r/Glasgow Tools

Not a sir! But you're welcome.

> begin saving to buy a property

Good idea.

> (which seems like a total pipe dream as I watch my salary deflate with inflation with each news article)

You're on an above-average salary. Based on the typical 4-4.5x multipliers on salary for buying, you could borrow about £148-167k. More than enough to get you a property in plenty of places in and around Glasgow. Won't be a mansion, but it wouldn't be a hovel either.

So, for addressing a) savings. First step, save money as an emergency fund. At least a couple of thousand to cover unexpected expenses and whatever else might happen. It'll help you avoid getting into debt again. Secondly, if you have never owned property before and therefore would be a first-time buyer, get a LISA. A LISA has a contribution limit of £4k per tax year, but you get 25% added in by the government. Only put money into the LISA that you don't need access to because there is a penalty to withdraw it. That turns your 4k into 5k to put towards a deposit on a property. I personally save up for the LISA contribution in a normal savings account so that it's accessible for as long as possible then I deposit it into the LISA in March, before the tax year ends. Remember to save for other stuff like solicitors fees and all that jazz. They can't be paid from a LISA, so you need to save separately for those. /r/HousingUK can help with some indications of how much you should need for those.

As to how much of a deposit you need, at an absolute minimum, 5% of the property value. The key is that 'asking price' is NOT the same as 'property value'. The bank does a valuation and decides how much they're willing to lend. If the seller wants no less than £150k asking but the bank says it's only worth £140k, then the bank would only lend the difference between your deposit and the £140k, not the full £150k. A good guide is the home report value, which is generally what banks will value it at. If you're paying over home report, you need to fund that yourself because a mortgage lender will not fund it. In that imaginary scenario, the bank would want a minimum 5% deposit, so 5% of £140k, £7k, and they would lend you the other £135k. You would need to make up the £10k by yourself to get to £150k. It's likely that going forward, given the likely recession and all that, that 5% mortgages are going to be harder to find, so 10% is probably more realistic.

Look at Rightmove and other sites like that to get an idea of what houses are going for, but be aware that by the time you've got a deposit saved, the market is likely to be different. But it can't hurt to get a vague idea.

> I foolishly missed out on that government scheme which matches your deposit or something to that effect.

I assume you were thinking about HTB ISAs here, which are what the LISA replaced.

For b), a decent credit score is a function of time and history. The good thing about mortgages is that they are secured lending. Secured lending is lower risk for the lender because if you don't pay, they have an asset (the house) that they can just take back and sell to recoup the debt. Credit cards, personal loans, etc are all unsecured lending. Which means that if you don't pay, the lender might just have to eat the debt because they have nothing they can take from you. What this means for people with poor credit is that the bar for getting a mortgage at all is lower. It doesn't mean that they'll give a mortgage to just anyone, and poor credit might mean the rate you get approved for is higher. Interest rates on debt is one of the ways lenders manage their risk - if they consider you a higher risk, they want higher rewards for lending to you.

> I'd mentioned one of the credit builder cards but didn't seem to keen on them

Not sure what you mean here. Prepaid credit cards aren't that helpful. You need one that reports to the credit reference agencies. A normal credit-builder card from somewhere like Vanquis, Aqua, Capital One, etc is, functionally, a normal credit card. They just usually have lower limits and higher interest rates. Get one, do normal spending on it, do not spend any more than you would have spent if you were using your debit card, pay it off in full. Rinse, repeat, every month. My partner has one set up to just have Netflix on it. Netflix charges it every month, the direct debit clears it off every month. This builds up a consistent history of having and using credit responsibly.

But frankly, the most important thing you can do right now is to not get into anymore debt. You don't NEED to have a credit card to get a mortgage.