31 yr old on £35k with £31.7k saved

https://metro.co.uk/2020/12/03/how-i-save-the-londoner-who-has-saved-up…

This is the problem with London and the UK. Wages are too low. The woman is on £35k a year, a very decent salary. She is looking to buy a home but has just £31.7 saved. She could probably get a 2 bed flat or house in greater london with a 90% mortgage but that is all of her savings gone. 20 years ago, her salary would have been £25k and she wouldn't be facing using all of her savings to get onto the housing ladder.  

I think the problem is more people trying to get onto the 'property ladder'

she could have been living her life with that 31K instead of sitting at a table thinking "in 5 years I'll have a mortgage"

mentalists

She can use HTB and get up to 40% equity loan in London. She will be fine 

Property prices are too divorced from incomes in London. She could move out and earn less money but not have ridiculous house prices. If she must live in London, rent and save for retirement so that you are able to draw enough income to pay rent as a pensioner or take a lump sum to buy a house that suits her needs.

 

what an add article/advert for Plum.

It would be interesting to know how much extra she pulls in from her additional work

 

I hope the boyfriend has a similar amount saved, then they have a very good deposit

same as today's pensioners Risky

bitch that I never knew I'd need money once I wasn't working, demand a 9 bed city centre town house, demand to be let off of the TV licence, demand extra money for fuel despite a life of collecting sweaters, demand the taxpayer pay for my buses and find a charity that hands out meals for needed old duffers who never planned for a rainy day 

seems to have worked pretty well for most retirees so far

I mean you might have 30 years worth of rent saved up before you retire.....

Yeah private renting in retirement is not the norm 

it will be 

[RoF] My nanny's assistant's daily cheapo watch is £31k[/RoF]

There’s also the issue that if you don’t really have a  high enough salary, even if you have savings, and help to buy, you might not be able to afford the mortgage.

Many lenders for instance are only lending up to 4 times annual salary or other income gross of tax. This may relax but if you’re on 30 K a year, the maximum lenders are lending is something like 120K.

Average house price in Greater London is north of 400K, you might get a nice one or two bed somewhere in zone four/five/six and not too stabby stabby for 250k. 

On help to buy, that’s 50 K of savings, 80 K help to buy loan, and 120 K mortgage.

Without help to buy, you’re looking at 130 K savings needed (or downgrading expectations to further afield eg Milton Keynes or Essex *shudders*)

 

I think people are slightly deluded about the historic home buying power of people living on their own. Not sure many people decades ago expected to buy a flat and have most of their savings intact. 

Real house prices are falling in the UK. The real crime, per the HTB suggestion above, is the govt lining the pockets of people who build shit quality housing with taxpayers' cash. 

100%+ mortgages were absolutely a massive thing bananaperson. Banks would lend you all the money and chuck in extra so you could buy sofas and beds etc.

agreed bananaman. There was a BBC article this morning saying that house prices have gone up to 8.5% last year in a recession, mainly due to the stamp duty holiday.

If the government really wanted to protect jobs, i.e. among estate agents and conveyancers, they could have extended some kind of payment scheme to those involved. Instead what they’ve done is to hugely inflate the value of property assets across the country and fook over the young/working classes.

Would be keen to hear from Sails on this though as RoFs resident conveyancer

Rof Royalty - a partner at my old gaff bought in 1989 with a 100% mortgage, he is one of the old school and extremely embarrassed and apologetic about how his generation had things better financially. It helps that he is quite grounded and has two sons - mid 20s - working in minimum wage jobs having left university not long ago, and is seeing how they will struggle unless he buys them their own property

Isn’t it quite normal to spend a lot of your savings on a house deposit? 

At that age the whole point of savings is a house purchase isn't it? Then you save again for your BTLs. 

Rof Royalty - a partner at my old gaff bought in 1989 with a 100% mortgage, he is one of the old school and extremely embarrassed and apologetic about how his generation had things better financially. It helps that he is quite grounded and has two sons - mid 20s - working in minimum wage jobs having left university not long ago, and is seeing how they will struggle unless he buys them their own property.


 

Morgan Freeman narrator voice: He did buy them their own properties.

At that age the whole point of savings is a house purchase isn't it? Then you save again for your BTLs. 
 

Not the BTLs, but yeah.

Certainly when I bought my place in 2006 it wiped out most of my savings between deposit and having to furnish the place having lived in furnished rental flats until then.

Jamie it really depends on the type of property and the location.  The main inflation has been suburban and rural family properties.  If anything one bedroom flats in London with no outside space have gone down and those with a garden or balcony have just about held their own.  London prices are by and large still on a downward trajectory overall.

WTF. How on earth has a 30-something on a relative pittance managed to save up £31k !! 

How on earth has a 30-something on a relative pittance managed to save up £31k !! 
 

I actually thought this too. She’s saved almost her gross annual salary. That’s not bad going.

she saved it over five years and her monthly rent is cheap for london

I would find it very tough. I count my blessings that I don’t need to live in London to work in a hyper-specific sector that doesn’t pay very well like some people seem to.

Says she has additional income from other things, which I assume is not included in her annual salary reported in the article. 

its less than 20% of her take home. I save almost 40% of mine

500 quid a month isn't that much to save if she doesn't have debt, splits her rent and bills and is frugal. 
 

ive never been the sort to spend hundreds a month on clothes, I save more than that and I have 2 children (yes I earn more but my living costs are much higher)

I wasn't saving anything like that when I earned twice that salary. What do these people live on? Bread and water?  

+1 @ 3 Ducks.

I was in London, earning considerably more than her and still never seemed to have anything at the end of the month, largely due to the outrageous cost of living.  There is certainly no way I could have saved that sort of money.

She must leat Pot Noodles, never go out and never do anything remotely interesting like go on holiday.

 

My income is just over double hers. In normal times I go on one or two European city breaks a year, take the kids on a U.K. holiday for a week eat out about once a week and spend very little on clothes/make up etc. I can usually save between 700 and 1000 a month (unless I decide to splurge on holiday/large item).

you lot must waste a hell of a lot of money  

She says in the article that she went on holiday last year or so.

Hoolie aren't you married, which means you can basically split the cost of living?

Being single and owning your own property and car in London and the South East, without having to have a lodger, is actually a pretty big expensive enterprise.  

I used to have a lodger who was paying £650 a month.  They moved out and I decided I liked the privacy + use of the second bedroom as storage more than I liked the £650 a month.  

I've always out earned my bad spending habits (well since my mid 20s).

I do find it amazing people on £30k a year have money left over to save at the end of the month if they live in London.  Well done on this person for having saved so much at a young age at that salary.

Maybe overshare but this is my take home pay versus expenses going back 10+ years on a graph. I love to track... (lockdown has clearly curbed my spending other than the house purchase/move and wedding last autumn)

Judge away, RoFers

costs

That's like one of Chris Whitty's graphs - largely meaningless without further data to allow full comparison.

 

There's no Y axis data...I could earn way less than most here. Just showing income vs expenses relative, not how rich I am. or how poor I am :)

There are no figures on the graph - Canadian could be earning fook all and the spikes could represent an extra £200.  

I am married yes, but so is dux and I bet he and his wife have a higher household income than we do 

Conversely he could be doing very well and the spikes a £20k bonus.  

Anyway the woman in the article is cohabiting too 

I miss bonuses, Puppy. Hopefully they'll return shortly....missed them last year.

Canadian could be earning fook all and the spikes could represent an extra £200.  
 

I think we know that’s not the case.

I'm at the the Criminal Bar - 'Inside Info' suggests there are NQs at mid ranking City shops earning more than I do.  Oh well, at least I'm not a desk wallah.

<cries>

 

Many of my m8s have got one BTL. One is buying his third. I may by my first this year to dip a toe in the BTL gig. 

Anyway props to you Canadian. You haven’t let your lifestyle outstrip your income.

To be fair that sounds like a decent enough salary for a stimulating self-employed job. I think I’d prefer that to being the city NQ.

Thanks Chimp - I do on reflection see lifestyle creep though - until lockdowns anyway. The culprit is actually vacations - as income went up they got much more expensive.  Kids are next in line for us, and I can see it will get harder to keep that red line flat.

I thought the BLT market was basically dead following tax changes?

 

Long term investment though? Stick a tennant in there and let them cover the mortgage. In 20 years time either cash out with capital or just have the income as a pension. 

It is unless you buy up north, in london you'd be looking at a massive deposit because yields are so low. 

Many of my m8s have got one BTL. One is buying his third. I may by my first this year to dip a toe in the BTL gig. 
 

I think equities are better now.

Our household income is pretty modest. I don't earn that much more than Ms Hoolie. Mrs D earns a bit more I guess. No children. Not many holibobs. I don't know how people do it. (Well, lockdown is different obviously because there's roger all to spend money on)

We are just quite mean with money compared to many people with similar income I suppose, we don't have expensive interests like ballet/opera etc, we shop on aldi not Waitrose and so on. 
 

I expect that woman is the same. 

thanks Sails

My understanding was that within the London market there is a huge amount of disparity depending on where you are

For instance, prices in Kensington and Chelsea have gone down by around 15% plus but near where I live which is in zone two/three prices/rents have held up fairly well unfortunately

 

I've always saved a reasonable amount. Maybe £500 a month when I first started (I think I started on £34k but I was in Liverpool then so it was a much more decent wage than in London). Clearly a lot more now. I don't spend much on anything apart from holidays (so last year has been cheap - only 2 trips one to Spain and the other to the Caribbean). 

Can someone please explain why average (salary) joe or average (salary) jane deserves to be a home owner daan saaf?

If house prices for a two bed are up to 10x minimum full time wage, I get the concept.  Down South and especially in London, no way Pedro

Canuck, it was like five times your annual income! bonkers

Nah it was like 2 months pay + my regular pay I got that month, so it looks crazy compared to the other months. Also I was in a no income tax jurisdiction when I got it which helped (those are take home pay figures)

"Real house prices are falling"

 

The ones I see in adverts and articles must be fake ones then

The other thing is that so many people I know in their 40s have profited, and continue to profit, off fairly good capital growth in properties they have bought as investments over the past 10-15 years. While being a BTL landlord is a massive hassle and rental yield saw less and less generous, the fact is that house prices do generally rise at a steady rate over time. A couple we know for instance - good friends - earn £70k a year gross between them but over the last 5 years have experienced capital growth of 200-250k in the value of their BTL property. 

Jamie don't fall into the capital appreciation BTL trap.  It's all good until the banks aren't lending and you can't refinance to take a bit more out to cover the annual loss.  If you're going into make sure it stacks up as purely an income producing investment and if it goes up in value it's a bonus. No professional property investor ever invests in a property where the return relies purely on value growth as a result of external factors.

I get infuriated by the people who quote price growth figures for the whole of London as there is no single market in London but a raft of markets which are all subject to different factors.  Exchange rates make a huge difference in the prime market but nobody is going to buy a three bedroom house in Surbiton because the Euro-Pound exchange rate shift a couple of basis points.

I expect Nationwide know less about it than some flippant internet tede that's looked at some adverts, so stand corrected. 

According to RoF over the last few months (so it must be correct!), London house prices are about to crash, so she should just hold on for a while, keep saving and pile in when she sees that the market has bottomed out........

Sails I am aware of this - my parents used to be BTL - but what I’m saying is that if you get it right, and in a rising market, you can potentially get huge windfalls that outweigh salary income.

Other people I know in their late 40s and 50s made a lot of money this way in the 2000s through BTL - buying, redecorating, renting out and then flipping a 5-10 years on. More money than their net salary income.

While there is considerable risk involved, my gripe is that young people these days do not have those investment opportunities.

(You may argue that from a social and economic stability point of view that is a good thing, but it does jar when older people moan about millennials)

Isn’t the big question what her expectation of salary rises are?  Every generation has had to scrimp  and save when starting out and the first house they buy will be pretty crappy.  These days deposit is the limiting factor,  in the old days it was repayment affordability

TBH she should probably hurry up and get a house that can sleep 10-15 somewhere near the sea for £500k or less, furnish it off freecycle, cane it on AirBnB following unlock and then sell it with the benefit of entrepreneur's relief in 2 years' time, pushing all her profits into a lifetime ISA. Reckon she would have £60k by the end of it. 

bananaman please provide evidence of any current drop in house prices... cos I ain't seen it despite worst recession in 3million years