To Ask Realistically How Much I Need to Save

[Mummadeeze]

Am terrible with money but after reading lots of posts on here I am feeling really determined to try harder to save up and get on the property ladder before it is too late for me. All I really want is a small flat that I can live in when I am retired. I don’t even really mind where it is, I just don’t want to end up homeless! I earn 67k a year at the moment but don’t manage to save a penny. I think I can change this if I try harder though as I have read that others manage to save on a lower income than mine. I am 45 years old. So my question is, how long have I realistically got before I am too old to be able to afford a mortgage? And how much is the minimum I could get away with saving for a deposit between now and then? Hope some money savvy people have some advice. Thank you.

You are going to struggle to get a mortgage with a long enough term at your age and nothing saved as a deposit yet. Have you got a pension?

Okay, if you are looking at any city, we are currently looking at flats in an averagely nice area of Manchester, lots going on, popular with young professionals.

Nice two bed, nothing needing doing is around £160,000
You’d need £16000 deposit
Mortgage would be around £635
You could probably rent it for £750 to £800. (Obviously you’d have service charges of @£100pcm on top.

Wow! That Manchester option sounds good and realistic. If I am majorly careful maybe I could save that kind of deposit in three years (so will be 48). I do have a pension that I have been paying into since my twenties so that is good, it will be fine to live off I think as long as my accommodation is sorted. Thank you for making me feel a bit better. I like the idea of living in Manchester or Birmingham. I love cities and would hate to live London but know it is unrealistic to think I will be able to live in London in my old age. And in answer to whether I have thought about trying to save for a deposit before, the answer is yes but a) I didn’t always earn this much, my salary has gone up a lot in the last three years b) I had a businesss that went wrong in my 30s and had a bad credit rating for ages (but it is fine now) and c) have been burying my head in the sand and enjoying finally having enough money to enjoy my spare time a lot.

Ok well i would think about areas id like to live, get on rightmove and find a balance of cost and niceness. I'd aim for a minimum of 10% deposit plus moving costs of another 7k or so. You dont have to think about stamp duty thank goodness.

I would always aim for 2 bedrooms if you possibly can. And id rather pay more for an area i had some kind of connection with.

I think you should set your sights on saving £25000 in 2 years. You should have choices then.

*hate to leave London (not live!!!)

Two years doesn’t sound that long in the grand scheme of things. Thank you. I am going to try. Temptations are everywhere, I spend a lot of time researching holidays, treats for my DD etc and I love to spoil her as much as I can, but I know the time has come to be more sensible.

Sit down and budget everything for the monthly costs. Is there anything you can lose or switch for lower prices? Decide how much you'll be saving and transfer it directly to your other account so there's no thoughts of frittering it. How old is Dd? Will that £250 extra be freed up soon? As nice as outings/entertainment are, think of it as that's £100+ more towards your goal. I've recently dropped some standing orders I'd been stupidly still paying out on, scrutinise incase you have some too.

It’s not too late but it’s time to start

How much is a property that you would like to buy ? You need to save 10-25% of that figure

You can borrow roughly 4 x your income ( bonus can be included if proved as consistent over a set number of years / roughly half of the average figure)

Roughly £240 000 based on basic

Debts / commitments will eat into this figure but it’s a rough guide

I would ensure you have good credit rating go on clear score or Experian for example it will tell you how to improve this

Say you save £500 per month it will take you 48 months to save the £24000

It seems a long way off and impossible but look into it

If help to buy isas are still going ( £200 a month max savings) that’s a good one as government will give you a £50 per £200 saved and used to purchase first ever property upon completion £2400 for you to buy furniture on the basis you saved and left £200 per month for 48 month)

Mortgages can stretch as far as 70 years old do you have time but not a lot as the repayments need to be affordable the less time you have to repay the debt the less you can borrow Also

It’s habit how much we spend you need to open the savings set up a direct debit and consider the money gone.

Talk to your bank they can explain options x

Two quick ideas - do you work in a key occupation (nurse etc ) and have you looked at shared ownership? Be careful with the latter as the starting price may be more expensive but worth considering pros and cons.

If neither of those suit.. I wouldn't worry about where to live in the future and what you can afford - just start putting away the money immediately and you can work that out later!
The danger of considering a move to a different city like Bristol and Manchester is that you may earn less income as well as pay less on a flat, so that's worth considering.
But again you have options when you have your deposit. Aim for £25K - £20K in a deposit and £5k deposit.
I don't know how old your DD is but will she be in secondary soon? That will save you another £250 on childcare.

Finally your 1 bed rent sounds v expensive. Depending on where you need to be for school, are there options to switch to a cheaper rent to bank £200/month?

Finally your 1 bed rent sounds v expensive.

£1400 for a one-bed in south London is actually the norm.

You won't be able to get a buy to let flat anywhere as you haven't got a main home. You'd need to move to Manchester or Bristol.

In terms of mortgages, banks will lend till you're 68 and sometimes even for a longer term. So if you save for a deposit over 3 years, you could get a 20 year mortgage.

Judging by your rent, you're in zone 2, max 3? I reckon it should be possible for you to get a flat in a nice area in zone 5-ish in 2-3 years if you save monthly + your bonuses. If your daughter is younger (still in school for a few years) she'd also benefit from much better schools.

The first obvious thing is to not spend the pay rise but to put it directly into a savings account.
Then with say £750 a month put away, you’d have a significant pot inside two years with £7,000 a year and £24, 000 from savings it would be a total of £38, 000.

Then buy a place to rent out for now. Get someone else to pay your mortgage so that your life wasn’t thrown into complete upheaval at the moment.
Look at options re help to buy, Are you maximising your tax allowances and claiming everything you can? Childcare vouchers, professional fees, training costs, etc

£500 a month for 15 years would be £90k by 60. That would be a good chunk?

Nice two bed, nothing needing doing is around £160,000
You’d need £16000 deposit
Mortgage would be around £635
You could probably rent it for £750 to £800.
(Obviously you’d have service charges of @£100pcm on top.

That’s a huge amount of a hassle for £15-65 “profit” per month, which would be more than swallowed by travelling to it, gas safety certs, letting agent fees, maintenance costs etc.

Two quick ideas - do you work in a key occupation (nurse etc )

How many nurses etc do you know that are on £60k with £7k annual bonuses?

bear in mind that if you rent the flat out you'll be paying up to 40% tax on the rental income which will make it harder to cover the mortgage.

In terms of working out deposit and how long you need to save, bear in mind that often the mortgage term can't extend beyond retirement age so the longer you leave it the shorter the term and the higher the payments. I'd suggest talking to a free broker like London & Country to get some initial free advice to help you plan

Would OP earn £67k outside London?

I suggest:
Make a shopping list & stick to it (groceries) when you go shopping.

STOP going out. Completely. Go on a stay-at-home programme for 2 months. No take-away food allowed for main evening meal, either.

Stop buying clothes. Most of us have way too many. Unless you're completely out of stuff to wear (as in nothing in the home clean or dirty that would do).

Put a budget on days out for now, say £20 max spend on the day for both of you. Yes this means going to parks & museums & bringing sandwiches. Stick to this for 2 months.

Gosh. We are 2 adults & 3 kids (mostly teens) & between all of us manage to "fritter" less than £600/month, I reckon (DD must spend £70/month on Everything-£5.com mind).

You sound like you may need to stop shopping, like, the ACT of shopping.There are ways to take it off the table.

1. Order a recipe box (if you cook at all) and never go to the supermarket again. Gousto, Hello Fresh, Mindful Chef etc. Get a subscription one and just let it run -- don't log in. For milk and bread you can get a daily delivery from Milk and More or a weekly delivery from Ocado. Just set up an autoshop and don't touch it again. Don't think about it.

1. If you normally order in, consider a home cooking service instead. I only know ones local to me but here are reasonably priced ones coming up online with a quick search. Or there's always Cook, but then you're really in that shopping mode again.

1. In general, get a blocker (Chrome Nanny, LeechBlock etc) and block every site you casually shop on. Include things like Tripadvisor and Instagram! Redirect to sites that help you in your life instead.

1. Pay yourself first -- put your savings in your account on pay day. Put it in an account without easy access. Don't think about it. You could save £1k per month, if you needed to, on your salary.

1. You probably want to buy as early as you can and let it, as other posters have said.

Order a recipe box (if you cook at all) and never go to the supermarket again. Gousto, Hello Fresh, Mindful Chef etc. Get a subscription one and just let it run -- don't log in. For milk and bread you can get a daily delivery from Milk and More or a weekly delivery from Ocado. Just set up an autoshop and don't touch it again. Don't think about it.

These things are almost as expensive as takeaways (except Ocado which is just an expensive supermarket shop).

Agree with standing orders I have a few. I recently culled a couple and Beauty Pie is next on my hit list. Culling just 4 will save £350 per year. I've also been spending £750 a year on meeting friends for brunch - by just getting a coffee instead it will bring it down to £250. There's £850 saved without even trying. Keeping track of spending really helps, it's hard when you are busy but knowledge is power and all that.

Wow. We earn just over £40k between us (DH full time, me part time) and manage to save £800 a month. We have 2 kids.

Go on your online banking every day. If you have £52.20 in your account, transfer £2.20 into your savings. Round it down to the nearest 5 or 0. You'll be surprised at how much you'll save and you'll not even notice. Good luck.

You need to set up a standing order for savings which comes out on the day you’re paid so it’s not there to spend.

You could save £800 a month for deposit and £100-200 a month for a holiday each year and that would still leave a reasonable budget for food, eating out once in a while and clothes as needed, then all of your £7k bonus into savings as well.

It depends, honestly, on what you are spending already? If you have a very good income and are still massively overspending, it's more realistic to deal with the overshopping situation than to start meal planning and batch cooking and so on. My advice was not general, but particular to this OP.

I am just amazed that you can't save anything on such a huge salary. What are you spending it al on?'

I second the save on payday advice and living off your old salary.

Money Saving Expert has good boards for saving etc and you post a statement of affairs and people will suggest areas you can cut back.

Look at the cost of energy, mobile phones, food and if you can make savings add them to your monthly savings number.

Track your spending. Write down or use an app to record every single penny you spend for a month. It might give you quite a shock to see where it goes.

If you have a shopping habit, is there stuff you can sell and add the proceeds to your deposit fund?