Wealth Check: 'We're saving £1,000 a month so that we can buy our dream home'
Stephanie and her partner have set their sights on a three-bed detached house, and then plan to have children. How can they achieve their goal?
Saturday 01 February 2014
Stephanie McIntosh, 22, and her partner Shaun Holloway, 29, are keen to get onto the property ladder, having saved hard for their first home.
The couple have been living with Shaun's parents in Newquay, Cornwall, for the past 14 months, enabling them to save up to £1,000 a month. They are now very close to reaching their £10,000 target. "We want to start looking at how much we might be able to borrow, and the deals available – with a view to buying a place by the end of this year," says Stephanie, 22. "Shaun and I hope that one day we'll get married and have children, but for now our main priority is getting our first home."
Stephanie works as the Research, Development & Innovation Office Manager for the Royal Cornwall Hospital and takes home around £1,000 a month. Shaun is an IT technician and brings home a similar amount.
Both have their current accounts with the Halifax, and get £5 each month (provided they deposit at least £1,000). Stephanie also has £6,000 in a Halifax savings account, while the couple have around £200 in a joint savings account with Nationwide.
"We tend to put money we get for Christmas and for birthdays into the Nationwide account," says Stephanie. "We then use this account for spending money. In addition, we have £1,500 in premium bonds."
The couple are looking to buy their first home in Cornwall. "As I have an NHS career in Truro, I hope to live not too far from there," says Stephanie. "Equally, we are both open to commuting that extra bit further if the perfect house comes along. Ideally we'd like a detached three-bedroom house costing between £150,000 and £180,000."
The couple moved in with Shaun's family in November 2012, and pay £450 a month in rent.
Both Stephanie and Shaun also make monthly loan repayments, having borrowed money to buy cars. "I took out a loan for £3,500 with HSBC in May 2012, and currently repay £150 a month," says Stephanie. "Shaun also borrowed money but all our debts will be cleared by May – and we're very excited about that."
While both have Capital One credit cards, they only use these for their "general spend" to benefit from cashback, and pay them off in full each month.
Once the couple have paid off their debts and reached their £10,000 savings target, they want to go on saving £1,000 a month to cover moving costs such as legal feesand new furniture. "This will mean living off £1,000 a month, but we've done this before," says Stephanie. "We try to be as savvy as we can with our spending, and always check sites like Topcashback.co.uk when buying online. We also use vouchers or promotional codes."
Stephanie pays around £70 a month into an NHS pension; Shaun also has a workplace pension, and pays in around £50 per month. "But we wonder whether we should withdraw the money and put it into cash individual savings accounts (Isas) instead," says Stephanie. "At present, we have no protection policies, but also wonder whether we need to review this."
Our panel of independent financial advisers (IFAs) agree Stephanie and Shaun are doing the right thing by clearing outstanding debts, and making regular cash savings to buy a property. But they urge them to keep saving, both for the short term and the longer term. They also suggest once they've bought their home they should review their protection needs, and think about longer-term investments.
Don't take on further debts
Patrick Connolly from Chase de Vere says the couple are using their cards sensibly, and are wise not to take on new debts. "As they are aiming to buy a house, their overall expenditure will increase, and being burdened with debt repayments will make this far more difficult," he warns. "They are fortunate to have cash savings to cater for short-term emergencies."
Continue to build savings
Mr Connolly urges Stephanie and Shaun to continue regular cash saving. "The more they are able to save, the less they will need to borrow, and so the easier it will be to buy a property," he says. "Equally, they are planning to get married and have children, and building additional cash savings will help them manage this more easily – particularly if one of them takes time off work to bring up the children."
Christopher Daems from Principal Financial Solutions urges Stephanie and Shaun to make use of their cash Isa allowances, with tax-free interest. "They should divert some of their money to an instant access cash Isa," he says. "The current annual allowance is £5,760."
To check the best rates, try sites such as SavingsChampion.co.uk and Moneyfacts.co.uk.
Having taken positive steps to help achieve their home-buying dream, the pair now need to take independent financial advice from an adviser or broker.
This will help them find exactly how much they could borrow, what type of property they can afford, and what monthly repayments might be.
Mark Hibbitt from Sovereign urges Stephanie and Shaun to ensure they're on the electoral roll. "If not, any application to borrow could fail the credit check," he says. "They should also get their reports to check there are no errors on their files. Assuming both have good credit ratings, they may be able to apply for a mortgage from 4 to 4.9 times joint income."
He adds that most while most deals would require a 10 per cent deposit, they could look at the Government's Help to Buy scheme. "This would potentially enable them to buy with a deposit of just 5 per cent," he says.
The Government will then provide a loan for up to 20 per cent – and the couple would then need to take out a mortgage of up to 75 per cent of the purchase price to meet the shortfall.
"Many mainstream lenders are now offering deals," adds Mr Hibbitt. "For example, if Stephanie and Shaun took a five-year fix with Santander over 35 years (at 95 per cent on a £150,000 property), their monthly repayments would be around £700."
Mr Daems reminds the couple that interest rates are currently very low.
"If they opt for a variable-rate mortgage, their monthly repayments will go up once general interest rates go up," he warns. "They must ensure they can afford this. The best way is by opting for a fix."
Don't stop pension saving
Stephanie is very lucky to be a member of the NHS pension scheme, according to Mr Connolly. "This is a fantastic scheme which provides guaranteed benefits that would be very difficult to replicate elsewhere," he says. ."
Our advisers agree Shaun should also stay in his company pension scheme. "While retirement may seem a long way off, as they get older Stephanie and Shaun will be grateful they have been paying into their pensions," says Mr Connolly.
Mr Connolly says once they've bought a property, they should look at longer-term investments such as stocks-and-shares Isas. "These are tax-efficient," he says. "And, unlike pensions, Stephanie and Shaun would be able to access their money whenever they wanted."
Think about protection
"They should seriously consider life assurance and income protection policies when they decide to start a family," says Mr Hibbitt. "Before paying for cover, both should contact their employers to find out what benefits are provided for them. They should also draw up wills."
- 4 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 5 Women think Irish men are the sexiest, survey finds
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...
Day In a Page
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business