Getting Onto The Property Ladder

MrGilmore · 24-03-2009, 1:36 AM

Mornin' all,

I'm after some advice with regards to getting on to the property ladder within the next couple of years.

A bit of background info:
At the moment I'm working full time and earning a good wage. Living at home so have very low fixed outgoings each month and generally able to save a good stack of my pay after Mr Brown gets his 'share' of it.

I'm quite keen to get on the property ladder as soon as I can really, I'm working on trying to save a good deposit. With regards to the deposit, does anyone have any advice on what's the most effective way to save a deposit quickly?

I'm hoping to try and find something suitable for myself that will also be a solid investment around the beginning of summer next year. I'll be looking for a pad just for myself, undecided whether I'd prefer a period house or a swanky new apartment. Keen to keep my options open on that front, will boil down to what's more cost effective I guess.

Now, my parents didn't really ride the property wave of the last few years, so really they'd not be the best people to talk to so hopefully some wise old soul will have some good advice for me.

Anything with regards to getting on 'the ladder' will be greatly appreciated, however big or small.

Regards
Mike.

WHUFC · 24-03-2009, 7:59 AM

Most effective way of saving a deposit? Bank it in the highest earning notice account possible; and at this time is about 2 maybe 3% return.

Those who saved or save for a rainy day have been shafted.

clockworks · 24-03-2009, 8:08 AM

I'm saving hard, not to buy a house, but to retire early. My strategy is to open as many "regular saver" accounts as possible.
These accounts generally pay the highest interest rates (up to 12% a year ago, currently up to 6% fixed) and you pay up to £250 into them each month by standing order.
I'm paying into 3 at this time. The "worst" one I've got is with Barclays, paying 6% interest.

ISAs aren't paying that much - 3.5% is about the best - so only make sense for long term savings.

I'd avoid buying a new property, unless it's a real bargain at auction. Try and buy in an area that's "on the way up", and never buy the best/biggest property in the street.
Buy something that you can grow into - big enough for a family, if you can afford it. Selling a small property and trading up is expensive.

Dave Weystoner · 24-03-2009, 8:26 AM

The only way you will move off the bottom rung of the property ladder is if you can add value to your first house. That means, as Clockworks has said, buying in an area ripe for gentrification so you can ride on the rise in value as the area gets more popular. The other way is to buy a house that needs serious updating and spending a couple of years doing it up. I guess this is the way most of us have moved up the ladder. It doesn't get you an instant shag-pad though.

Dave

IPaintSara · 24-03-2009, 9:56 AM

If you've got the funding in place and are confident in assessing the property and work it may need the best way to buy is at auction. Already there have been some outrageous bargains and this situation will increase as the recession bites harder and more lose their homes.

MrGilmore · 24-03-2009, 10:50 AM

Thanks for the advice so far.

Auction is always a possibility, something I will definitely look into nearer the time. Deposit wise at the moment I've managed to save just under £12,000 at this stage.

Regards
Mike.

Urien Rheged · 24-03-2009, 3:13 PM

I sold my last house and I had to wait for my new/current house to be built so I moved in with my parents whilst it was being built. I didn't have to pay for the new house until it was built, so I put about £30,000 in Premium Bonds for 16 months. I won at least £50 every month and sometimes £100 - £150.
I'm no financial advisor but worked out well for me

Jenn · 24-03-2009, 3:22 PM

If you're going to get a mortgage, aim to have 25% deposit at least as that will get you better rates. Below that and you may as well not have any deposit as you are treated like someone with a 100% mortgage.

MrGilmore · 24-03-2009, 11:38 PM

Quote:

Originally Posted by R1PLEY

I sold my last house and I had to wait for my new/current house to be built so I moved in with my parents whilst it was being built. I didn't have to pay for the new house until it was built, so I put about £30,000 in Premium Bonds for 16 months. I won at least £50 every month and sometimes £100 - £150.
I'm no financial advisor but worked out well for me

R1PLEY,

I've spoken about Premium Bonds with my father once or twice before. He seemed to think they were one of the only safe ways to invest your money nowadays.

Something I'm definitely going to look into further.

Regards
Mike.

IPaintSara · 25-03-2009, 10:01 AM

Premium Bond payouts have been drastically cut BBC NEWS | Business | One £1m Premium Bond prize axed

Urien Rheged · 25-03-2009, 10:12 AM

Quote:

Originally Posted by IPaintSara

Premium Bond payouts have been drastically cut BBC NEWS | Business | One £1m Premium Bond prize axed

The chance of a payout has been reduced by 0.8% and the £1m jackpot prizes are being reduced from two to one. They have also introduced a new range of £25 prizes. I wouldn't say that's a drastic cut.

IPaintSara · 25-03-2009, 10:15 AM

A cut of nearly half seems pretty drastic to me

Smurfin · 25-03-2009, 11:03 AM

Quote:

Originally Posted by Jenn

If you're going to get a mortgage, aim to have 25% deposit at least as that will get you better rates. Below that and you may as well not have any deposit as you are treated like someone with a 100% mortgage.

This isn't true. You can get a good deal with a 20% deposit, which I'm in the process of agreeing. 80% LTV, 5.29% fixed for 4 years....that's pretty good, whichever way you look at it. People need to forget about the interest rates because they're meaningless to most people and don't reflect actual borrowing rates.

The quicker you can get the deposit together the better, because there's never been a better time. I'm waiting to hear about a house offer today, if I get it then it will be the bargain of the year. The risk with waiting too long or just waiting until the market bottoms out is that by the time you've realised it's moving up, it'll be too late. That said, if you don't have the money then save, save save until you do have a deposit ready to go. And keep your credit rating spotless

Jenn · 25-03-2009, 11:27 AM

Quote:

Originally Posted by Smurfin

This isn't true. You can get a good deal with a 20% deposit, which I'm in the process of agreeing. 80% LTV, 5.29% fixed for 4 years....that's pretty good, whichever way you look at it.

But is it anywhere as good as 4.89% fixed for 10 years on 75% LTV?

themilkman23 · 25-03-2009, 4:23 PM

Quote:

Originally Posted by Jenn

But is it anywhere as good as 4.89% fixed for 10 years on 75% LTV?

Yes, it's quite near as good. 0.4% as near by my maths.

Phil57 · 25-03-2009, 7:39 PM

Quote:

Originally Posted by themilkman23

Yes, it's quite near as good. 0.4% as near by my maths.

But ten years is a big difference to four years in everyone else's maths!!

themilkman23 · 25-03-2009, 9:19 PM

Quote:

Originally Posted by Phil57

But ten years is a big difference to four years in everyone else's maths!!

True, but some people may not want a ten year mortgage, the redemption fee would be a crazy amount if you wanted to move or circumstances meant you couldn't pay your mortgage ie you lost your job. The term of the mortgage is not usually based on deposit anyway, more personal preference.

My point was that for the original poster to get the additional 5% deposit, which might mean another few months/years saving, for 0.4% saving on the rate is not a huge amount.

Smurfin · 25-03-2009, 11:30 PM

Quote:

Originally Posted by Jenn

But is it anywhere as good as 4.89% fixed for 10 years on 75% LTV?

No, but hardly in the realms of:

Quote:

Below that and you may as well not have any deposit as you are treated like someone with a 100% mortgage.

That's the only point I was making