Wealth Check: Recession-resistant and set on buying a home

His career prospects are good but he has to start again after spending time abroad. A teacher seeks guidance on saving for a deposit. By Harriet Meyer


THE PATIENT

Three years ago John-Mark Evans, 37, took some time out of his career to study yoga in India. "Now I'd like to put down some roots," says the chemistry teacher, who arrived back on home soil last month and plans to settle in Brighton. "I'd want to get on to the first rung of the property ladder," he adds. "But I can't see myself attempting to buy in the next year, as I don't reckon the bottom of the market has been reached."

Currently, he pays £550 a month to rent a room in a three-bed flat in central Brighton, and is taking his time exploring the area. "As I only moved to the coast this month, I need to find my feet before buying a home."

He is earning £25,000 as a secondary school supply teacher, but hopes to find permanent employment soon. "I don't know how easy it will be to get a mortgage as a supply teacher," he says. "But my profession is secure at present, so I feel I'm in a pretty good position." To boost his income, he hopes to teach Ashtanga yoga classes.

Fortunately, he has a solid base from which to start building a deposit. John-Mark has £3,200 in a cash individual savings account (ISA) with National Savings & Investments, paying 1.8 per cent, and £3,000 in an ICICI bank HiSave account paying 2.45 per cent. "As I've been out of the country over the past few years, I haven't been contributing to these savings accounts, but I plan to start as soon as possible."

To fund his travels, John-Mark used compensation received after a motorbike accident. "I got nine months' loss of earnings, which was a nice sum," he says. As a result, he managed to avoid falling into debt during his time abroad, paying off the balance each month on his Lloyds TSB credit card, which he used to rack up free air miles.

With regard to retirement, he has made four years' worth of contributions to the Teachers' Pension Scheme, paying in 7 per cent of salary. He has no protection policies in place.



THE CURE

With a career that remains stable during a recession and a base from which to build savings as the housing market plummets, John-Mark is in a better position than many, agree our panel of independent financial advisers (IFAs). "As a chemistry teacher, he will be in demand and should find a full-time post. From there he simply needs to get into the habit of regular saving," says Mark Wapshott at IFA St Edmundsbury Financial Services.



Property

With prices plummeting, John-Mark is wise to let them fall further before buying a home, agree the advisers. But he has chosen an expensive city.

As a guide he will need a deposit of 10 to 15 per cent to gain access to a decent choice of mortgage deals, says Richard Morea from London & Country. However, even if he can only show a year's worth of supply teaching as income, this should be sufficient to appeal to lenders for standard deals, Mr Morea adds, as teaching is considered a secure occupation.

John-Mark's £6,200 in savings, though, is likely to be "swallowed up in fees and stamp duty", says Dennis Hall at Yellowtail Financial Planning. As a solution, he could opt for the Government's HomeBuy initiative, aimed at key workers such as teachers. Under this scheme, he could buy a share in a property – whatever he is able to afford – rather than all of it.

MyChoice HomeBuy is one of the most popular schemes. John-Mark could take out a low-interest equity loan of 15 to 50 per cent of the purchase price through his local housing association, with interest charged at 1.75 per cent. "And he could take a mortgage for the remaining balance with a willing lender," says Mr Morea.

He could increase his share in the property by 10 per cent at a time by gradually buying more chunks.



Savings/investments

John-Mark should squirrel away as much cash as possible each month towards the property purchase. Yet with savings-account providers paying a pittance in interest, he will have to be patient to build a sufficient sum, says Gordon Bowden of Quainton Hills Financial Planning.

He could benefit from a more attractive rate on his individual savings account by transferring to Marks & Spencer's cash ISA, paying 3.1 per cent, and fixing this for a year, adds Mr Bowden. And while Nationwide's e-Savings Plus pays 2.5 per cent, Alliance & Leicester pays 3 per cent, including an introductory bonus, for the first year.



Tax

John-Mark should check to see if he's eligible for a tax rebate, say the advisers. An individual's annual allowance (currently £6,035) – the amount they earn before paying tax – under PAYE is divided into 12 months to cover the tax year. Depending on when he went travelling, he may find he is able to reclaim some of this sum if it remains unused. He should complete form R40 (available from www.hmrc.gov.uk), with a letter asking if he is eligible for a refund, and send it to his tax office.

To make a property purchase tax-efficient, he could see if his finances will stretch to a flat with a spare bedroom, allowing him the option of renting this out for extra income. The Rent a Room scheme allows him to rent out a room and benefit from up to £4,250 a year in rental income tax free, says Mr Bowden.



Retirement

John-Mark is fortunate to belong to one of the few remaining final-salary pension schemes. But he only has four years of contributions behind him and there are several ways in which he could top up his pension in future.

The teachers' scheme offers the chance to buy added years through additional voluntary contributions (AVCs), which are guaranteed to provide extra income in retirement. "This can be very valuable and does not involve investment risk," says Mr Bowden.



Protection

As he is single with no dependants, John-Mark has no need for life cover. "And," adds Mr Bowden, "he has the luxury of a three-times salary death-in-service benefit as a member of the Teachers' Pension Scheme."

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

Suggested Topics
Finacial products from our partners
Property search
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

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
    The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

    The ZX Spectrum is back

    The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
    Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

    Even the screenwriter pours scorn on Grace of Monaco biopic

    The critics had a field day after last year's premiere, but the savaging goes on
    Menstrual Hygiene Day: The strange ideas people used to believe about periods

    Menstrual Hygiene Day: The strange ideas people once had about periods

    If one was missed, vomiting blood was seen as a viable alternative
    The best work perks: From free travel cards to making dreams come true (really)

    The quirks of work perks

    From free travel cards to making dreams come true (really)
    Is bridge the latest twee pastime to get hip?

    Is bridge becoming hip?

    The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
    Long author-lists on research papers are threatening the academic work system

    The rise of 'hyperauthorship'

    Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
    The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

    The rise of Lego Clubs

    How toys are helping children struggling with social interaction to build better relationships
    5 best running glasses

    On your marks: 5 best running glasses

    Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
    Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

    'Ben Stokes gives everything – he’s rubbing off on us all'

    Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada