Sensible or misguided
Discussion
I'm in a fortunate (or unfortunate position depending your outlook on life) to be able to live at home for the next five years, while paying a reasonable amount of board. The aim is to be able to buy a house mortgage free at the end of those five years of saving. I've no interest in being in a relationship or starting a family until I'm in a sound financial position. Job is fairly secure and I'd like to think things will steadily improve financially on that side as I gain further qualifications etc. Obviously things change and nothing is guaranteed but that is the current plan
The struggle I'm having is deciding on how best to invest or save during that time. I'm currently leaning towards lending through Zopa. £20,000 initially followed by £1,000 per month over a five year period would return a shade over £13,000 in interest. There will be tax incurred during that first year but then the following four years will fall within the £15,000 personal limit.
Is this a good way to go or is there better options out there with similar levels of risk?
The other conundrum is what will happen to house prices over those five years. That £13,000 in interest might be completely wiped out by rising house prices. It may actually make more sense to get a mortgage and a foot on the ladder now?!? Or there may be another boom and bust cycle and it could fall nicely for when I'm in a position to buy. Who knows, but it is a tough call
It's all a bit new to me so it would be nice to receive some advice from those with the knowledge and experience
The struggle I'm having is deciding on how best to invest or save during that time. I'm currently leaning towards lending through Zopa. £20,000 initially followed by £1,000 per month over a five year period would return a shade over £13,000 in interest. There will be tax incurred during that first year but then the following four years will fall within the £15,000 personal limit.
Is this a good way to go or is there better options out there with similar levels of risk?
The other conundrum is what will happen to house prices over those five years. That £13,000 in interest might be completely wiped out by rising house prices. It may actually make more sense to get a mortgage and a foot on the ladder now?!? Or there may be another boom and bust cycle and it could fall nicely for when I'm in a position to buy. Who knows, but it is a tough call
It's all a bit new to me so it would be nice to receive some advice from those with the knowledge and experience
There are Financial advisers on PH. Personally after a lifetime of enjoying property, cars and so on whilst earning over 40 years to pay for it all and create two pensions because I wanted be very secure in retirement I think buying a house or property where you want to live that is well constructed and not overpriced is likely to be a good investment.
Beyond that NEVER ever trust the government. 10 Minutes with the probability tables and demographics of the UK makes all reliance of UK private pensions suspect because the maths does not work. Possibly a buy to let portfolio but semi commercial property would be a better bet because of the pension and taxation advantages. You are making the right enquiries good luck with the results.
Beyond that NEVER ever trust the government. 10 Minutes with the probability tables and demographics of the UK makes all reliance of UK private pensions suspect because the maths does not work. Possibly a buy to let portfolio but semi commercial property would be a better bet because of the pension and taxation advantages. You are making the right enquiries good luck with the results.
If it's a case of living at home and simply paying board £200-£300 a month then your far better staying at home since you'd be paying out regularly for bills over and above the mortgage anyway if you bought and lived alone, such as council tax utilities, etc, unless there's some other factor like a massive commute to work or some such, then you'll be able to save faster than price increases in all but the most expensive areas, which you likely couldn't have any hope of buying into on a single salary anyway.
Once you get to a 40% deposit and can access rates below 2%, I'm really not sure why you'd stay at home given that markets are rising across the country.
I understand the benefit of staying at home to save a healthy deposit but once you are past 40% then surely the benefits of moving out from your parents and the life experiences it will bring, outweight the potential burden of a 60% mortgage? Also, if you can save 100% in a few years, you can still save/overpay the mortagge significantly and be independent.
It's the age old PH debate of cash Vs finance. In this instance I'd get your own place asap once you have at least a 40% deposit!
I understand the benefit of staying at home to save a healthy deposit but once you are past 40% then surely the benefits of moving out from your parents and the life experiences it will bring, outweight the potential burden of a 60% mortgage? Also, if you can save 100% in a few years, you can still save/overpay the mortagge significantly and be independent.
It's the age old PH debate of cash Vs finance. In this instance I'd get your own place asap once you have at least a 40% deposit!
Sarnie said:
Once you get to a 40% deposit and can access rates below 2%, I'm really not sure why you'd stay at home given that markets are rising across the country.
I understand the benefit of staying at home to save a healthy deposit but once you are past 40% then surely the benefits of moving out from your parents and the life experiences it will bring, outweight the potential burden of a 60% mortgage? Also, if you can save 100% in a few years, you can still save/overpay the mortagge significantly and be independent.
It's the age old PH debate of cash Vs finance. In this instance I'd get your own place asap once you have at least a 40% deposit!
This, get out as soon as you can get/afford the mortgage. Don't worry about property cycles, you're in for the long term. Do think about rising interest rates, they will go up. I understand the benefit of staying at home to save a healthy deposit but once you are past 40% then surely the benefits of moving out from your parents and the life experiences it will bring, outweight the potential burden of a 60% mortgage? Also, if you can save 100% in a few years, you can still save/overpay the mortagge significantly and be independent.
It's the age old PH debate of cash Vs finance. In this instance I'd get your own place asap once you have at least a 40% deposit!
Speaking very generally (and from my very limited experience) I would say get on the property market as soon as you can.
I'd save up a healthy deposit, like stated above, and then get involved.
There is also an argument for spending as much as you can afford. In retrospect if I had stretched myself more as a youngster I'd be in an even better position now. The rises might not be as meteoric in the future but I cant see you doing badly (as long as you buy well etc etc).
I'd save up a healthy deposit, like stated above, and then get involved.
There is also an argument for spending as much as you can afford. In retrospect if I had stretched myself more as a youngster I'd be in an even better position now. The rises might not be as meteoric in the future but I cant see you doing badly (as long as you buy well etc etc).
How much is living in our own house with your own space worth? For me, its worth a lot more than the rent I pay!!
Also recently around certain areas of the Midlands (and I assume the SW) there is no way your savings would keep up with house price inflation unless you were able to sacrifice almost everything else to put money aside. No point saving as hard as you can only to find that your own house is getting further out of reach.
I've jumped on the ladder as early as I can with a house I can add value to, and would rather have a large mortgage and hope to take advantage of house price increases rather than busting my arse to save just to be mortgage free.
Also recently around certain areas of the Midlands (and I assume the SW) there is no way your savings would keep up with house price inflation unless you were able to sacrifice almost everything else to put money aside. No point saving as hard as you can only to find that your own house is getting further out of reach.
I've jumped on the ladder as early as I can with a house I can add value to, and would rather have a large mortgage and hope to take advantage of house price increases rather than busting my arse to save just to be mortgage free.
Condi said:
How much is living in our own house with your own space worth? For me, its worth a lot more than the rent I pay!!
Also recently around certain areas of the Midlands (and I assume the SW) there is no way your savings would keep up with house price inflation unless you were able to sacrifice almost everything else to put money aside. No point saving as hard as you can only to find that your own house is getting further out of reach.
I've jumped on the ladder as early as I can with a house I can add value to, and would rather have a large mortgage and hope to take advantage of house price increases rather than busting my arse to save just to be mortgage free.
I think that is currently the better option. Whether prices continue to rise is very much an open question.Also recently around certain areas of the Midlands (and I assume the SW) there is no way your savings would keep up with house price inflation unless you were able to sacrifice almost everything else to put money aside. No point saving as hard as you can only to find that your own house is getting further out of reach.
I've jumped on the ladder as early as I can with a house I can add value to, and would rather have a large mortgage and hope to take advantage of house price increases rather than busting my arse to save just to be mortgage free.
AJS- said:
Juanco20 said:
Aren't rates on a buy to let mortgage shocking though?
I doubt they're as shocking as savings rates.Gassing Station | Finance | Top of Page | What's New | My Stuff