Wealth Check: 'I want property and a cheaper phone package'

Currently living at home with her parents, recent graduate Nicole Lester, 23, commutes from Essex to London where she works as a sales and marketing manager for a photographic syndication company.

Nicole is aiming to save for a deposit on a house and perhaps build up a property portfolio. She has debts totalling £3,000, consisting of a student loan and three credit cards with Egg, NatWest and Virgin.

Concerned that her mobile phone bill is costing £60 a month, Nicole would like advice on how to reduce this cost and upgrade her phone to a better model.

We asked Lisanne Mealing of MDM Associates, Rob Clifford of Mortgageforce and Anthony Ball of OneCompare.com for a professional opinion.

Case notes

Nicole Lester, 23, Witham, Essex

Personal: Nicole works as a marketing manager for a photographic syndication company earning £26,000pa. Monthly outgoings total £500

Property: Looking to buy her first home, reduce debt and save for the future

Debt: £3,000 owed on student loan and three credit cards with Egg, NatWest and Virgin

Mobile phone: Costing £60 a month with T-Mobile, but benefiting from 400 free texts (exceeded) and 400 free minutes.

MORTGAGE

Getting a foot on the property ladder is entirely sensible and every year counts, says Clifford. Doing so at Nicole's age and soon after graduating is not unusual but many first timers face a serious affordability gap, given that earnings have grown so much more slowly than house prices.

Nicole is right to aim to save a deposit as almost all lenders expect to see a personal stake of at least 5 per cent of the purchase price.

Clifford estimates that if Nicole decides to buy a property as her main residence then her earned income would make it possible to borrow at least £100,000, subject to the extent of any existing outgoings on credit cards.

Some lenders largely disregard the credit card debt, while others deduct these outgoings from income prior to calculating what level of mortgage is feasible. For Nicole, a mortgage in the range £95,000 to £115,000 could therefore be on offer.

Building a portfolio of residential property is increasingly common as buy- to-let mortgages have become so competitively priced and so widely available. Some lenders will disregard Nicole's earned income and instead base the lending decision on the rental income from the property in question.

Beware that buy-to-let loans almost always demand a minimum 15 per cent deposit, which might push this particular financial plan a few years away for Nicole.

One option Nicole could consider, continues Clifford, would be involving her parents with the mortgage transaction as a joint applicant or guarantor. This might enable Nicole to get on to the housing ladder much more quickly, at a time when house prices are relatively stable and when there are some great mortgage offers around, such as 4.75 per cent fixed for two years from West Bromwich Building Society.

DEBTS

Nicole should perhaps consider a consolidation of her three credit cards with a lower rate of interest, especially if she is going to keep outstanding balances on it. Northern Rock is currently offering 0 per cent on balance transfers for six months with a standard continuing rate of approximately 8 per cent.

If she intends to keep nil balance on her credit cards, she could go for another scheme where she is offered rewards or cashback. An example would be American Express Blue, with double money back for the first three months and 1 per cent on most purchases after that point. The current APR is 6.9 per cent, although a higher rate may be offered depending on status.

MOBILE PHONE

Ball says Nicole's mobile phone bills represent an excellent opportunity to save money. Nicole currently pays £60 a month with T-Mobile. For this she gets 400 free texts and 400 free minutes at anytime. However, on average she uses 300 minutes and 600 texts a month. By going over her limit she can end up paying as much as £120.

Nicole has a Nokia 6170 flip phone and would be looking to upgrade to something similar. She needs to choose a new tariff carefully - some 37 per cent of mobile phone users exceed their monthly allowance every month.

Nicole could choose from several handsets, all of which are free on the top tariff (online 200 texter option from O2) and would save her £30 a month. As Nicole is keen to stick with a flip phone, he recommends the new Motorola v3i and Motorola PEBL U6. The Nokia 6101 and Samsung e530 are also possibilities but Anthony thinks these are less cutting edge.

For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Financial Adviser

    £20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

    SThree: Graduate Recruitment Resourcer

    £20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

    Guru Careers: Application Support Analyst / 1st Line Support

    £25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

    Guru Careers: .NET Developer / Web Developer

    £45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence