To think I could manage to buy a house like this?

[YDraig]

Hi,
I’m quite young and have a child. I don’t have much money but since moving into my first flat of my own I’ve tried to save a bit each week.

Some weeks this is £100 and some weeks it’s just £20. I do work as well as getting some child benefits. Over the last 13 months I’ve managed to save very close to £2,500.

Im constantly cutting back on things and trying to get extra hours in work and I’m up for a promotion this year as well, week to week I spend as little as possible. I really want to try to buy a house in 5-6 years, either by a mortgage (when my credit file isn’t shot) or maybe even if I manage to save enough, buy outright but I know that’d be loads harder. Either way I do it I’ll need a lot of money, at least £5-£10k for a deposit and thats without other expenses. I might not be able to get a mortgage as my DD’s dad took out a £500 loan in my name and defaulted I didn’t know until debt collectors were involved. He had hid the mail. I’ve paid it off now but it’s still dragging my score down.

I was chatting to my mum about it hoping she’d have some advice and all she’s done is put me down saying that I’ll never manage it and “something will crop up” eat my savings and send me back to square one. I read on here ages ago that unless it’s life or death treat your savings like they’ve been spent and aren’t available anymore. That’s what I’ve been doing and I’ve never touched them. But now I’m filled with doubt and really unsure I’ll ever manage anything. I really didn’t expect my mum to be so negative

I really want to have my own home because we moved around loads when I was a kid, my parents are poor and don’t have much. So i shop at Lidl, meal plan, walk to work rather than bus, never buy anything brand new, no TV package etc. My life is very basic because I wanted to maximise how much I could save even if it was only £20 some weeks.
Am I being totally naive to think I can manage it? I don’t actually know anyone who owns their own home at all so most of my info and knowledge comes from googling.

You can get 95% mortgages with just a 5% deposit, so you’d already have that much but would obviously need to save for fees on top. If I was you what I would do is save for another year and then go to the banks to get a mortgage in principal. This basically tells you how much they would lend you (but isn’t a binding contract on your part) and would give you a good idea of how much more you’d need to save or whether you would have enough already to buy the house. If you’re scared of going into a bank itself you can get these online (just be honest about income, expenditure, savings etc.)
I have just bought a house on my own this way whilst still on maternity leave (also living in a cheap part of the uk relatively speaking). I had just over 11k for deposit and fees and house prices are nearly four times what you’re proposing spending around my way.
Good luck!

Sorry I should add the mortgage in principal isn’t binding on the bank’s part, they do a full and detailed application when you actually but a house. But so long as you’re honest on your application for a mortgage in principal you should be ok.

OP you are amazing - you have saved an incredible amount of money and I really do feel that you will get on the property ladder BUT you must be very careful about telling your parents or friends about how much you have saved as it sounds as if they might try to persuade you to “lend”it to them. Your mum is just jealous . Rise above and aim for those stars

It's getting late so I've only read first 2 pages, hoping not repeating stuff. Have you been offered the Help to Save scheme through the government as this includes contributions from them if you are on a low income.

www.gov.uk/get-help-savings-low-income

It sounds like you are doing great! Well done keep it up. You are right that saving even £20 a week is great. I also like to do the same and ignore any money in my savings.
My husband also had a loan which defaulted and his credit score was 'very poor' when we bought our current house 2 years ago. We had a mortgage advisor who was amazing and I'd highly recommend, he got us such a great deal. He said that with things like that they often look into your whole history, if they can see it was a one time occurance and hasnt happened since then you are usually okay. Have you got ant regular direct debits that you pay? Or a credit card that you can spend a little and pay off every month? All of this helps. We put loads of the bills in my husband's name even before we bought our house to help with this. He couldn't get an overdraft or a credit card but he has finally managed to do that this year.
Most mortgage companies let you borrow 4 to 4.5 times of your salary so sounds like you'll be okay. Just remember you'll need money for solicitors fees, think ours ended up costing around £3,000.
It's worth speaking to a mortgage advisor as they can tell you any hidden costs like surveys, stamp duty, ground rent etc.

But you are doing so well, honestly keep it up!!

Someone else above mentioned contacting Experian. I would strongly recommend doing so if the credit was taken out fraudulently. You can ask Experian to contact the lender to investigate and state that this loan or credit was not taken out by you. It is up to the lender to ensure that the person they are dealing with is who they say they are and that the information that they are providing to Experian is correct so they are guilty here of not carrying out due diligence.

I work in lending and deal with Experian queries regularly btw. I have never had a fraudulent case personally due to our rules around knowing our customer but it can happen with online lending/credit facilities.

Report the loan on Experian, tell them it was your Ex's and you did not consent. After investigating they will remove this from your credit record.

Did you report the fraud to the police? If it has been recorded as fraudulent then the above advice is correct. If not, it's not but worth asking-a credit record can be altered if it's not factually correct.

On the saving-I'm intrigued as to how else your mum would expect you to save for a house?? You're doing brilliantly. We did the same thing when saving for a house and even put all our 1 and 2ps in a bottle to add up. You are the strong and reliable role model your child needs OP and we can only wish the world had more like you in it. Best of luck!

YDraig you sound amazingly strong, determined and savvy. I'd take a bet on you any day. Please do not let your DM, or anybody else, put you down. You are doing it. Day by day. That's a huge achievement already.
Well done you.

I think you can improve your credit score by taking out a credit card that you pay off each month without incurring interest .

You have the right approach!
I had £0 in savings when DS was born and had bought a house by the time he was 4. Lived frugally but happily and all bonuses and pay rises went straight into savings. Keep up the good work!

I haven't got any more advice that what other people have given you - ISAs, help to buy etc, but just wanted to say you sound admirable and I'd be very proud of you if you were my child. Absolutely fantastic attitude. I think you'll do well at your work as well and could go for more promotions. Not sure what you do work-wise but would commuting to Cardiff pay more, even with the commuting costs (that's if you can get childcare)?

Also, an ex of mine ran up credit in my name which damaged my score. When I applied for a mortgage the mortgage broker told me to put an explanation on the credit rating agencies account - I did this with Experian, just saying it wasn't my debt but I'd paid it off. The other day I did an Experian credit check and it's not on there so at some point it gets wiped off.

You are doing a great job. Your DM was probably stating her experience and frustration with her life. You are doing something she probably feels she ought to have done.

If you looking to buy in the Valleys make sure you have a bit extra saved for a full survey due to the age of the miner’s terraces and the increased risk of ground movement due to mine workings. A lot of my family lived in the Valleys and the old terraces can be really well built and comfortable.

You will get there - have you looked at the lifetime ISA OR Help to buy ISA - you will get yourself a 1000£ top up from the gov for every 4K you save a year - must be spent to purchase a house with - but may get you there faster!! That's what I'm at now - hoping to be in a position to buy in the next year or 2 - just keep going !!!

Go for it. Go for it and keep going for it, you sound like someone who knows what she wants and you are doing something about it, not just dreaming. I wish you all the luck. And if you have a wobble, imagine yourself in that home and how proud you will be.

You sound like you are doing incredibly well with saving. Well done and keep going, you will get there x

Yes, of course it is possible for you to buy a house. If you are looking at a £50k house then ideally a 20% deposit so as you say £10k and if you earn £14k then a £40k mortgage should be easily affordable so long as you do not have other debt.

Re the defaulted loan. Unless you reported this as fraud it won't be removed from your credit file. Check on Noddle what shows up there. Credit scores mean nothing as each lender uses their own credit scoring criteria but the credit agencies are useful in seeing what is marked against your name.

I would just say focus on savings for now rather than improving credit scores. Some people say using a credit card and repaying in full each month may help and it certainly wont hurt but it depends how disciplined you are as to whether you can trust yourself not to use it to go over your budget.

Does your mum doubt you can do it because you have had money difficulties in the past or is it because she did not manage to buy a home and assumes you will not either? I would prove her wrong.

Sorry I meant 50% bonus not double for help to save.

Think of it positively, I'm in the same boat. Crap credit rating (my own stupidity) but I think by the time the negatives off my credit rating if I save the minimum (approx 100 a month) I'll have more then enough for a mortgage deposit.... get a help 2 save account through the government itll defo boost your savings up long term... your doing great take no notice of the negativity chances are its clouded by a bit of jealousy

I'm from the Valleys and house prices are sensible. Many years ago in another bit of the UK I bought a house for 50k with a hard saved 5k deposit which gave me a slightly better rate than 5% deposit. Interest rates were higher then but I was on about 16k.
A lot of people at home grew up in council or coal board housing and that was secure and safe. Why buy if you had that?
But times change and renting's not the same. Buying will give you more security.
Keep on doing what you're doing, get the credit record sorted and take advantage of schemes. You won't make money but you will have a home that's stable :)

You do really need to get the default off your file or you'll struggle with getting a mortgage at a decent rate or at all. There's no point paying more when you don't have to.

Complain to the lender and make sure they did everything they should have to check who was applying for the loan. And you should be able to take it to the ombudsman if they don't play ball. Honestly it's worth doing. There is an argument that you've accepted the debt is yours as you've been paying it but this is all understandable if you didn't know about it until it got to the point of damaging your credit.

Good for you, OP. You sound sensible and determined. You're on your way! In my experience people are often naysayers when someone else's success reflects negatively on them (or so they think). I wonder if your mum wishes that she'd been more financially savvy when she was younger, and when you succeed with your plan it'll highlight the gap between your achievements and hers?

You absolutely can but make sure your savings are working for you.
Don’t get a Help to Buy ISA as you aren’t saving enough.

If you haven’t already I would set up a separate account (Account A) with my savings in that I add any spare cash to each month.

I would use some of the original savings as a lump sum for a Help to Buy ISA (Account B, they are only available 19/11/2019 to new customers so open it asap) to get it started.

Then I would set up a DD from Account A to a Help to Save account (Account C, more info below). You say you have saved almost £2500, that will cover DD into this account for the lifetime of the account. When Account C finishes (4 years) I would transfer the money into Account A and increase my DD into Account B until I’d saved the maximum £12000

Account C
As you are on benefits you can open a Help to Save Account with the Government. Each month you can save up to £50, you can deposit as many times as you like during the month from as little as £1. the Government will pay 50p for every £1 you put in, the bonus is paid after the 2nd and 4th year. You can only open 1 in your lifetime and can still keep it even if your income improves and you come off benefits. I would save the max each month that you already have which would give you a total of £2400 savings + £1200 bonus after4 years.

OOPS ignore the bit at the top about the Help to Buy isa - I wrote that before I realised it ended in November.

Both Help to Buy and Help to Save are brilliant accounts and ideally you want both to max out savings before the Government get rid of them.

Remember that anything over £6000 will impact any benefits you may be on at the time.

I’m also a single parent and over the 10 years since DD was born Ive gone from earning £0 a month when I was SAHM untill she was 3 to £400 a month in my first job after having her to £1600 a month as I have changed jobs / roles and upped my hours as DD got older so you definitely can save and you have no idea what the future holds for your earning potential.