House Deposit

Ciphon · 10 Jul 2013 at 15:06

This is intended to be a bit of a "How did you do it" and "What would you do in our shoes" type of thread...

My girlfriend and I are currently saving for our first home together. We're doing everything we can to cut back to absolutely maximize our savings. We're living as frugally as we can without going insane; I can't remember the last time we went for a meal out, or to the cinema

.

Anyway... We both earn reasonable wages, are in our mid-20's, rent a flat, and run 2 cars just to give you perspective of our situation.

My "dilemma" is that although we're saving as hard and fast as we can and have been for months, we're still only 63% towards our target amount for deposit and fee's (I have a spreadsheet :cool:

). We're looking at a minimum of 5 months if jobs go exactly as we hope they do, and a maximum of 8 months if they don't.

Now, we've had a parent offer us the remaining 37% we need as a gift, which is incredibly generous of them. However, we both feel as though we should be doing it on our own, but the temptation of being able to get on with it right now is very strong.

The temptation is made even stronger by the fact that our landlord / letting agent are trying to get us to sign into a new 12 month contract to accept responsibility for all white goods and an increase in rent following a rent review. All of this came off the back of them trying to blackmail us into signing the new contract by not replacing a broken fridge freezer, which is their responsibility under the current contract. I argued this, and we have now received a new fridge freezer and are awaiting the outcome of the rent review.

What would you do / How did you do it?

tom_e · 10 Jul 2013 at 15:08

Take the gift, if you really want to do it alone then agree to repay them when you get the money together. Either way bite their hand off!

Andybtsn · 10 Jul 2013 at 15:10

Take the gift and speak to Parents about setting up a direct debit of paying them back each month. If life offers you a good hand you need to take it, especially when it comes to the housing market!

[DOD]Asprilla · 10 Jul 2013 at 15:12

Take the gift but keep saving. It could be 8 months before you have to hand over any cash anyway so then you could either give it back or use it for renovations that may be required.

Our deposit was my wife's redundancy pay and since the in-laws paid for the wedding, my parents paid our stamp duty. Getting on the ladder is hard so take all the help you can get.

Raumarik · 10 Jul 2013 at 15:27

Take the gift.

I didn't get financial help from my parents for the deposit but they gave me money after I had the house, which helped towards the unexpected costs which just seem to pop up.

By the time you have the house you'll be several months down the line, just remember to save during those and not treat it as extra cash, it's extremely handy to have a few pounds to spare when you move in.

Definitely take it though and pay it back when you can. Unlike the above posters I'd accept it as a gift. Otherwise it's a loan, not something I'd accept from family or friends.

Just ensure it is a GIFT and not a LOAN.

Ciphon · 10 Jul 2013 at 15:39

Thanks for your opinions guys.

Halfmad said:
Just ensure it is a GIFT and not a LOAN.

My girlfriend and I were kind of torn on the gift / loan thing.

It's her parent who has offered us the money. Perhaps strangely, I'm the one that would rather it be a gift than a loan, as I don't really want to be in a situation where we have already increased our monthly outgoings (still to a level we can comfortably afford), but also have debt to pay back.

[DOD]Asprilla;24589707 said:
Take the gift but keep saving. It could be 8 months before you have to hand over any cash anyway so then you could either give it back or use it for renovations that may be required.

I quite like this idea. As you've said Asprilla, it could be months before we're actually in a house, and could therefore pay it back with the money we save in that time...

cotton_flex · 10 Jul 2013 at 15:42

Have you got a place in mind? if not start looking now... took me best part of last year to get into my first house. Again, helped by parents

Ciphon · 10 Jul 2013 at 15:48

cotton_flex said:
Have you got a place in mind? if not start looking now... took me best part of last year to get into my first house.

We've got a general area in mind, and look at houses regularly on Zoopla & Right Move.

A few of our friends think that we should be out looking at houses with the intent to put an offer in right now, but I feel as though it's too early for that as we've only got enough money to cover the fee's and a 5% deposit (ideally want 10%).

valve90210 · 10 Jul 2013 at 15:57

Take the gift!!!

Hyburnate · 10 Jul 2013 at 16:41

Take it if you can make sure it's a gift, but keep saving you're going to need money for small things like towels and cutlery. They're not things you think about but you do need them, even things as small as soap o.O

Ciphon · 10 Jul 2013 at 16:47

Hyburnate said:
you're going to need money for small things like towels and cutlery. They're not things you think about but you do need them, even things as small as soap o.O

Haha, indeed! We're quite lucky (maybe unlucky, as it prevents us from saving more) that we're already renting a semi-unfurnished flat, so we have things like towels, couch, table & chairs, beds, TV, etc.. The only things we'll need are fridge/freezer and a washing machine.

Hyburnate · 10 Jul 2013 at 16:51

Ciphon said:
Haha, indeed! We're quite lucky (maybe unlucky, as it prevents us from saving more) that we're already renting a semi-unfurnished flat, so we have things like towels, couch, table & chairs, beds, TV, etc.. The only things we'll need are fridge/freezer and a washing machine.

Oooo that's good, nothing I can imagine worse than having to try and move your belongings whilst buying the essentials. Like the thought of having to try and store a fridge freezer until moving date.

Little_Crow · 10 Jul 2013 at 17:55

I'm in the same position as my missus' folks have stumped up a pretty considerable sum towards a place. You may need to get it in writing that it's a gift and not a loan, as this could then lead to implied ownership of a part of the property which lenders might not like.

We used Which? mortgage advisers, and I couldn't recommend them enough, they've been incredibly helpful over things like the above and everything has been totally stress free (unlike the rest of the move).

HangTime · 10 Jul 2013 at 20:36

Ciphon said:
"How did you do it"

Mix of savings, inheritance and a donation (roughly 22% of our deposit) from my dad.

"What would you do in our shoes"

Take the cash. Pay them back later if you don't want to have it 'hanging over you'.

In terms of your 'dillemna', 5-8 months saving to reach your target seems pretty reasonable given that you've only been saving for months so far rather than years. Essentially if I've interpreted what you've said correctly you could have saved the entire deposit in only 12-18 months which is pretty good going, I was expecting you to be talking about needing to save for 5 years or something.

Finally I would bear in mind that what you think would be a suitable deposit today may not be so at the time you come to actually arrange the mortgage and/or buy the house (due to changes in mortgage market and/or house prices). In other words you may be thinking "we want to put down a 15% deposit on a £200k house" but the reality is next year you could find that you only really need a 10% deposit on a £180k house, or you find £200k doesn't get you the sort of property you thought you wanted and you need to spend £230k or whatever.

Mr-White · 10 Jul 2013 at 20:54

I'm in the complete opposite situation, got tons of cash but have no intentions of living on my own.

MW

Foxxy · 11 Jul 2013 at 09:50

Mr-White said:
I'm in the complete opposite situation, got tons of cash but have no intentions of living on my own.

MW

Sounds like you want a medal? Lol

*slow claps...*

valve90210 · 11 Jul 2013 at 10:23

Little_Crow said:
You may need to get it in writing that it's a gift and not a loan, as this could then lead to implied ownership of a part of the property which lenders might not like.

Yep, we had this when my parents helped out with buying our house, the solicitors and the mortgage company that wanted proof that we had been given a non-repayable gift (otherwise it would have to be taken into account during the mortgage application process and hence would reduce the amount they would lend.

The solicitors wanted proof as to where the money was coming from statement from my parents and copies of bank statements showing the money in place before the gift...to make sure it wasn't ill gotten gains etc!

DiCe! · 11 Jul 2013 at 11:31

As a single male of 26 who earns mid £20ks I have no idea how I am going to afford a house. It scares the **** out of me.

Ciphon · 11 Jul 2013 at 12:09

I'll be sure to get something sorted in writing if we end up accepting the gift so the banks don't go crazy.

DiCe! said:
As a single male of 26 who earns mid £20ks I have no idea how I am going to afford a house. It scares the **** out of me.

It is damn tough, and it is scary. I'm sure you'll get there, as will we!

Quite a few people I know have the attitude of "I'll rent forever" - I always think, what happens when you're coming up to retirement and you're still renting? Unless you've got an incredible pension in place, I can only imagine it would be a struggle for the rest of your life?

ci_newman · 11 Jul 2013 at 12:10

DiCe! said:
As a single male of 26 who earns mid £20ks I have no idea how I am going to afford a house. It scares the **** out of me.

A few options:

Buy and sub-let some of the spare bedrooms
Find a partner and buy with them
Earn more money

That's about it though really.