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.

I'd recommend an online bank like Monzo...I have 'pots' set up for everything, and you can lock them too. You can so set it so your transactions are automatically rounded up.

Plus I get a notification everytime I spend. Really helps me keep on top of my spending ☺️

OP you don’t need a SIPP on top of your workplace pension if your WP pension is a defined contribution one. Up your contributions into that one so you get the tax relief and NI savings.

If you are set on buying try this site/app. Came across this recently and I like how it brings everything together and keeps it simple. Will help you better understand how much you need to save and how to get there. www.firsthomecoach.co.uk/

And whilst £67k seems like a lot to some, it’s not a massive salary in London! Especially when you have kids.

If I've read correctly you want to buy a property and rent it out and live in it later as a full time residence (after your daughter has finished school)?

It's hard to get a buy to let mortgage as a first time buyer (you will need a much higher deposit e.g. 25%+ instead of 5-10% for a property for you to live in). Also they will take into account your rent liability when deciding how much to lend you as you will be servicing your London rent and your mortgage on your buy to let property.

You can get around this by buying and moving in to the property as your primary residence (e.g. moved in, registered with council tax) and converting it in 12 months or so to a buy to let mortgage but your bank must approve this and you will be changing mortgage product.

Some people are recommending shared ownership (can't buy to let) and also LISA or Help to Buy ISA but they also need to be for buying your first home.

Are you wanting to buy a home in London for you and your daughter to live in (moving out of your rental)?

MindDisco unfortunately I don’t think I will be able to afford a flat in the area I want to live in which is why I am considering a buy to let outside London. We are very settled in the area we are in and are renting near an outstanding state secondary school which I am very keen on for her. We are applying for secondary next month. My ideal scenario is to buy a small, reasonably priced flat to let out and then have it to live in when I retire (or at least to sell to buy something else). I think it might be more possible to save up a 20% deposit for a small flat in Manchester than to raise a 10% deposit for a flat we could live in now in my area in South London. Flats near me are very expensive. If I could afford to buy a big enough flat near me then obviously that would be the ultimate ideal but I can’t see that happening any time soon. A colleague at work has just bought a small flat near Newcastle for the same purpose and this also inspired me. mintbiscuit I will look at that site, thank you.

I'm a mortgage broker so I thought I'd add to this thread (also posting this from my mobile so apologies for typos and crap formatting):

• As others have said you will need a minimum of 5% deposit for a property purchase, but ideally 10%. At a 10% deposit you will get access to better rates and potentially can borrow more. Lenders often limit the income multiple more severely if you only have 5% deposit.
• At an income of 67k there are lenders who would lend up to 5x you income. However, take this with a pinch of salt. They will also look at other outgoings eg childcare and other debt (if you have any) and this can bring the amount they will lend down, as can a mortgage term less than 25/30 years. Best way to find out how much you could borrow is speak to a broker , not with the bank directly as they will only be able to advise on their policies, and they can vary a lot from bank to bank.
• If you are contributing to a pension and more than 10 years away from retirement, there are lenders who will lend till age 70. Some will even go to 75 but these are limited and you will have to give a convincing explanation of how you would support a mortgage after retirement (ie you'll need to provide loads of details on your pension arrangements). So actually, you can save for 3 years and still reasonable expect to secure a 22 year term mortgage.
• If you go down a buy to let route you will need at least 20% deposit. 25% would be better. You will also be a little limited on lender choice as some buy to let lender don't lend to first time buyers. Also, buy to let mortgages tend to have higher interest rates than residential mortgages.
• You could look into a help to buy scheme. You can get a 5 year interest free loan from the government ot help towards a deposit on a new build property in the scheme. You will have to have at least 5% deposit of your own for the property purchase, but it could get you on the market sooner.

I would really recommend seeing a mortgage broker or financial advisor. They will be able to go into more depth, and help you understand your options. Good luck!

Sorry, meant to add that with a help to buy scheme you can get up to 20% of the property value on a loan, meaning that with your 5% contribution you'd only have to initially mortgage 75% of the property, hence allowing you to get in a property sooner. It is only a loan though, so you do need a plan to pay it back.

I didn't even realise you can get a BTL if you don't own your home.

If going down the BTL route, I'd also add to make sure you're clear on taxes. Being a higher rate tax payer with a small deposit you might need to contribute £££ monthly towards payments and fees.

RenegadeMrs thank you. That all makes sense.