Saving for a deposit on house

agnes

agnes

agnes

Soldato
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Hello everybody! *Dr Nic mode*

So, according to my 5 year financial year forecast, next month is the start of my 3 year plan to save money for a house deposit, initially, I will be going in with the mind set to buy land and build. But, this is a dream. However, dreams can come true if you work hard enough!

So, as it stands, I wish to simply start building up my deposit. I will have around £1000 free each month, I have cut off all DD's that have previously been setup and paid all loans off ect ect. Only have the core payments and little things which I would describe as luxuries. Such as phone, magezine sub, games ect ect. All these payments made where forecasted and I no longer have any 'suprise' payments *shiver*.

Now, obviously I don't want to simply chuck in £1000 each month into savings and leave my self with sub £300 each month. As I do have expensive hobbies. So, ideally, £500-700 is my aim each month.

My question is, how much is a 'decent' first deposit? This is something I left blank on my forecast. I don't know, don't claim to know and would love to get as much help and advice as possible.

Also, where am I to place such a high amount of savings over 3 years? As easy as it would be to simply open another IAS with my bank, I don't see the point, I want somewhere that is going to give me at least a little back.

Again, thanks guy!

EDIT: Back story, I am 24, living with my mother after moving back in from Tryford which is VERY expensive to rent in. I have no plans to rent again, and she is fine with this. We are both in agreement that me living with her until 30 (hope not) is ok. I am not paying her rent, but instead buy food, help out and mainly fix stuff as my step dad can't even change a plug fuse.
 
agnes said:
My question is, how much is a 'decent' first deposit? This is something I left blank on my forecast. I don't know, don't claim to know and would love to get as much help and advice as possible.
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Obviously this varies, but you want at least 10%, aiming for closer to 20%. Higher deposits give lower interest rates.
 
wozza2k said:
You can buy with only a 5% deposit but your repayments will be a lot higher. Aim for maybe 10-20%
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I guess this would be the obvious question I missed, how much would one pay for their first house? I was thinking £250,000 is reasonable in the area I am looking at (south Hampshire).
 
Well, the lady and I are currently saving for our deposit and all the banks have recommended we save a good portion of what we want to spend so between £15k and £35k. Most banks and lenders will want to see that you have a sound financial background before giving you a look and a large chunk deposit works well at that and most of the time will give you a better interest rate than walking in with only a 5% deposit.
 
Yes, as for credit rating, mine is fairly poor at the moment, but I am hoping that within 3 years of clever spending and witchcraft, I will be able to bring it up to speed.

Never had any CCJ's or anything like that, just stupid loans taken out of stupidity at a low age.
 
agnes said:
Yes, as for credit rating, mine is fairly poor at the moment, but I am hoping that within 3 years of clever spending and witchcraft, I will be able to bring it up to speed.

Never had any CCJ's or anything like that, just stupid loans taken out of stupidity at a low age.
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I feel your pain, I'm still paying for the debt created by my ex wife in my name!!
 
How much to pay for your first house is completely up to you. Buy what you can afford. The same goes with how much deposit you'll need. Look at how much your monthly expenditure would be in a house, then work out how much you'll be paying on top of that with a mortgage. Obviously you'll need to have a fair chunk of money set aside ontop of that for unforeseen circumstances in the short term, and don't forget to plan longer term if the rates were to rise.

Head over to Nationwide (or any other bank probably) and look for the mortgage calculator on their website. Just bung in some random figures and see what the monthly repayments would look like.

Personally, I wouldn't buy a house with less than 20% deposit. You can get them with as little as 5 or 10% deposit, but the monthly repayments are a lot more expensive.

I bought my first place a year ago. Before that I lived with my parents and worked as much as I could and saved nearly every penny. After a couple of years me and the gf had saved enough to put down a 30% deposit and got a respectable 5 year fixed deal with fairly comfortable repayments.

tl;dr Stay at home and save as much as you can until you can't bare it anymore, then buy a place with your hefty deposit!
 
agnes said:
I guess this would be the obvious question I missed, how much would one pay for their first house? I was thinking £250,000 is reasonable in the area I am looking at (south Hampshire).
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If you can only really save £500 ish a month, I doubt you can afford the mortgage itself on a property that expensive surely? Also the deposit which you would need, say at least 10% at the very minimum would take you over 4 years.
 
So in three years you might have around 25k?

Your current salary brings in 1300 p/m?

I'm not sure if that will allow you to have a house costing 250,000.

Your current wage per year is around 20k? 20 * 4 = 100,000 max mortgage allowance. Add on 25k then you have a max house value of 125k.

Unless your buying with someone else?

Your on the right track on your savings!
 
S@njay said:
So in three years you might have around 25k?

Your current salary brings in 1300 p/m?

I'm not sure if that will allow you to have a house costing 250,000.

Your current wage per year is around 20k? 20 * 4 = 100,000 max mortgage allowance. Add on 25k then you have a max house value of 125k.

Unless your buying with someone else?

Your on the right track on your savings!
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One would assume that 1000 savings + 300 disposable is in excess of normal living costs - call that £900 a month if he rents a house - so around £35k allowing for tax and NI.
 
hmm, well I (me and the missus) are aiming to buy a house soon around £225-£250k. To get the better interest rates we are saving 25% deposit, 25% is where the price break happens to reduce your monthly payments. So thats a £56k - £62k deposit and our monthly repayments on a 25 year will be around £800-900 a month, plus bills it would be impossible for me to do it on one wage. Even with 2 of us, once you factor in running cars etc it doesnt leave you with a lot spare.
 
In general 25% deposit will get you the best mortgage rates.

Anything less then 10% don't even bother buying as you can't really afford it.

I have no idea how much a house in your area costs, say 200k?? then if you can get 45 to 55k down that would be ideal.
 
Aim for the magic 25% OP. My fiancé and I are saving up for our first house together and thankfully house prices in stoke-on-trent are quite cheap and we're both in reasonable incomes. As said above saving £5-700 isn't a great deal when you're looking at houses upto £250K. Are you buying alone or with GF/partner?
 
Duke said:
If you can only really save £500 ish a month, I doubt you can afford the mortgage itself on a property that expensive surely? Also the deposit which you would need, say at least 10% at the very minimum would take you over 4 years.
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Possibly that savings would be over and above his rent costs, so he could actually afford £500 + whatever his rent is each month in payments.

So if his rent was £700/month he could actually afford £1200 or so. He doesnt mention if he is renting or staying with family etc though so thats just an assumption Im making.
 
I am open to both buying with someone else, but at this time, I am doing it on my own. My maths is aiming for double of what I could do. But to me, this makes me work harder for it.

If I am single at the time, then yes, sadly, it will be a 100-150k house :(

But then at least I am on the property ladder then!

Thank you all for the really good input.

Oh and Duke, this is me being selfish. As it stands, I coule comfortably let go of £1000 a month.
 
If you can't afford a decent house in the area you live in due to house prices, look to move to another area where houses are cheaper, you've got a 3 year plan, there's nothing preventing you from moving job to an entirely different place at the end of it and simply putting up with a longer commute each day until then.

The pain is worth it, I've just done exactly that to get a house 40 miles away which was HALF what it would have cost me where I previously lived.
 
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