Saving for First House

[AndyTeg]

Any advice on the best way of saving for a desposit for a house. I am from the UK, on an average starting graduate salary.

Any advice would be greatly appreciated.

Teg

[reaz]

Well I don't know about the UK so I can't say much. If you were in the US I'd first try to set a realistic timeline to save enough for a house. For example 5 years is a good timeline to save up enough to cover 30% of an average mortgage.

What I'd then recommend is to do a auto deposit of the money into a Roth IRA account. The benefit of this is that the money accumulates and the earnings are tax deferred if you dont withdraw in 5 years. 5 years later you can withdraw the capital and put it towards house. The good thing about this is that you saved up enough and you did not have to pay tax on the earnings.

Your other option is to do a direct deposit to a high yield savings account. The benefit of this is that with the Roth IRA you can lose some money during bearish markets but here you'll be guaranteed some rate of return. The demerit of this is that the earnings are taxed and you probably wont get a good enough rate on the earnings anyway.

Direct deposit is recommended in both cases. You have to alter your lifestyle so that you live as if you are earning less. Don't consider that part of income that has been tucked away in some savings account or retirement account. Don't touch it for 5 years. You'll see that this amount will grow really fast and you'll soon be ready to buy your house.

[laal mia]

if you were in US, i could'v done your loan.

[Geezer]

http://www.shopsdirect.com/sdn/0-129-%5BISA%5D

[bender]

Well I don't know about the UK so I can't say much. If you were in the US I'd first try to set a realistic timeline to save enough for a house. For example 5 years is a good timeline to save up enough to cover 30% of an average mortgage.

What I'd then recommend is to do a auto deposit of the money into a Roth IRA account. The benefit of this is that the money accumulates and the earnings are tax deferred if you dont withdraw in 5 years. 5 years later you can withdraw the capital and put it towards house. The good thing about this is that you saved up enough and you did not have to pay tax on the earnings.

Your other option is to do a direct deposit to a high yield savings account. The benefit of this is that with the Roth IRA you can lose some money during bearish markets but here you'll be guaranteed some rate of return. The demerit of this is that the earnings are taxed and you probably wont get a good enough rate on the earnings anyway.

Direct deposit is recommended in both cases. You have to alter your lifestyle so that you live as if you are earning less. Don't consider that part of income that has been tucked away in some savings account or retirement account. Don't touch it for 5 years. You'll see that this amount will grow really fast and you'll soon be ready to buy your house.

I believe taking out money from a roth IRA without penalty to buy a house is a U.S. thing. He is in the U.K. and would need to check tax laws over there. I also believe in the U.K. they have no roth IRA. I think they have SIPPS, ISA's and personal pensions accounts.

[reaz]

I believe taking out money from a roth IRA without penalty to buy a house is a U.S. thing. He is in the U.K. and would need to check tax laws over there. I also believe in the U.K. they have no roth IRA. I think they have SIPPS, ISA's and personal pensions accounts.

That's why I started off saying that I do not know how it works in the US. Everything else I outlined is for US residents.

[s11nyk]

Any advice on the best way of saving for a desposit for a house. I am from the UK, on an average starting graduate salary.

Any advice would be greatly appreciated.

Teg

Well you would need to have at least a mimimum of 10% deposit for a house in the Uk and considering the increases over the years you are looking at around £25-£30k for a deposit for a decent house, which is live-able.

Then again if you go for a new build, then many companies are offering deposit paid schemes, which also cover all legal expenses and stamp duty, and therefor your only concern would be to ensure you could apply and obtain a suitable mortgage to cover the cost of the monthly payments from your salary.

I know of one firm that deals with high end apartments who for a fee of around £12,500 can negotiate on your behalf....deposits, stampduty, and the other little cost involved.

For this you would get a plush high ened apartment with the top of the range trimming, in the kitchen, bathroom, and the apartment overall.

The best way to save for this is to have a 5 years bond...i do recall Egg offering such a service at around 5% on the basis no funds are withrdrawn over the period.

Best thing to use is www.moneysupermarket.com to search for the best provide and rates that suit your needs.