
  If I could hardly save when paying Ј600 rent and half the bills, the thought of paying out double bills and more on mortgage than rent on roughly the same salary is worrying without added worry of what I'd do if a knackered car died.
  The logic being that if I get a decent car when I buy the house, and can save a few hundred each month then I can update it every few years, rather than having to start saving from scratch on top of house bills. In 5 years time my current car will be worth literally nothing (worth about Ј1500 atm, bought it when it was nearly new a few years ago).
  The 6 months pay in the bank is the same sort of thing, I wasn't necessarily thinking about it in terms of job loss but more just about having cash to hand for emergencies, although I know if I spent any of it I'd struggle to replace it.
  TMS are you also buying alone?
• Based on the posts above, and a bit more reading around the banks websites, I've come up with a revised, more optomistic target of Ј69,330, with the assumption that I will take any other costs out of up to a maximum of 3 months of the 6 month contingency.
  Mortgage Setup Fee - 0.00 (Find a fee free)
  Mortgage Arrangement Fee - 0.00 (Find a fee free)
  Mortgage Account Fee - 0.00 (Find a fee free)
  Higer lending charge (1.5%) - 0.00 (Hoping 25% deposit will avoid this)
  Valuation Fee -Ј500.00
  Searches - Ј500.00
  Legal Costs - Ј500.00
  Survey - Ј500.00
  Telegraphic transfer fee - Ј50.00
  Stamp Duty 1% - Ј1,850.00
  Moving Costs - Ј200.00 (van + beer for helpers)
  Contingency - 0.00 (Take from 6 month contingency if necessary)
  (Section total - Ј 4,100.00)
  Deposit 25% - Ј46,250.00
  6 month pay in bank - Ј10,980.00
  Replace Car currently 7 years old - Ј8,000.0
  Revised target - Ј69,330 (77 months, 6.5 Years at Ј900pcm)
  That takes me to around February 2020, aged 32.
  I am hoping my salary will have increased by then and I will be able to avoid having living costs increase in that time but would like to come up with ways to save extra each month around my full time job.
• Hi mate,
  Thats looking a lot more realistic i think now! I completely understand your reasonings, and as somebody whos been caught out myself, I see where you're coming from.
  Yes, I've saved up to buy on my own. My story is a little more sad than yours though I'm afraid, my thread is on this board a few posts down.
• Hi I noticed that you posted this quite a few months back. I wondered how you were getting on and whether you could provide an update, hopefully you subscribed to the forum!
• Hi Sammie,
  I do still read the forums but haven't really posted on this thread as I've been having a real problem prioritising, especially after the December move, the dust from which has only just settled.
  I will post an update in the next few days when I can get enough peace and quiet to write everything out.
  GTG
• Wow, this is depressing (not you personally, just how much it all costs).
• In very much the same boat here...
  Unfortunately, moving home with the Parents isn't an option as they're just under 100 miles away and I work nightmare shifts at my job... However, if I could move back, I definitely would though!
  My OH and I pay Ј650 a month for a 1-bed flat in Bristol. We are both in decent jobs and have no debt, but saving for a deposit is a real mission!!
  Will follow your progress with interest - best of luck!
• Good luck with the saving Gotoguy. Your buying costs are now much more what I would expect, I do think your deposit and savings are very much the ideal but I can see your rationale. I'm guessing you're not expecting a quick increase in equity or in salary which would help take the pressure off? I guess if you have a spare bedroom that might give you the chance for more income if needed. My friend does AirBnB so he can choose when people stay
• The only thing I would add is to consider the cost of the flat / house you want to buy - obviously this is the single biggest factor in how much you need to save! At Ј185k in my opinon that's a lot for a first house, not sure what others think.
  I don't know where you live and that will be a big factor, but if you looked further afield perhaps you could find somewhere cheaper and really bring down that amount you need to save and the time it'll take you to do it.
  For example I work in London and when looking for a first house couldn't afford anywhere near there, so settled for a cheap area of Kent - at Ј135k for a 3-bed house. It's a longish commute and there are costs involved in that, but it's worth thinking about as the prices can be so much cheaper if you start to look outside your immediate area.
  At the end of the day it's a choice as to whether you would rather live with your parents into your 30s but save for the perfect place, or settle for somewhere a bit further away but be able to move much sooner, and start living the lifestyle you want.
  Hope that helps, and good luck with your saving, you'll get there!