Wealth Check: 'Should I buy a property now – or wait?'

Since leaving university, Julie Chiromo, 36, of north London, has struggled to keep on top of her student loans and other debts. Although she currently rents a flat on her own, she hopes to buy a property within the next five years, but is concerned her financial situation may make this aim difficult.

"I have been thinking of buying a house, but with the withdrawal of 100 per cent mortgages and my current financial situation, I do not think this is a viable option for me at the moment," she says.

CASE NOTES: Julie Chiromo, 36, community care manager, London
Current salary: Julie's salary is approximately £20,000 to £25,000 per annum.
Monthly outgoings: she spends around £1,301 on rent, food and bills.
Savings and investment: Julie saves £100 per month.
Debts: she has £2,500 in student loans, on which she is paying interest at 4.8 per cent. Julie is also paying £100 per month towards a car loan.

We asked three financial advisers to take a look at Julie's situation: Mel Kenny of Radcliffe and Newlands, Dennis Hall of Yellow Tail Financial Planning and Keith Churchouse of Churchouse Financial Planning.

Paying off debts

The advisers suggest that generally it is better to pay off debts before saving, as the interest payable on debt is usually higher than what is received on savings.

Kenny suggests that Julie draws up a financial plan that she can stick to. This way she will feel more comfortable and in control of her situation with the knowledge that her income is working hard for her.

"Until the summer of last year, the interest rate on student loans was very small and encouraged minimal payments," he says. "The rate has now doubled to 4.8 per cent making it less attractive to have."

Churchouse estimates that Julie is currently paying £75 towards her student loan automatically. "I recommend that Julie focuses on using any excess income to repay this as soon as possible," he says.

Julie also has had concerns regarding paying off her car loan over the last two years. The advisers suggest that as the car hire loan is likely to be above cash ISA rates, paying off this loan should be a priority.

Property

The mortgage and property market is likely to be quite different in five years' time. The advisers all agree that Julie will need to be disciplined with her finances if she is to keep her financial options open. "Julie should check her eligibility for the Key Worker Living programme, a government initiative," says Kenny. "With this she may be able to obtain a loan to buy a share of as little as 50 per cent of the property's value," says Kenny

Alternatively, Julie could work on the assumption that she will be able to raise a mortgage on 3.5 times her income and would require a 10 per cent deposit. "At today's income levels that would equate to being able to borrow £87,500 and Julie would need almost £10, 000 for a deposit, so she would be looking for a property costing under £100,000 and there are not many of these around in Greater London," says Hall.

Savings

Julie is currently saving £100 a month. She should continue to set aside money on a regular basis into a suitable savings account such as a cash ISA. Kenny says: "Egg's mini cash ISA currently attracts 6.05 per cent variable interest per annum tax-free. Over the next five years this could be used to either pay off the student or car loan, go towards a property deposit or make further contribution to her current pension."

To find an independent financial adviser in your area, visit www.unbiased.co.uk

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

Life and Style
love + sex
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Life and Style
A statue of the Flemish geographer Gerard Kremer, Geradus Mercator (1512 - 1594) which was unveiled at the Geographical Congree at Anvers. He was the first person to use the word atlas to describe a book of maps.
techThe 16th century cartographer created the atlas
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
News
i100
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

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Christine McCleave: FP&A Analyst

    £36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
    Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

    What is it like to live with Alzheimer's?

    Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
    The Internet of Things: Meet the British salesman who gave real-world items a virtual life

    Setting in motion the Internet of Things

    British salesman Kevin Ashton gave real-world items a virtual life
    Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

    Election 2015: A dead heat between Mr Bean and Dick Dastardly!

    Lord Ashcroft reveals latest polling – and which character voters associate with each leader
    Audiences queue up for 'true stories told live' as cult competition The Moth goes global

    Cult competition The Moth goes global

    The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
    Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

    Pakistani women come out fighting

    Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
    Leonora Carrington transcended her stolid background to become an avant garde star

    Surreal deal: Leonora Carrington

    The artist transcended her stolid background to become an avant garde star
    LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

    Education: LGBT History Month

    Pupils have been discussing topics from Sappho to same-sex marriage
    11 best gel eyeliners

    Go bold this season: 11 best gel eyeliners

    Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
    Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

    Cricket World Cup runs riot to make the event more hit than miss...

    The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
    Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

    Katarina Johnson-Thompson: Ready to jump at first major title

    After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot