Wealth Check: 'I want to save more money and buy my first property'

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The Independent Online

Joby Carpenter has worked as a civil servant for over three years and hopes his career in the civil service will progress - at his current rate of promotion, he could, in five years' time, be earning just over £35,000.

Joby has a loan of over £4,000 with the Student Loan Company but this is his only debt. On the savings front, he has put £400 into an Alliance & Leicester mini cash ISA, and also has £800 in another account with the same bank. This is a monthly savings deal that pays 10 per cent annual interest. Joby also contributes 3.5 per cent of his salary to his civil service pension, about £60 a month.

Joby would like advice on how he can save more. He is also keen to get on the property ladder in the next few years - he needs to save enough money for a deposit on a house. Ideally, this would be in London, but he is also looking at the possibility of buying in Chester or Manchester.

If he did buy outside London, it would need to be somewhere with a strong rental market, as the property would need to make him enough money to pay his rent in London.

Joby also says that he enjoys a full and active social life and does not want to have to curb it too much in his quests to save money and purchase a property

We asked three financial advisors for their suggestions: Paul Barnes from Plan Invest Group, Justin Modray from Bestinvest and Mike Marigold of Montgomery Charles.

Case notes

Joby Carpenter, 29, civil servant, London

Income: £20,900 a year.

Spending: £1,000 a month on rent, bills, food and social life.

Pension: Contributes £60 a month to civil service final-salary scheme, approximately 3.5 per cent of salary.

Investments: £400 in an Alliance & Leicester mini cash ISA and £800 in an Alliance & Leicester monthly savings account paying 10 per cent.

Debt: £4,647 owed to the Student Loan Company.


Before he can really get to grips with savings, Joby needs to know exactly where his money is going. Paul Barnes suggests including repayments on his student loan in his planning. These are currently deferred, but will become payable once Joby's income rises by another £2,000 or so, which is likely if Joby is promoted in the future.

Mike Marigold suggests that Joby should contact the Student Loans Company to ask what impact a pay rise could have on the repayments.

Barnes adds that Joby has already started saving, which is a good thing, but any long-term plans will have to be temporarily put on hold as his initial efforts should be focused on getting together a lump sum to help him get on to the property ladder.

Joby has decent accounts with Alliance & Leicester and little would be achieved by changing them, says Marigold. Justin Modray thinks that Joby should move some of his current account balance to his cash ISA, as it currently pays about 5 per cent annual interest tax-free.

The ISA would be a good home in which to build up a deposit to buy a property, says Modray. He suggests Joby should set up a direct debit from his current account into the ISA account.


Purchasing a buy-to-let property in the North-west could be profitable, if done carefully, but Modray points out there can be a lot of hassle involved and costs.

These could even lead to Joby losing money. The rental income would be taxable, although Joby would be able to offset mortgage interest and maintenance costs. It is also worth remembering that 1 per cent of the whole property purchase price above £120,000 will have to be spent on stamp duty and that another 1 per cent will have to go on legal and moving fees.

Another option in getting a foothold on the housing market would be to join up with friends.

Barnes likes a deal on offer from Britannia Building Society, which has recently launched the Share home loan. As an example, the society will lend up to three times each of up to four people's salaries.

Joby should calculate the deposit he will need to put down on a property to buy - if he can save roughly 5 per cent of the purchase price, this will ensure he gets a competitive mortgage rate. Marigold says that Joby could be able to raise a mortgage of between three and four times his annual salary so long as it continues to rise.

If London prices are out of reach, Joby could contact his local housing association to ask about part-ownership schemes - he might find he is able to purchase as little as 25 per cent of a new home, while renting the balance from the association.

Another option is to purchase a cheaper investment property out of London. Joby has been considering Manchester, and Marigold thinks he should concentrate on university towns, where good rental yields are possible. Northern Rock's buy-to-let range is particularly flexible, he says.


All three of the financial advisers say that Joby's civil service pension is one of the best schemes that's available. It's a valuable commodity that he should maintain contributions to if he possibly can.

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

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