Wealth Check: 'I want property and a cheaper phone package'
Saturday 21 January 2006
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.
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.
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.
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.
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 email@example.com
Independent Partners: See how much you could save by switching credit cards. Compare now
arts + entsThere were towering ideas, some scintillating performances and revelatory grooves... our writers pick out their personal highlights
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
elephant appealPrince William signs up for our charity appeal
peoplePrepare to be entranced by worms as the molecular biologist gets ready to give the Royal Institution science lectures
elephant appealSo says man jailed for cutting off dead elephant's tusks
booksWe examine the best titles for teens
voicesPeople moan that Christmas is too commercial, the spirit lost. But it is a time to over-indulge, and always has been, says DJ Taylor
scienceResearchers teach border collie to understand sentences using more than 1,000 words
booksA Christmas story in six parts
travelWill high-value tourism help the workshops of this Renaissance city?
food + drinkA trifle without custard? Surely not! Nonsense – and here’s three to finish your festive meal that prove it
Geoffrey Macnab does not like the comedian's big screen debut
- 1 Top PR exec Justine Sacco under fire for sending racist tweet before flying to Africa
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 The publisher who played with fire: the battle for control of Larsson's £30m legacy
- 5 Police seize possessions of rough sleepers in crackdown on homelessness
Tom Daley ‘is gay because his father died’ says UK evangelist
Iain Duncan Smith leaves Commons food banks debate early
David Cameron takes his biggest gamble yet as he gets tough on Europe over immigration
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
Anachronistic and iniquitous, grammar schools are a blot on the British education system
Scientists ‘incredibly concerned’ for fate of banana as plagues and fungus infections spread across world’s supplies
- < Previous
- Next >
iJobs Money & Business
£59999 - £80001 per annum + Benefits: Pro-Recruitment Group: A Top 10 firm in ...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Project Manage...
£60000 - £90000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£Negotiable: Citifocus: High calibre individual with institutional client serv...
Day In a Page
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.