Help me create a savings plan to buy a house!

[Needadoughnut]

With an annual net joint income of £45k, how could we save to buy a house? Local rent is £1200 for what we need. We dont have a big deposit at all (10% at best). I think we should possibly buy a flat instead, protect the deposit that way and keep saving until we can eventually have a higher deposit. Thought of help to buy too, but seem to be too complicated when you want to move and they're too small. We need 4 bedrooms and that's why we don't have that many options.

Why do you need 4 bedrooms?

The first step to saving is to cut out all unnecessary spends.

Coffees on the go
Lunch out
Takeaways
Holidays abroad
New clothes
buying your partner birthday presents / christmas presents

Etc

The second step is to sell anything you don't need, you'll be surprised by how much you can make from bits that are just lying around unused.

Where abouts are you? Can you get a 4 bed on your joint income?
We just about managed to buy a 2 bed terrace on a similar income.

We temporarily moved in with my parents (it was hell!), and worked our arses off! We grabbed all the overtime we could, and only spent on essentials. It didn't actually take us that long but it was grim. We did have our DS which definately made it harder.

I do appreciate that we were lucky that this was even an option.

It was definately all worth it though.

I think if we are to get a decent deposit, then yes we can. Last time I bought a house (with my ex) our deposit was 20% and the we were able to for the house comfortably. We had a higher joint income but also had more disposable income that we knew what to do with it.

What about shared ownership? Buy 25 or 50% of a house, then staircase up later?

Awkward can this be done with any house or they have to be newbuilds and the like?

It's usually new build houses (and flats).
You should Google your local area though, they may have other schemes.

What about buying a 3 bed house then adding an extension? It might work out cheaper.

When I say new build, there are brand new new builds and 'resales' where people are selling a shared ownership home, so they might be 5-15 years old or thereabouts?

If you have a 10% deposit, interest rates are very low at the moment so it might be feasible to get a 2 year fixed deal, then overpay as much as you can and you could have a much better LTV after 2 years?

Unfortunately I don't think we'd pass the mortgage application as of now. I'm in FT employment plus I do a lot of consulting. My consulting I believe has to have a "history" of at least 3 years I believe to be considered as an income. This stream of revenue accounts for at least a third of our income if not more.

Ah I see. Maybe look at the shared ownership, and then staircase to full ownership once your consulting income is established enough to be counted?

Would you be eligible to start a help to buy ISA?
My daughters have them and they are recomended by Martin Lewis, the Barclays Bank one is the best at the. Oment.

Good tip! My DP would be eligible but not me. I wonder if the help to buy houses gain as much equity as a "normal" one. Rent is expensive here in comparison to buying. That's why I'd like to buy ASAP

Are you a first time buyer and under 40? If so look up lifetime ISA. Government top up by 25%. You can put max 4K in each year. If you are both eligible you can both take one out.

He is but I'm not. He turns 40 this year, so I don't know if he'd qualify or if it would be too rushed.

I'm not sure what you mean by 'help to buy' houses - if you have a help to buy loan, you pay that back (in 5 years I think?). Then the house is a 'normal' house, albeit a new build - which probably wouldn't gain as much equity as an older house you might improve, but you wouldn't be paying rent for that period so it might even out?
For 'shared ownership', they do take longer to sell as you have to go through the HA - unless you staircase and buy the whole thing, in which case it becomes a 'normal' house.

Get the HTB ISA ASAP as they're phasing them out in November.

You can use the govt top up towards any house. Doesn't have to be a HTB one.

Oh good! I think I'm fairly confused between help to buy and shared ownership. I've looked into help to buy in the past and if I remember correctly none of the houses that would were even remotely affordable.

If you search on Rightmove there is an option to filter by shared ownership. You could also Google shared ownership resales + your local area, to find listings. With shared ownership you buy a percentage and pay a reduced rent on the remainder.
Help to buy is where you get a loan for (I think) 20%, I think that is only new developments (and agree these are often seem to command a premium!).

This website has a helpful summary:
hoa.org.uk/advice/guides-for-homeowners/i-am-buying/shared-ownership-resale/

Could temporarily living with less than you need be an option? A 3 bed house with separate dining room, and turn the dining room into the 4th bedroom, or a 3 bed flat and the adults sleep in the living room, or a flat over a shop which has no garden but is cheap rent for the size? Economise on rent temporarily to boost the deposit.

For buying look at ex-LA properties as they can be significantly cheaper per SQM than other houses. Include maisonettes - you can get duplex ones sometimes which are, to all intents and purposes, a house with extra neighbours downstairs.

Odd living arrangements aren't really an option, I think the DC would have an issue with that. Children don't have a clear idea of why owning is best. Both families live at least 6 hours away, so unfortunately that isn't an option either. Serendipity What's ex-LA?

Shared ownership doesn't need to be brand new, I've seen older SO properties on rightmove, I usually notice them because I think 'wow that's cheap' but then see it's only for a quarter of the house.

I'd recommend looking at the Moneysavingexpert guide to ISAs because I think you can 'reserve' one while you still qualify for it, and then just stick a few quid in and top it up later, so worth getting if you qualify (I don't so don't understand them properly, but I know they're almost always a no brainer for those who qualify).

www.moneysavingexpert.com/savings/help-to-buy-ISA/

Have you talked to a broker or at least looked at some online calculators to see if you qualify for the amount of mortgage you need to buy the house you need? Then you can work out what sort of deposit you might need.

Eg, if you qualify for a £150k mortgage, and you can get a 4 bed house for £180k, you need to save about £30-35k for a deposit and fees.

However, if a 4 bed house will cost £350k, you would need £200k+ as a deposit, which doesn't sound doable, especially as you need to pay your rent and feed/clothe etc your family, including presumably at least 3 DC as you are looking for 4 bedrooms. If a 4 bed house is going to be beyond your reach, tehn you need to be looking at cheaper areas, a smaller property, or shared ownership.

LA = local authority, ex council house, which are usually cheaper than those that have always been privately owned, and are often a good size, well designed with bigger gardens. Often in perfectly acceptable areas too. I live in one myself.

The MSE mortgages guide will probably also be helpful

www.moneysavingexpert.com/mortgages/mortgage-guide/

DC are perfectly capable of understanding that you need to live somewhere smaller for a while. Or permanently, come to that.

If you can't compromise on 4 beds either temporarily or in the future then I think your best bet might be to carry on renting, buy a smaller property and rent it out.

Do not touch HTB loans. Disaster written all over them esp in a falling/stagnant market or if you're salaries aren't going up by a lot.

SO can work out really well if you wouldn't be able to save for a few more years and get a 'normal' house. If have children and want something more secure than private rent this can be a good option, you are essentially buying secure a tenancy and taking on the responsibility for repairs and maintenance yourself. Better IMO if you think you would be able to staircase up to 100% over time.

However I would always chose a SO stake over an above being in private rented for ever.