Is now the wrong time to save for a deposit?

[J3OEF]

Me and my wife have been discussing quite alot recently about saving money for a deposit for our own house as we are currently renting an apartment at £600 PCM due to moving out from my mums.

She thinks we shouldn't bother saving at present due to the way the country and economic climate is and how difficult it is for people to get the required deposit as you talking atleast 20k these days, and we should concentrate more on spending our money on holidays and stuff, as she says we are only 26/27 and have a whole life ahead of us to see the world etc.

I however think we should at least save something towards a house, whether it be £100 a month for the foreseeable future, at least then if the market does pick up we would have a nice decent start.

So my question is, does anyone else have a difference of opinion with there OH when it comes to something like this, if so how do you reach a compromise?

Thanks

 

[mjn]

Depends, you got any debts you could pay off early?

If not, i'd save crazy for a few years, and it'll soon mount up in an ISA account.

 

[digitaldecks]

anything is better than nothing. yeah the market is not the best in terms of higher returns, but ISA's and things like that may add a bit more.

Even if you save a grand a year, it will come in handy if you need in an emergency.
Savings is not just about saving for something, its also a little piece of mind.

 

[Dave]

For the sake of all that is good, save your money.

I'm (almost) mid thirties and while financially I'm secure I could have been financially secure in a lovely house in a nice area instead of a small house in a **** hole.

Whether you spend the money on a deposit or anything else is neither here nor there, savings are a safety net you may need and if you don't then spend a couple of months in Borneo with orangutans or something. It may seem like dead money when it's in a savings account but it's still available if required.

 

[JimmyMac]

Definately save, even if it's only a bit. All well and good saying things aren't great now but you might as well save for when things are better. I only wish I had done it in my 20's, I know I could have saved a little bit and still had enough surplus to enjoy the odd holiday and such and it would have put me in a far better position for my 30's. I struck very lucky in the end, my now wife already had the house we are in from a previous marriage and got it at a time when the prices are good so we have a very good amount of equity, otherwise I would never have been able to put a deposit down!

 

[Dancook]

I've JUST started to enjoy saving money at the age of 30. I've always been a spender! It will be good to not go into debt to buy things anymore.

Would be great to be able to save money to move house in the future without need of a mortgage, thinking of all the interest I won't have to pay.

Interest on savings does not excite me much, the amount seems trivial to be honest - which is why at the moment my savings are going into bonds - because the chance of something bigger appeals to me more.

I'm a convert, save! I think I might have two lines of saving - one for a future house move and another for car/camera stuff.

 

[jenam93]

Do you want holidays? You need to save.
Do you want stuff? You need to save.
Do you want to buy your own house? You need to save lots.
Do you want to have kids? You need to save lots and lots.

The only reason you shouldn't be saving is if you have debt. Debt will cost you a lot more in interest than savings can gain you, so try and pay off all your debts first then start saving.

 

[blue max]

Always try to save something if you can. It gives you options.
Obviously it depends what you have to give up to be able to put something aside, but in these uncertain times, I would definitely try and build up a buffer. But as has been said, not at the expense of a cc repayment.

With deposits these days, you might take quite a while to save a deposit, but it's a good thing to aim for.

 

[jassco]

I'm in a similar position, and think that saving is the best thing to do. It takes a very long time to save a deposit, so get saving now and you might have built it up for when the economy does recover and house prices start to rise again. Personally I think there'll be another boom and bust in the mid-long term, so get money saved for the 'good years' part of it

 

[Rasczak]

Save! The OP is currently wasting £600 per month in rent that he could be paying into a mortgage where at least he would slowly but surely be building equity in a property. And at "26/27" surely children might not be that far off?

 

[Wahreo]

Set up a standing order the minute you start earning.

Even if it's a small amount per month, it's something. A lot of people can afford a healthy amount, when it's automatically zapped from your account, you really won't miss it.

I have an amount out of my account every month plus when my Son and Daughter were first born, I set up another two accounts and money goes in those two every month plus christmas money and any other money they get in there. At least then I know that if they wanted to go to University, they have the money there for it.

A mortgage is likely to be the biggest loan you will ever have so the minute you start saving, the better.

If you want to take your foot off the gas and still go on holidays then reduce the amount going out to your Mortgage savings but still save something. The important bit here is to keep putting money in. The years really fly by.

 

[sep8001]

Yes, always try and save when you can and try and get on the property ladder as soon as possible.

My friends started young and now have a very small mortgage, whilst I left it late and have a big mortgage. They can afford two holidays a year where as if I am lucky I can have one.

 

[FZR400RRSP]

I thought 95% mortgages were pretty common again, and even 100% ones were available, albeit with a guarantor needed to back up any potential negative equity in the event of things going wrong?
It's always seemed to me that saving for a deposit, especially saving small amounts, is an exercise in futility.
As you save, property prices increase, meaning you need to save more etc etc
Maybe the OP needs to investigate options that would get him onto the property ladder NOW.
It might mean higher payments for a few years, but at least he's in a property and at some point he will build equity and negotiate a cheaper mortgage.

 

[blue max]

I thought 95% mortgages were pretty common again, and even 100% ones were available, albeit with a guarantor needed to back up any potential negative equity in the event of things going wrong?
It's always seemed to me that saving for a deposit, especially saving small amounts, is an exercise in futility.
As you save, property prices increase, meaning you need to save more etc etc
Maybe the OP needs to investigate options that would get him onto the property ladder NOW.
It might mean higher payments for a few years, but at least he's in a property and at some point he will build equity and negotiate a cheaper mortgage.

What if you view that property prices may drop. There are many struggling at the moment and it is hard to get mortgages, so little to support higher prices. With no new buyers coming in, the whole system grinds to a halt.

 

[FZR400RRSP]

What if you view that property prices may drop. There are many struggling at the moment and it is hard to get mortgages, so little to support higher prices. With no new buyers coming in, the whole system grinds to a halt.

Well that is a risk, but one I'm not familiar with, living in Aberdeen.
Negative equity is an alien concept up here.
Maybe the OP is in an equally 'safe' location.

 

[Liquid101]

Save.

The longer you leave getting onto the property ladder, the harder it'll become. As you suggest, you'll need to have at least 20k saved to make buying a house a reality.

You might also think about what happens if you decide to have children. Childcare costs are going through the roof as well - saving when you're forking out another 600 could be difficult.

My advice would be this - spend the next 12 months treating yourself, go on some decent trips, go out to dinner every week, enjoy yourself. Then knuckle down and save. Before you know it, you'll be in your mid 30's, a couple of kids and not a hope in hell of saving 20k.

 

[FZR400RRSP]

He'll need a minimum of 20k, but can only save £100 a month?
See what I mean about an exercise in futility?
Unless you can save a whack, it seems like farting against thunder.

 

[blue max]

He'll need a minimum of 20k, but can only save £100 a month?
See what I mean about an exercise in futility?
Unless you can save a whack, it seems like farting against thunder.

It may be that it isn't enough for a deposit, but it must be one of the wisest things to do whatever the case. It may only buy the curtains, but you will never regret saving.

 

[FZR400RRSP]

It may be that it isn't enough for a deposit, but it must be one of the wisest things to do whatever the case. It may only buy the curtains, but you will never regret saving.

I thought the whole thread was about deposits, not saving 'in general'
I'm not against that at all.

 

[domtheone]

Indeed it does.


Need a fortune these days.

The only glimmer is that house prices (outside London) are, by and large, not going anywhere fast for the rest of this decade, imo.

They're still so hideously over valued, it'll take over a decade of stagnant prices to bring the long term average house price/earning ratio down from stupid to silly.

Save save save. If nothing else for me, it's 2 fingers up to the government that wants you to spend spend spend and load yourself up with debt.

 

[Wahreo]

Saving isn't necessary to fund a deposit, that money could be used to do the property up if need be or if he get's made redundant it'll help him out. I know a few people that dip into their savings every now and again just to pay their mortgage or bridge a gap.

I survived throughout the recession because I had savings. When your turnover some months is £80, it's a real lifeline having a savings account that has been looked after during the good times.

The point is that having a regular amount going out of your account for savings/investments etc, is always a good idea.

 

[blue max]

I thought the whole thread was about deposits, not saving 'in general'
I'm not against that at all.

I was suggesting he saves in any event. If he aims for a deposit and it is short, there is no damage done. Nobody knows whether he will manage it. But he will be in a far better position if he has tried, than not.

So, I'd say go for it. And the very best.

 

[Wahreo]

Indeed it does.


Need a fortune these days.

The only glimmer is that house prices (outside London) are, by and large, not going anywhere fast for the rest of this decade, imo.

Yes, House prices aren't doing an awful lot outside London. I'd say that a deposit is essential. I really think the OP would struggle without a deposit.

Even remortgaging they want a lot of equity in the house. Banks are still playing it very safe IMO.

 

[Norman]

I wholeheartedly recommend saving as much as possible even if its at the expense of having a good time while young (within reason).
I turned around my personal situation some time ago and being in a positive cash-flow situation is so much nicer than always chasing paying off debt.

I'd also urge the young not to discount the necessity of diverting some of your monthly income into a private pension. I for one don't want to be forced to work till 67 (or older if they move the goalpost again) and I've recently taken significant steps to correct pension apathy in my youth.

 

[w3dal]

We just bought our first house and getting a mortgage on a new build was a nightmare - most lenders would only lend a minimum 85%LTV which left us in a right pickle.

I thought £25k would be good enough but it ended up us having to use a deposit of £45k

For us first time buyers it's proper hard work, but we haven been paying rent on our flat for the last 12 months at £1,000 a month and now enough is enough its time to pay off our own mortgage and not the land lords

Get saving!!!

Good luck

Dal