Obviously though, as well as some great advantages to this there are a few pitfalls to avoid. Keep reading to learn more about how to decide if it’s a good idea, what the main advantages are, how to get a joint mortgage, and how to sure you’re protected if things go wrong.

• Is it a Good Idea?
• Advantages of buying with friends
• Disadvantages
• Getting a Joint Mortgage
• Protecting Yourself
• A Further Note
• More Useful Reading

Is it a Good Idea to buy a house with friends?

Getting a joint mortgage is always much more affordable than getting one on your own. Lenders look at the combined income when considering how much you are able to borrow. So, if you’re splitting this between two, three, or four of you, then you can afford a bigger mortgage.

You need to be careful before jumping into any decision though. Think about the pros and cons of buying a house with friends and whether it’s actually suitable for your personal circumstances. Do you have any existing debt? Do you have job security? Are you sure you can live with the people you’re buying with?

You need to make sure you have complete trust in the person, or people, you commit to getting a mortgage with. Any failures on their part to make payments will negatively impact you and your credit score, not to mention your friendship. It’s a good idea to act like a bank with each other – look at their credit scores and financial history so you know what you’re getting into and hopefully there’ll be no nasty surprises later on.

Not all lenders offer mortgages for those buying a house with friends. Speak to an independent mortgage broker – all of you, together – to clarify your current financial situations and find the best deal.

Advantages of buying a house with friends

There are lots of advantages in this kind of situation. The appeal of buying with friends is clear when you consider that:

You share costs

Not only do you share the cost of the deposit, mortgage repayments, and fees, but you can split the cost of any necessary property maintenance and repairs that need to be done.

You can get a better mortgage deal

Tight mortgage requirements mean for most lenders you need a minimum credit score of 680 and at least a 5% down payment. This makes it much harder to qualify on your own, but with more people contributing to the mortgage your odds of approval increase. Lenders will also often only take the two highest incomes and credit scores into account when calculating a shared mortgage. (If any of you has a bad credit score, though, this will impact the overall mortgage affordability).

Let’s say you’ve saved £15,000 towards your deposit. On your own, that won’t get you very far. But if four of you each have £15,000, your total deposit is now £60,000. You can afford a bigger mortgage and/or get much better interest rates.

Earn Home equity gain

If you’re already renting with the friends you want to share with, you’re wasting money together. What you currently spend on rent could be going towards a mortgage. In fact, your monthly outgoings will likely reduce, too: mortgage repayments are (generally) cheaper than rent! Let’s say the four of you live together now and you each pay £500 on rent. That’s a monthly cost of £2,000! For a property costing £300,000, with a deposit of £60,000, your monthly costs will be around £1,100 a month. Between four of you! So instead of forking out £500 on rent, you’re paying almost half at £275.

Not only do you pay less each month, you’re paying towards an investment asset. So, when you decide to sell up, you and your friends will walk away with the money from the sale of the house. This is compared to leaving a rented property where you walk away with…nothing. If your property has gone up in value, you could sell for more than you paid for it and make a tidy profit, too!

Disadvantages of buying with friends

However, while all of those things sound amazing, take time to consider the pitfalls of buying a house with friends, too.

It’s hard to move

If any disagreements arise that can’t be resolved, unlike renting you can’t simply move out. Selling the house, selling your share, or refinancing are your main options. You might be able to get a tenant in to pay rent on your share, if you can’t afford to sell. However, they may not all be feasible depending on whether you qualify and selling a house usually takes months.

Your credit score could take a hit

Bear in mind that if your friend misses a payment, it can damage your credit score, too. This is because you’re officially tied financially – so their debt on the house is also yours. Keep an open conversation going about your money situations when you’re living together. This will help sudden shocks if someone can’t pay their share of the mortgage. It’ll give you a chance to put safeguards in place, or help them find ways to make extra money to pay for it.

You’ll struggle to get other loans

Lenders look at the total amount of credit (debt) available to you. When you’ve got a whopping mortgage on your credit score, relative to your income, it could be harder to get other loans like car finance, personal loans, or credit cards. Hopefully, with the money you’re saving by not renting anymore, you’ll have enough spare capital each month that you won’t need to access more credit. However, it’s definitely worth bearing in mind when you’re weighing up your options.

Getting a Joint Mortgage

Four people is the maximum you can have on a joint mortgage. Generally speaking, most lenders will take the two highest salaries into consideration for how much you are eligible to borrow. If you are contributing different amounts for the house deposit you can also decide how you share the equity in the property if it won’t be equally divided.

After you have taken out a mortgage, any changes you want to make, such as borrowing more, will have to be approved by all the borrowers named on the mortgage first.

As you apply for a joint mortgage you need to consider what kind of home ownership you want – you can either be joint tenants or tenants in common. Seeking legal advice before making this decision is wise, but generally people in long-term relationships usually opt for the former while the latter is the popular choice for people taking out mortgages with friends and family.

Joint Tenants

• Have equal rights to the property.
• Both can claim an equal share in any profit made if the house is sold.
• The other tenant will automatically inherit the property if the other dies.

Tenants in Common

• All tenants can own a different share of the property.
• One tenant won’t automatically inherit the property if the other dies.
• Can choose who to leave your share to in your will.

Protecting Yourself

Always take sensible precautions and don’t rush into any financial decisions. You will need to hire an attorney to create a cohabitation agreement which outlines information to minimise disagreements or problems down the line and protects you and your investment.

A cohabitation agreement should cover:

• How much each party will put towards the deposit.
• Define what share of the property each person owns.
• How the property will be valued if you decide to sell and who will handle the process.
• What will happen to the property in the event of the death of one or more partners.
• Details on specific procedures to deal with any disputes and disagreements that may arise.
• How will the cost of maintenance and repairs be paid, and will the cost be shared.
• Whether or not rooms can be rented out.

A Further Note

It’s important that each partner has a will in place. We also recommend having a life insurance policy as well to at least cover the cost of the mortgage should you die or become terminally ill. If someone gets married after buying the house with you, make sure they have a pre-nup in place that clearly sets out what they own.

Another good idea to minimise disputes is keep detailed records of all costs – from the deposit and monthly repayments to utility bills and maintenance costs.

More Useful Reading

Check out more of our useful articles on mortgage advice and how to get onto the property ladder.

• Should You Fix Your Mortgage?
• Don’t be Embarrassed to Get Bad Credit Mortgage Advice
• How Do You Get a Good Mortgage?
• How to Get a Mortgage: The First-Time Buyer Guide
• Alternative Ways to Get Your Own Home

The post Buying a House With Friends appeared first on MoneyMagpie.

Here are some alternative ways you can afford a home – from self-building to property schemes, there’s something to suit every type of buyer.

• The rent problem
• Get cheap chain-free housing
• Help To Buy scheme
• LISAs
• Shared ownership schemes
• Self-build homes
• Property auctions
• Buying property with a friend or partner

The Rent Problem

Paying over the odds in rent has left many house hunters unable to save for a large deposit, pushing back the prospect of home ownership until later in life. New figures show that wannabe home buyers estimate they won’t be able to own a property until they reach the age of 33.

Rent increases – especially in London – have priced many out of the housing market. The average rent in the UK is over 30% of the household income – and in London, that rockets to a whopping 61%.

These figures mean there’s less left over in the month for other household costs: food, insurance, car maintenance, commuting costs, utility bills… how on earth do people save ANY money at all?!

Buying a house through the typical route means you’ll need at least a 5% deposit – or 10% if you want a decent rate. As the average house price in England is £309,512, Wales £222,295, and Scotland £199,971, that means first-time buyers need to save an average minimum of at least £12,000 (and that doesn’t include the cost of finding and buying a house, either).

Years ago, the Government introduced some policies like stamp duty holidays and Help to Buy to ease the housing affordability crisis. There was a reasonable uptake on these schemes – but the strict rules around them still limited who could access cheaper housing schemes.

More recently, there have been additional schemes introduced, like Lifetime ISAs and local councils expanding shared ownership schemes beyond local authority properties. Let’s take a look at how you could benefit from these options to buy a cheap house and get on the property ladder.

Chain-free housing

A ‘chain-free’ property is one where the seller does not need to purchase new property after the sale, which means that your housing deal does not depend on lots of other buyers who at any stage could break the chain and collapse your purchase or sale. This often happens when a couple have moved in together and one partner needs to sell their old home, or someone has inherited a bereavement property and needs to sell it.

Chain-free housing is much easier to negotiate as there are only two parties involved: you and the vendor. You don’t have to worry about someone else’s property sale or purchase falling through – which often affects property chains – and you can be more flexible on exchange and completion dates. It’s much easier to get a cheap house this way as you can negotiate on price, too: they’re eager to sell!

Help To Buy

The Help to Buy scheme is now closed to new applicants – but if you opened a Help to Buy ISA before November 2019, you can still make the most of it!

The Help to Buy scheme helps first-time buyers save the deposit required for their first home. The ISA account lets you pay in a maximum of £200 a month (and an initial transfer of £1,200). The Government tops up whatever you’ve saved by 25%, up to a maximum of £3,000.

If a couple buying a home both have a Help to Buy ISA, they each get the bonus, taking the potential maximum bonus to £6,000.

You can then use your savings and the bonus to fund your deposit. You can’t take the money out for anything else (OK, you can, but you don’t get the bonus and lose any interest).

When you’re ready to buy a house, you’ll need to find a Help to Buy mortgage. When that’s agreed, your solicitor can arrange for the funds in your ISA to act as a deposit for your house – and claim the 25% bonus.

The scheme closed to new applicants on 30 November 2019 – but if you missed it, you can now access Lifetime ISAs instead.

Lifetime ISAs

Lifetime ISAs (LISAs) have taken over from Help to Buy ISAs. They’re designed to help you save for your first house – or your retirement.

You can save up to £4,000 each year into a LISA. The Government tops up a 25% bonus. Like a Help to Buy ISA, both people in a couple can have their own LISA and take advantage of the bonus.

The difference here, however, is that you can either use the funds like you would have on a Help to Buy ISA (to fund the deposit on your first home) OR keep saving into the account until you’re aged 50. You can then access the money when you’re aged 60 – meaning a minimum of 10 years’ accrued interest AND a 25% bonus. If you choose this route, you’ll access the money as and when you like – and unlike a pension it’ll always be tax-free (as it’s in an ISA).

The LISA was introduced to encourage people to save for their retirement. Getting onto the property ladder is seen as one way of protecting your future investments – while paying into savings you can’t access until you’re 60 is another.

You’ll sacrifice the 25% bonus and take a 6% hit on any money you withdraw that’s not for your first home or after the age of 60, meaning you’ll get back less than you paid in.

Unlike a Help to Buy ISA, which is a cash ISA, the LISA is a separate type of ISA. This means you can pay into your LISA as well as a cash ISA every year.

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Shared Ownership

Shared ownership is where you buy part of a house and the housing association (or developer) owns the rest. You pay your mortgage and a small rent each month on the portion of the house you don’t own. It’s a cheap house option if you want to pay off your home over a long period of time.

You can ‘ladder’ your ownership, too. Over time, you can buy more of the property until you own up to 100% of it. This is a good way of getting onto the property ladder if you’re struggling to save a deposit, as you typically need only 5% saved. However, make sure you can afford both the mortgage and rent costs each month.

You can move house when you like – if you still only own part of the house, you’ll get the relevant proportion of the sale price. You usually have to offer the house back to the association before you can put it on the open market, which means you may not get the best value for it.

Local Council shared ownership schemes

Local councils used to limit shared ownership to ex-social housing properties. These days, however, many have opened up their shared ownership options to help first-time buyers purchase in their area. Properties may not even need to be listed by the council – some authorities offer a shared ownership option on ANY property. More commonly, however, councils will list suitable properties on their website. They’ll offer shared ownership in the same way as above – but it means you could buy a house that doesn’t fall under typical shared ownership requirements (i.e., part of a new build development or as ex-social housing).

Self-build a cheap house or tiny home

Around 11,000 people build their own home each year and you could be one of them. Don’t be put off by the term ‘self-build’ either – less than 10% of people who take this route actually get involved in the building part!

WHAT DOES SELF BUILD ENTAIL?

You need to buy a piece of land first. You’ll have to find land that’s near (or already connected to) mains supplies of water, gas, and/or electricity. If you find land in the middle of nowhere, connecting these essentials could be prohibitively expensive.

A good place to start looking is at land that used to have housing on it. There’ll be utilities connections nearby and you may be more likely to get planning permission for your home.

You could also buy land that already has planning permission for a house to be built on it. This will be more expensive than land that doesn’t have permission yet – but you may also get access to architect’s plans from a previous project that was never completed. This could save you serious cash!

Now, the median build cost of self-building a home is £270,000 – but the average market value for the completed home is £500,000. That’s a huge profit!

Much of the cost is in the land purchase, planning applications, and labour. If you’re willing to self-manage the building project, you can save around 20% of the total cost – and if you want to build some things yourself (if you have the experience) that’ll knock up to 40% off the total cost.

Design and build options

Self-building is a great way to design the perfect home you’ve always wanted. That, however, comes with a huge price tag. If you’re after a cheap house, you could look at pre-fabricated home options.

These are particularly ideal if you want a fast build and an eco-friendly house. Panels are constructed away from the site and then delivered and built in just a few weeks. The speed at which this occurs, plus the ‘cookie cutter’ process, slashes build costs.

Join the Tiny Home Revolution

If the eye-watering £270,000 average price tag put you off this idea – hold on!

Remember, that’s for the AVERAGE self-build home. Most self-builders build their own home later in life, when they want to build their dream ‘forever’ home. That means the properties are generally quite large with bespoke features.

Tiny homes, however, are a growing revolution. They can be mobile, like these, or you can simply buy a small land plot and get inventive with your space-saving designs. They’re a long-term cheap house, too: install solar panels or other environmentally-friendly features to reduce your bills and running costs.

If you opt for a pre-fabricated tiny home self-build, you could have your entire house built in less than 24 hours. Seriously!

Self-build mortgages

You can still get a mortgage for a self-build project, but the terms are different. You’ll also get the money in stages rather than as one lump sum.

Property auctions reveal cheap house gems

We’ve all watched Homes Under the Hammer at some point. That’s what auctions are about: finding a cheap house in need of a little (or a lot) of renovation for well-below market price.

Harder-to-sell properties in need of a bit of TLC are often offered at competitive ‘reserve’ prices well below market value. As well as the money-saving bonus, auctions cut out the usual long drawn-out process of house buying.

Beware though, this option does involve a considerable amount of effort and could be a huge financial project. If you’re willing to put the time and energy in, you really stand a chance of saving some serious cash.

You can now buy houses using the ‘modern method of auction’ too. That means you’ve got a bit longer (28 days) to confirm a mortgage for your purchase.

A traditional auction means you’ll need serious funds in your account when you’re already at the auction house – but the ‘modern method’ gives you extra time.

You’ll not usually be able to conduct lots of surveys on your auction property before it sells (and if you do, there’s no guarantee you’ll be able to buy the house on the day if someone outbids you).

However, there are some real bargains to be had!

So, how do you buy a house at auction? See our nine-step guide to buying at auction.

Buying with a friend or partner

If other options sound too much like hard work, you should consider joint ownership – a great way to get on the property ladder if you’re a first-time buyer. It’s not a way to get a cheap house, but it’ll certainly get you on the way to buying your own home in the future.Two wages are better than one, especially if you’re looking to get a fairly large mortgage; but beware, money matters between friends and lovers can lead to problems!

Obviously, you need to know you can stand living with them day in, day out. Even if they’re wonderful, you should get things ironed out by a legal expert to protect you both.
According to the law, you can own a house with someone else either as joint owners or as tenants-in-common. Although they sound the same, legally there’s a very important distinction.

JOINT OWNERS

Two people (or up to four, on some mortgages) own the whole house between them. Neither has a separate share they can sell. There’s no fancy word or process to describe this. If one of the owners dies, the other(s) automatically inherit that person’s share of the house. No will written by the friend and co-owner giving it to family can change that. This is a common type of ownership between married couples.

TENANTS-IN-COMMON

This is when you both own half of the house (or a different percentage depending on what you agree). So, each owner has a distinct share of the house meaning that if one of the owners wishes to leave his or her share to someone else, they can. The other person cannot just sell the house and get all the money. It has to be divided up according to the percentages agreed.

So, if you’re cohabiting or are just friends trying to save money by living together, this protects you both.

If one wants out, the other owner will have the option of buying up their share of the property too.

Joint ownership means you can share your all your bills, the costs of buying a property and your mortgage repayments.

Both these options can help get yourself on the property ladder. You’ll also benefit from potential future profits and have the security of owning property.

If you found this article about how to get a cheap house useful, you’ll love Alternative ways to get your own home.  It’s packed with ideas for how you can buy your own place even if you can’t get the deposit together. 

If you’ve tried your hand at housing auctions, self-builds or joint ownership, we’d love to hear about your experiences via our Facebook or Twitter pages.

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

The post Can I afford a home? How to buy a cheap house appeared first on MoneyMagpie.

What is a First Time Buyer Mortgage?

Just £5,000 Deposit for a £500k Property

Other First Time Buyer Mortgage Options

The Risk of Large Loan to Value Mortgages

Are LISAs Useful?

What Is a First Time Buyer Mortgage?

If you have never owned property before, you could be eligible for a first time buyer (FTB) mortgage. There are, however, lots of restrictions and they vary between mortgage providers and even mortgages within the same provider. The key thing is you must never have owned property before.

If you’re buying with a partner, friend, or family member who has previously owned property, all is not lost. You can buy a property as a first time buyer with someone who is not one, and still make the most of great first time buyer deals.

Is £5,000 for £500k Mortgage Too Good to Be True?

Yorkshire Building Society recently launched an incredible first time buyer mortgage offer, requiring buyers to have just £5,000 for a deposit on properties up to £500,000. Is is too good to be true?

The deal is real, but there are several restrictions you need to be aware of before applying. The maximum loan to value is a huge 99% – which means if you have £5,000 saved up you could get a mortgage up to £495,000. The lending criteria is strict and you’ll need to have an excellent credit score to boost your chances of acceptance.

The first five years, the loan rate is fixed at 5.99%, and then becomes variable. Fixing is common in mortgage deals, but it is worth noting that if you want to shop around for a better mortgage rate after those five years, such a high loan to value mortgage could make it harder to get a good rate later on. If, however, you have a lower loan to value (such as a £5,000 deposit on a £250,000 house), this is less of an issue – it’s just if you’re right up there with the maximum £500,000 house price.

The bad news is this mortgage can’t be used on flats or new build houses. This means you’ll be restricted to buying a house that might need some work doing to it as it’s older – so make sure you factor that in to your calculations. The usual mortgage lending criteria will apply, so things like non-standard construction and unliveable houses (i.e., ones that need a total renovation to be habitable) won’t qualify either. The mortgage is available in England, Scotland, and Wales but not Northern Ireland.

Other First Time Buyer Mortgage Deals

Of course, Yorkshire Building Society is just one option available on the market for first time buyer mortgages right now. If you don’t meet the eligibility criteria, or want to buy a flat or new build home, another option might suit your circumstances better.

Halifax offer a similar 5% deposit scheme for first time buyers, which does allow new builds but not new build flats. You also cannot take advantage of other buying schemes such as Shared Ownership, Right to Buy, Shared Equity, or Buy to Let. It’s a repayment mortgage (not interest-only), and you can borrow up to £570,000 with a deposit between 5% – 10% under the Government mortgage guarantee scheme. This scheme is set to end on 30th June 2025, so you will need to apply before then.

What’s interesting about Halifax is that they also offer a ‘Family Boost‘ scheme which could be useful for those who have parents or grandparents with savings they are willing to hold in trust for three years. Ten per cent of the purchase price of the house is held in an account for three years, and if you keep up with your savings then your family receive their money – with interest – back.

Natwest offer a 95% LTV first time buyer mortgage scheme as well, with a purchase price up to £600,000. Once again, it can’t be used on a new build home. The big restriction on this one is that you must borrow between 91% – 99% of the purchase price, whereas other schemes allow a lower LTV option if you have a bigger deposit and lower purchase price. Natwest’s 95% LTV mortgage, however, is open to those who are not classed as first time buyers – so anybody can apply for it (although you must be a home mover – you can’t use it to purchase a Buy to Let property).

The Risk of Large Loan to Value Mortgages

The Government Mortgage Guarantee Scheme is designed to help first time buyers get on the property ladder. It is currently due to end on 30th June 2025, but could end sooner. The idea is to help new buyers find properties in their desired area without needing a huge deposit. In theory, this should help more people become homeowners.

However, a high loan to value mortgage does put people at risk of tying themselves into both a property and a high mortgage rate for a very long time. Most mortgages are a minimum of 25 years, and the fixed term rate is for two, three, or five years depending on the provider and mortgage offer. This means that, after that fixed term, buyers will be at risk of high variable rates which could cost a lot more than the initial monthly payments. It will also be harder to shop around to remortgage after the fixed term, as lenders will be taking on a large risk of giving property owners a mortgage with little equity in their home.

With higher variable rates, long mortgage terms, and often high early repayment fees, any first time buyer considering a 5% deposit mortgage should take time to consider their long-term plans. If you want to move house again in, say, five years’ time, it might be better to save a larger deposit for another year or two and find a standard mortgage with a lower loan to value percentage instead of buying twice in a short space of time.

Are Lifetime ISAs Useful?

It’s all gone a bit quiet on Lifetime ISAs, so we thought it was worth mentioning here that, if you already have one and made your first payment into it 12 months before you apply for a 5% mortgage, you can benefit from the high LTV scheme. This means that, in theory, you only need to save £4,000 in one year to get the £1,000 bonus and you’ll have your £5,000 deposit already saved.

However, it is always worth checking that the property you are interested in buying can be used with both a Lifetime ISA and is eligible for the 95% mortgage scheme you’re applying for, as there might be some restrictions that cancel each other out. (For example, if you hold an older Help to Buy ISA you might only be able to buy a new build home, which then means you can’t get a 95% mortgage under the Government scheme).

Not sure a first time buyer mortgage is for you? There are lots of other ways to buy a house – check out the rest of our mortgages and property section for ideas.

Disclaimer: MoneyMagpie is not a financial advisor or mortgage broker. Information provided in this article should not be taken as financial advice and individuals are recommended to seek expert independent financial advice before applying for a mortgage or any other financial product.

The post Latest First Time Buyer Mortgage News appeared first on MoneyMagpie.

We’ve compiled a list of key money questions you should know the answers to. It covers things from dealing with debt to investing in the stock market. We’ve got you covered with a range of tips and starting points to help you become more financially stable.

Here’s the 8 money questions to ask yourself!

• Am I Financially Prepared for an Emergency?
• Do I Spend More Than I Earn?
• What is My Credit Card Balance?
• How Much Debt Do I Have?
• Am I Paying More For Anything Than I Need to Be?
• What Happens to a Mortgage If You Split?
• Should I be Investing on the Stock Market?
• Is Paying for a Warranty Worth It?
• More Money Questions

Am I Financially Prepared for an Emergency?

If 2023 has taught us anything it’s the importance of being prepared for an emergency! It’s hard to know exactly what you will need until the time comes, but 3 – 6 months of necessary spending is a good guide. You need the money to be in an easily accessible savings account, ready for when you need it.

However, it’s a fine line between having enough and putting too much in there. Interest rates on savings accounts are shockingly low at the moment. In fact, interest rates are lower than the rate of inflation, so if you over-inflate your emergency fund, your money will slowly be losing value instead.

As well as having an emergency fund, do you have an asset you could borrow against if you had to? It’s not always as an ideal solution, but it can save you from the larger cost of getting a personal loan or using high-interest credit cards.

Do I Spend More Than I Earn?

You may think you don’t, but there are a shocking number of Brits who regularly spend more than they earn. According to research by the Office for National Statistics, on average each UK household spent £900 more than they received in income in 2017 alone. The problem for many people is that they’re simply unaware of how much they’re spending!

Due to cards and contactless, it is so easy to lose track of how much you’ve spent. The best way is to create a regular habit of checking your bank statements and monitoring where your money goes. Take some time to sit down with your accounts and face reality. How much do you actually earn? Once all your living costs have been taken out, how much do you have left? Create a budget and stick to it! Your finances dictate the lifestyle you can afford to have, not the other way around.

what is My credit card balance? (and what are the interest rates on it?)

Credit cards are great when they’re used properly, but they have made it far too easy for us to overspend without a second thought! Only purchase something on a credit card if you know you’ll have the funds at the end of the month to pay it off. However, life sometimes does throw surprises our way. There may be a month when, for some reason, you might not be able to pay the balance off in full. In preparation for this, make sure you’re aware of your credit card interest rates, how much it’ll cost you, and always use the card with the lowest APR if you might not be able to pay the full sum.

Remember to monitor you balance carefully to make sure you’re staying on top of payments. Find out more on how to use credit cards to build your credit score here.

how much debt do I have? And How to Pay It Off

Debt can be overwhelming and if you don’t stay on top of it it can easily spiral. When asked, a lot of people tend to underestimate how much debt they really have by 25%. UK citizens actually owed £1.6 billion in debt at the end of January 2020. While the average debt total (including mortgages) per adult was £31,845, higher than the average annual income.

Prioritise your debts by paying off the ones with the highest interest rates first, or think about applying for a debt consolidation loan. Check out our article How to Stop Debt Overwhelming You for more information, and see what MoneyMagpie founder, Jasmine, has to say about paying off debt below:

Am I Paying More For Anything Than I Need to Be?

Recurring expenses are something that we don’t think about often. They just come out of our account automatically without us ever paying much real attention to them. Meaning plenty of us are left paying for products and subscriptions long after we still need them, simply because we forget to cancel.

Go through your accounts carefully and question every expense. If you’re not using something anymore, or not using it enough – cancel! You’ll obviously still have things you’ll need to continue paying for, like insurance. But it’s always worth negotiating with your provider to try and get a better deal. Never simply auto renew a policy – you can almost always get it cheaper.

What Happens to a Mortgage If You Split?

Sadly, many people who do get mortgages together, whether friends or partners, do end up going separate ways. Knowing your options in advance can help you to prepare for the worst case scenario, as managing a mortgage in a break up is no small feat.

The key thing to remember is you’re both liable for all repayments. A mortgage provider doesn’t care about your personal life, so just because your partner is no longer paying their share it doesn’t mean they’ll let you only pay half. If you fall behind on repayments it will negatively impact both your credit scores.

The options you have are:

• Sell the house – Pay off whatever remains of your mortgage and split the rest of the money. If you’re in negative equity (when the value of your house falls below your mortgage balance), then you’ll have to divide the outstanding debt between you.
• Buy the other partner out – If you can afford to, one of you could buy out the other. However, you will have to prove to your lender that you can afford to continue the repayments on your own.
• Keep a stake in the property – Buying a proportion of your partner’s stake is an option if you can’t afford to buy their whole share. This way, one of you would own most of the property but the other could keep a stake in the home. They’d also be entitled to a percentage of the value if the house is sold at a later date.

Find out more about how to handle this situation in the video below:

Check out How to Prepare for a Post-Lockdown Divorce for more details, too.

Should I be Investing on the Stock Market?

This is one of the money questions we hear a lot, and the simple answer is yes. Everyone who can afford to do so should be investing – even if it’s just £10 a month. Really, investing is the best way to save for the long term. Interest rates on savings accounts are shockingly low so investing is the only real way to see a return on your money.

To a beginner, the stock market can seem overwhelming and rather daunting. How do you get started, or even know what to do? Read 7 Investment Tips for Stock Market Beginners for all the help you’ll need on making the first step.

Is Paying for a Warranty Worth it?

You’ve bought something nice and new and you want to protect it – that’s completely fair. The trouble is, a lot of warranties don’t actually give you that much for your money. In some cases you might get a couple of extra years, but we’ve found cases where an extended warranty cost over half the price of the product itself. And you may never end up using the warranty!

Instead, if you have contents insurance, check whether your items will be covered on that policy. What’s the excess? It’s often cheaper than the cost of a warranty. It’s always worthwhile checking as there’s no point paying to cover the same thing twice.

Also, if you are considering paying extra for a warranty check with the manufacturer and retailer first. Many manufacturers guarantee their products for a minimum of 12 months, with some up to 2 or 3 years and plenty of retailers often have their own guarantees as well.

Jasmine tells you what she thinks about paying for warranties in the video below.

More Money Questions

If you have even more money questions, why not head over to our messageboards where you can ask away and also find plenty of help from fellow readers.

Or check out one of our detailed articles answering different questions below:

• Do You Need Income Protection Insurance?
• Should You Invest in Penny Shares?
• Should I Save or Pay Off Debt? How to Decide
• Are Consolidation Loans Worth It?

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

The post 8 Money Questions You Should Know the Answers To appeared first on MoneyMagpie.

Here, we’ll think about a few things that you can do if you’re worried about being able to pay your mortgage.

1. Try to Negotiate an Extra Break 
2. Look at Ways to Reduce Other Bills 
3. Talk to a Mortgage Adviser and Consider Remortgaging 
4. Find Ways to Make Extra Cash 
5. Get Free Debt Advice 
6. More Mortgage Tips

Don’t Just Not Pay!

First and foremost simply missing payments can have a detrimental impacxrt on you. Therfore it is really important to take steps NOW to prevent debt. If you simply do not pay your mortgage, your credit score will be seriously affected. You could also end up in a debt spiral.

Act now to get up to six months’ breathing space if you’re worried about making payments. The FCA state ” Lenders will be able to offer borrowers: a switch to interest-only payments for 6 months. an extension to their mortgage term to reduce their monthly payments, with the option to switch back within 6 months”

negotiate an extra break

If you’re definitely going to struggle to pay your mortgage payments after this month, you could consider asking your bank for a renegotiation or for an extension on the payment freeze. You should also be aware that, if you’ve already had a total of six months’ holiday, any further extension will impact your credit score.

Anyone who hasn’t yet had a mortgage holiday, or who wants to extend, can get in touch with their lender to arrange the freeze. The FCA has confirmed the extension or new applications will not impact your credit score, unless you require more than a total of six months’ holiday.

Breathing Space

Don’t forget you can also apply for something called “breathing space”. According to Shelter: “Breathing space for rent or mortgage arrears. The breathing space scheme can help if you’ve missed rent or mortgage payments. You need to be referred to the scheme by a debt adviser.”

Therefore – REACH OUT!

Reduce Other Bills to Pay Your Mortgage as Priority

Not being able to pay your mortgage could have significant consequences. You don’t need us to tell you that! If you’re struggling, it might end up less costly (and less risky) to negotiate with your other suppliers instead. 

You could potentially save money on your bills if you can negotiate with your energy provider, for example, to reduce or freeze payments for a few months. As a side note, if you’re in energy arrears you could apply for funding help. There are various energy hardship funds that might be useful to you in this case.

Make sure you’ve applied for all the benefits and grants you can, too. Use the Turn2Us benefits calculator and grant finder to check for any funding that could help you with other costs, freeing up cash to pay your mortgage.

Finally, check with your local council about getting a Council Tax reduction or freeze. If you’re a low income household, you could qualify for a £150 reduction due to the pandemic, so make sure to ask about that. Your local authority may also be able to signpost you to other services that can help you manage your cash so you can pay your mortgage with more ease.

Tips to reduce your bills

If your utilities suppliers aren’t budging, there are still things you can do to reduce your bills and free up cash to pay your mortgage.

• Reduce your energy consumption: turn appliances off at the wall, switch off lights when you leave a room, turn the thermostat down a few degrees
• Save water costs – request a water meter if you’re single or in a couple
• Switch branded items for own-brand supermarket products
• Cancel subscriptions and see which you could share with friends and family to slash costs
• Set a cash budget for shopping and stick to it.

Talk to a mortgage adviser and consider remortgaging

If you need to reduce your costs, consider remortgaging your home. This involves paying off your initial mortgage by taking out another mortgage, and having your home sit as security against it. Remortgaging is often used by those who want to pay less or free up money for other purposes. If you’re not tied into a fixed term agreement, remortgaging could slash thousands of pounds from your total mortgage – especially as interest rates are now at historical lows.

Again, there are no guarantees with this. You might not be able to find a new lender who wants to take you on. There is the possibility, though, that a mortgage adviser could help you move or change your current deal in order to reduce the monthly costs that you need to pay. No, it’s not a complete freeze on your mortgage. But it could help to cut your costs, and that might end up being all you need. 

Be aware, if you go down this route, that you are likely to be paying your mortgage off for longer than you had originally agreed.

Pay your mortgage by finding ways to make extra cash 

Of course, this might not be possible for a lot of people. But if you do have the capacity to take on a second job, or some extra work in the evenings or weekends, this might just be the time to do it. Great at crafting? Why not soothe your worries and spend some time on it, before looking into the possibilities of selling online? Does your local shop need an extra pair of hands at the weekend? Offer up your services. 

If you do want to make some extra money, we’ve got a lot of articles on the subject. Here are just a few of them:

• How to Make Money from Home with Your Creative Talent
• How to Make Money on Social Media
• 3 Ways to Make Money Telling Your Real Life Story
• Make Money Ethically in Your Community

There are other ways that you can increase your income too, aside from extra work. If you’ve got space, could you rent out a room to a lodger? This is something that people have done for hundreds of years to keep the money coming in in hard times, so you certainly won’t be the first. Remember, too, there’s often a lot of stuff around your home you don’t need anymore – clear your clutter to free up space AND get cash!

Get Free debt advice

Yes, this is something that you should definitely do if you’re struggling to pay your mortgage and finding yourself getting into debt because of it. There are lots of places that you can get free debt advice. The experts on hand will be very used to dealing with situations like yours, so your case won’t come as a shock to them. 

Here are a few places that could help:

• National Debtline 
• Step Change
• National Debt Advice 
• Community Money Advice

Are you struggling to pay your mortgage? Worried about how the end of the mortgage holiday will affect you this winter? Feel free to share your story (and hopefully get some further helpful advice) over on our forums.

More MOrtgage Tips:

Need more help with your mortgage options? Try these next!

• Tracker Mortgages: The MoneyMagpie Guide
• Should I Remortgage to Pay My Child’s Debts?
• Looking for Mortgage Advice? Why a Specialist Broker is the Answer

The post Can’t Pay Your Mortgage? Here’s What To Do appeared first on MoneyMagpie.

Another day, another interest rate hike.  Say it quickly and 0.25% doesn’t sound a lot, but it’s the 14th consecutive increase since December 2021, taking the Bank of England base rate to 5.25%. This means only one thing for most of us: yet more belt tightening. 

The rationale behind raising interest rates to their highest level for 15 years is that this makes it more expensive to borrow money, therefore people have less to spend, reducing both demand and inflation. 

Prices rose by 7.9% in the year to June, according to the Office for National Statistics (ONS) which, on the plus side, was lower than the 8.7% in the year to May, and down from 11.1% in October 2022. However, it’s still four times the Bank’s 2% target.

Strong demand for workers, with more than a million unfilled vacancies, is pushing wages higher. Meanwhile, persistent food inflation and a rise in the cost of services, which has only just reached a peak, have all been a constant barrier to bringing down inflation. 

Inflation may take another two years

Andrew Bailey, Governor of the Bank of England, says it is vital that inflation falls back to 2% – something it is unlikely to do for another two years.  

Policymakers have been able to rule out fears of a recession, and with energy prices expected to fall over the rest of the year, it will bring inflation below 5%, meeting Prime Minister Rishi Sunak’s pledge to halve it from its 10.5% peak at the start of 2023. 

The UK is not alone.  Since Covid restrictions eased and consumer spending increased, inflation has shot up worldwide.  

Companies struggled to get goods to sell, and oil and gas costs rose dramatically with Russia’s invasion of Ukraine. As a result, interest rates increased for everyone. But the UK now has the highest rate in the G7, a group of the seven largest advanced economies, which includes Canada, France, Germany, Italy, Japan and the USA. 

What do all these figures add up to for people in the UK? 

Mortgages

A third of households have a mortgage and with 1.4 million people on tracker or standard variable rate (SVR) deals, they will see an immediate increase in their monthly payments. The 0.25% rise will add an extra £24 a month to the average tracker while an SVR will face a £15 jump. 

Three quarters of mortgage customers hold fixed-rate deals and while their monthly rates won’t change immediately, higher interest rates mean house-buyers, or the 1.8 million people expected to remortgage this year, will have to pay a lot more than if they’d taken out the same mortgage a year ago. 

An average two-year fixed deal which was 2.29% in November 2021 is now well above 6%. Dubbed the ‘mortgage bomb’ it means people have seen their monthly payments soar by hundreds of pounds, with the IFS, a politically independent think tank, warning rising interest rates could see the disposable income of 1.4 million mortgage holders fall by 20%. 

A typical mortgage holder coming to the end of a fixed-rate deal in the second half of this year will see their monthly payments rise by about £220. 

Credit cards and loans

Desperate times may call for desperate measures, but while it’s easy to turn to credit cards and loans to help you through a bad patch, their charges are also influenced by the Bank of England base rate. They were already high at 21.86% for an overdraft and 20.13% on credit cards, and lenders could put prices up even further. 

Savings

If you are fortunate enough to have savings, then an interest rate rise should be passed on to customers and enable you to make more from your hard-earned cash. 

Nationwide and HSBC were among the first providers to improve deals. Nationwide’s Triple Access Online Cash ISA will now pay 4.25% in annual interest, up from 3.5%. While HSBC is increasing rates on its Premier Savings Account by 0.25% to 2.25%. 

But it is important to shop around. While saving accounts are paying more, even those with the best interest rates aren’t keeping up with inflation. And the UK’s financial watchdog recently warned that banks will face “robust action” if they offer unjustifiably low savings rates to their customers. 

Laith Khalaf, the head of investment at A J Bell, is sceptical about the Bank of England’s high interest approach to tackle inflation. 

“Its own numbers show that more interest rate hikes will make almost no difference to inflation in the medium term, but it will inflict more pain on consumers and businesses, and in particular mortgage holders.  

“Sometimes doing nothing is the hardest approach, but there is increasing evidence that’s the path the Bank should now be following. 

“Based on their own projections, inflation will fall to 1.5% in three years’ time if the Bank hikes rates to 6% and then trims them back to 4.5%.  At the same time its forecasts say the Consumer Price Index (CPI) – the price of an average basket of consumer goods and services purchased by households – will fall to 1.4% if interest rates stay where they are.   

“So this supports a pause in rate increases, not least because the cost-of-living crisis is being exacerbated by high interest rates. The full effect of monetary policy takes around 18 to 24 months to ripple out into the economy, so a hiatus in rate activity would give the bank more time to assess the impact of its past actions.” 

Are we Seeing Rishi Sunak’s promised growth of the economy?

Rishi Sunak delivers his Spring Statement.

Rishi Sunak pledged to grow the economy as one of his five promises to the electorate when he became Prime Minister, but Bank of England projections show almost no growth in the next two years, less than 1%, according to Khalaf. 

He adds: “Price rises of 5% for consumers are still deeply uncomfortable, especially on the back of the double-digit inflation we have seen over the last year or so. Little wonder that pressure on household finances is finding its way into wage demands, which itself is stoking a second round of inflation after the energy and food price spike. 

“Meanwhile, although the housing market is on the wane, a correction rather than a crash seems most likely, even as prices have fallen at their sharpest annual rate since 2009. The one positive we can take from the UK economy is low unemployment. In the depths of the financial crisis, unemployment rose to 8%; today it sits at just 4%.”

The post Interest rates reach highest level in 15 years appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers. In this edition, I answer questions about making extra money, getting freelance work, mortgages and more.

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions or money saving tips you have in the comments below or email me on askjasmine@moneymagpie.com.

• Making money at home
• Debit card or cash when spending abroad?
• How can I find freelance work?
• I’m worried about my mortgage

Making money at home

For the past year, my main issue has been the grossly inflated cost of energy, and my own bill has increased by £180 per month. I have been searching the internet for genuine home-based money-making opportunities, but I am always cautious about so many scams on the net. Any suggestions? 

Jasmine says:

We have a great article containing work-from-home roles for everyone here. We also have some great ways to make quick cash here. Sadly, most side hustles won’t make hundreds, but can be a great top-up. We just published an article (here) about some of the most lucrative side hustles right now, with links to other articles of ours that we think are of use. 

I do hope this helps. 

Debit card or cash when spending abroad? 

I would be very grateful if you could help with my question? 

My daughter, husband and their two girls are going for a short break to Disneyland Paris soon. As they have a budget, please can you confirm which would be the most economical – paying for things using their debit cards or paying with euros? If euros, please can you recommend where may be the best place to buy them from, to obtain the best price? 

Jasmine says:

In your daughter’s case, it would be better to exchange currency so she can keep track of spending. The best rate will depend on where you are in the country and which currency exchange outlets are near you. Some may also apply fees. 

You can also buy euros at the Post Office counter if changing under £400, with no commission charges applied. But be warned: the Post Office exchange rates aren’t great. If your daughter does need to use her debit card for any reason, you’re often given the choice to pay in euros or pounds – always choose euros.  

When you pay in euros using you card, your bank will do the conversion into pounds. If you pay in pounds then the shop/outlet will do the conversion, usually at a higher rate. Also, make sure she gets a receipt so she can check the transaction has been paid in euros. 

How can I find freelance work?

I am a person with a learning difficulty. I only work one afternoon per week. I am 57 years of age and finding it very hard to get a least another afternoon’s work. I have been up-skilling all this time, I have studied Graphic Design on Udemy.com and I have obtained two certificates in Affinity Publisher beginners to advanced.  

I was wondering, is there any design work I could do on a freelance basis?

Jasmine says:

We have previously worked with Paralympian Liz Johnson, who is an advocate for finding employment for those with disabilities. She created The Ability People, and she launched platform Podium to people find work. 

We also have loads of articles about becoming a freelancer, including these articles: here and here.  

You may also find the government’s Access To Work scheme useful. It helps people find work and can provide reasonable adjustments to your workspace. 

At MoneyMagpie, we also love Upwork – freelancers can advertise their services at a set price. Fiverr is also a good site for this. Guardian Jobs is also good for finding a range of freelance and work from home roles.

I’m worried about my mortgage

I’m worried about by mortgage as I am not on a fixed rate anymore. With the interest rate going up all the time, the monthly mortgage payment just keeps going up and up. 

I would like to go on a fixed rate mortgage, but I don’t have a squeaky clean credit score. Would you be able to recommend a company that deals with this? I only have eight years left on my mortgage. The way things are going, I am at risk of eventually losing my home if the interest rate keeps going up. 

Jasmine says:

Firstly, we have a great article about how to cope with increasing interest rates impacting your mortgage. It may provide a little insight into the help available. 

Secondly, we have some great articles regarding credit scores, and how there are many quick and easy things you can do to improve it – here, here and here.

I do hope these help in that sense – sometimes we may not realise we can perk up our score with little effort! There are also things that could be lowering your score without you even knowing. 

Although I am unable to advise specific companies, Experian have some great advice, as do Online Mortgage Advisor.

The post ASK JASMINE JULY: I’m worried about my mortgage appeared first on MoneyMagpie.

Since rates began rising in January 2022, two million homeowners have seen their fixed deals expire and this is set to rise to 4.4 million by December 2024.  So a buyer who took out a 75% per cent mortgage on a £240,000 house two years ago will see their mortgage payments rise from £700 to £1,000 when they re-finance this month. 

Banks like HSBC and Santander have temporarily pulled their mortgage products and latest figures reveal 10.9 million people are having difficulty with their mortgage repayments with missed payments rising 33 per cent from 4.2 million to 5.6 million. 

The government believes higher interest rates are vital to tackle spiralling inflation and while rates are expected to peak at the end of 2023, they are likely to take years to recede. 

So what can you do to get help? 

One lady I spoke to remembers living on jacket potatoes and baked beans for months when, 30 years ago, interest rates rose to 15 per cent, and she had to cut her budget drastically. 

Whatever your situation using a budget planner is a good start to look at where you can cut flexible monthly costs. 

Can you reduce your buildings and insurance costs by shopping around?  Last year I saved myself £600 on car and household insurance by doing exactly that. 

If you have an endowment mortgage, consider giving it up or selling it off to an investor which will provide you with a lump sum to help reduce the mortgage debt. It is a risk so do get independent financial advice via Citizen’s Advice. 

If you’ve lost your job and income unexpectedly, check if you have mortgage payment protection insurance.  You might have taken out a policy years ago and forgotten about it, especially if it isn’t with your current lender.  There’s lots of circumstances where it won’t pay out but it’s worth checking if you have it. 

If you are coming to the end of your current mortgage rate, don’t bury your head in the sand, find out how much you owe and start researching what rates are currently available. 

Ben Thompson, Deputy CEO at the Mortgage Advice Bureau: ‘If you move to a new lender you will have to undergo affordability checks and they will look at your credit score so find out what it is and do what you can to improve it. 

‘This might mean closing old bank accounts, making sure you are on the electoral roll or looking at your credit limits.’. Natwest offers free credit reports no matter where you bank. 

If you’re struggling to meet your next payment, speak to your mortgage lender and come up with a new plan, whether that’s extending the mortgage term (your monthly payments would come down although you’d be paying more for your mortgage), change how often you make a payment or switch temporarily to an interest only mortgage (monthly payments will be much less but they don’t reduce the overall debt and you’ll still owe all the capital you originally borrowed). 

Generally, a lender won’t take action until you’ve missed four consecutive payments, but always remember that forcing someone to sell their home is costly and time-consuming and it’s something, especially in the current climate, that they’d prefer to avoid. 

If you are still feeling anxious then get advice here or call them on 0808 808 4000. 

There is some government support for mortgage interest (SMI) if your claiming benefits including income-related Employment and Support Allowance, Income based Jobseeker’s Allowance, Income Support, Universal Credit or Pension Credit. Go to MoneyHelper. 

In Wales some local authorities and housing associations operate mortgage rescue schemes (MRS) to help homeowners avoid repossession and in Scotland the government provides some help through its Home Owners Support Fund. It operates two schemes, Mortgage to Rent where a social landlord buys your home and rents it back to you or the Mortgage to Shared Equity scheme where then Scottish Government buys up to a 30 per cent stake in your home which reduces how much you owe on the mortgage. You continue to live in the home and make lower mortgage payments as a result. 

It’s also worth checking if you are entitled to any benefits that might help boost your income. 

Alternatively, if you have a furnished, spare room in your home you could earn up to £7,500 a year tax free from renting it out, something that will be particularly attractive to tenants struggling to afford the 4.7 per cent increase in private rental prices. 

Check out our guide to making money online here. 

The post How to cope with high interest rates affecting your mortgage appeared first on MoneyMagpie.

If you believe that you won’t be able to get a mortgage with a CCJ, you may be wrong. We spoke to Simply Adverse, a leading adverse mortgage broker who specialises in mortgages with CCJs.

• Getting a CCJ
• Does it matter that I have a CCJ?
• How much impact will your CCJ have?
• You can get a mortgage with a CCJ

Getting a CCJ

CCJs (County Court Judgments) are issued against you in the event of your failure to repay money you owe. The process leading up to a CCJ being issued is quite lengthy, so it’s not something that should come as a surprise to you. They are only issued if you have either failed to respond to attempts by your creditor to create a payment agreement, or you have been unable to reach an agreement about what any repayment schedule should look like.

The best course of action if you do get behind with any credit payments is to keep up a dialogue with creditors and try to find a way forward. In general, when you owe money the company you owe money to would much rather come to some sort of agreement than go to court.

However, if a CCJ is made against you it will be added to the Register of Judgments, Orders and Fines unless you either repay the full amount owed or can prove that the CCJ was issued in error. Any CCJ recorded on the register will also be added to your credit report.

Does it matter that I have a CCJ?

Having a CCJ recorded on your credit report could affect your ability to get credit in the future, including your ability to find a mortgage. This is because lenders may be concerned that your past failure to meet your debt commitments indicates that you are a poor risk for future credit.

There are caveats though. How much impact your CCJ has on your chances of finding a mortgage will depend on several factors, and you may find that securing a mortgage isn’t out of reach.

How much impact will your CCJ have?

How much your CCJ can affect your mortgages chances could be based on the following:

When your CCJ was made – more recent CCJs will generally have a bigger impact than CCJs from longer ago.

Number of CCJs – while having one CCJ may only present a small problem, multiple CCJs can pose a real risk that you won’t be able to find a lender.

Amount of your CCJ – as may be expected, smaller CCJs are viewed more favourably by lenders than CCJs in respect of larger amounts.

Is the CCJ satisfied? – If the CCJ is satisfied, that is paid in full, it will be much easier to get a mortgage than if it is unsatisfied.

You can get a mortgage with a CCJ

Lenders don’t just take into account your CCJ when assessing your application. They’ll also look at things like other types of adverse credit you have or how much your income is. As they consider more than just your CCJ there are other elements that will have an effect.

The size of your deposit. A larger deposit means a smaller mortgage loan, which means a greater chance of success.

The type of mortgage you want. Buy-to-let mortgages for example tend to have stricter criteria than other mortgages.

How much you can afford in repayments. If you have a large income and few outgoings, finding a mortgage may be more straightforward.

Mortgage brokers who specialise in adverse credit give you the best options. A whole of market bad credit mortgage broker will be much more likely to help you get a mortgage with a CCJ. This is because they have access to all lenders and deals, many of which are only available to brokers, they are also experienced in placing customer who have CCJs with the right lenders. Their up to date market knowledge gives you the best chance of getting a mortgage.

As you can see, there is no simple answer to whether you will be able to get a mortgage when you have a CCJ, as there are multiple factors that may affect your chances, but it’s certainly not true to say it’s impossible.

Understanding your position and taking professional mortgage advice can help you to find your perfect mortgage. Good Luck.

The post Does a CCJ mean the end of your mortgage hopes? appeared first on MoneyMagpie.

Buying a house seems totally unattainable to so many. Stuck in the pattern of too-high rent and too-low wages can trap so many of us. Yet people are still doing it. In fact over 350,000 young people and families have been helped into homeownership with Help to Buy since its launch in 2013.

Barclays Bank did a study into an apparent hike in home ownership over the past year and found that, “The number of first time buyers had doubled.” This, however, was suggested to be with the help of family: 58 percent in fact cited “family help” as the reason they were able to buy their homes.

Therefore, for those of use who don’t have family money, or even a family, where does that leave us? Well, this young person has given many people hope. Via her Social Media platform, Phillippa Thomson has shown that in just four years she has managed to save for her first deposit and now, her and her partner have found a flat and their dream has become a reality. We sat down with Phillippa to pick her brain and find out all of the incredible ways she has found to make extra income and to focus all of her saving on this incredible goal.

What made you start saving for a home at such a young age?

I wanted to get on the property ladder at a young age as I knew that property prices were going to keep rising. I also wanted to gain more independence and further my relationship with my partner by having the funds to buy a place and move in with him.

Can I ask what your job is and take home wage?

I am a Senior Legal Secretary at a firm of Solicitors. I started off as an apprentice and have worked my way up. I am hoping to do a CILEX law course in the future to further my career.

How much of the wage goes into the Help to Buy Account and what proportion of your usual wages is this ?

About 1/8 of my monthly wage goes into my Help to Buy ISA each month. I have been saving £200 each month for around 3 years.

How much have you saved so far?

I have saved £17,000 so far, I started saving when I was 18, I am now 22.

Have you had any help from friends or family?

I am in the process of buying an apartment with my partner and my parents are buying us a brand new bed, and they are also gifting us their old sofas which we are very thankful for.

Can you break down all the ways you are making extra income?

I have an Instagram account (@savingforahouse2022) on which I share all of my extra income sources.

I generate extra income by using various apps, which include survey, investment and cashback apps. I also share useful referral links for my friends and followers to use which is beneficial for myself and those using the links.

My partner and I also frequently sell at car boot sales to get rid of our unwanted items. It is a fun and easy way to make money.

Which are you finding the most cost effective?

I find survey apps to be the most cost effective, as it is a very consistent form of income. There are always surveys available to complete and for minimal work you are usually paid well. Low effort and good reward.

How much additional income do you average on per month?

I earn around £600 in additional income per month.

Does this leave you any wriggle room for holidays and fun?

Yes, I went on holiday last month to Greece.

“I spend about an hour and a half a day using my side hustle apps and creating Instagram posts. This leaves me with plenty of time to have a good work life balance.”

Finally, how much are you hoping to set aside to finally get that deposit and how long are you thinking this will take?

I have my deposit ready, I am buying an apartment with my partner and we are paying for half of the £15,800 deposit each. My half is £7,900, which has been saved for over three years.

If you could go back to the start of this journey, are there any additional things you would like to tell your past self that you have learnt along the way?

I wish I’d come across the money-saving community on Instagram sooner, as I may have been able to generate and save more money.

On reflection, apart from wishing that I had started sooner, I am actually really proud of what I have achieved and my approach to finances. I have always been focused on saving as much as possible whilst still allowing myself to have fun and have occasional treats. It is very easy to fall into the trap of living payslip to payslip but the best rule to live by is ‘everything in moderation’.

The post Case study: Side Hustling to Become a First Time Buyer appeared first on MoneyMagpie.