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Money

A User’s Guide

By Laura Whateley
16-minute read
Audio available
Money by Laura Whateley

Money (2018), the celebrated handbook to all things money, cuts through obscure financial jargon to explain personal finance in clear and straightforward terms. Brimming with actionable advice, it helps you finally tackle those pesky financial problems you’ve been avoiding for so long, from managing your debt to sorting out your pension. It’s time to take back control and feel good about your finances.

  • Millennials struggling to get by in a confusing and expensive financial system.
  • Cash-strapped people who are constantly fretting over their expenses.
  • Anyone who wants to ease financial stress and grow their wealth for the future.

Laura Whateley is an award-winning journalist who specializes in consumer finance. She’s most notable for her money-themed agony-aunt column – written under the pseudonym “The Troubleshooter” – which she writes for The Times. She also writes on the subject of personal finance for other publications such as The Guardian, The Observer, Dow Jones, and Moneywise magazine.

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Money

A User’s Guide

By Laura Whateley
  • Read in 16 minutes
  • Audio & text available
  • Contains 10 key ideas
Upgrade to Premium Read or listen now
Money by Laura Whateley
Synopsis

Money (2018), the celebrated handbook to all things money, cuts through obscure financial jargon to explain personal finance in clear and straightforward terms. Brimming with actionable advice, it helps you finally tackle those pesky financial problems you’ve been avoiding for so long, from managing your debt to sorting out your pension. It’s time to take back control and feel good about your finances.

Key idea 1 of 10

You can land a cheaper mortgage by saving for a larger deposit and reining in your expenses.

Let’s begin by addressing one of the most cumbersome financial problems of our era and what is most likely your largest expense housing.

Over the last few decades, house prices across Western countries have escalated rapidly. This has made the prospect of home-ownership nothing but a pipe dream for a whole generation of young people.

A report by the Institute for Fiscal Studies estimates that average house prices across the UK have risen to at least ten times the average salary of 25 to 34 year-olds, and in London, it’s as much as 16 times.

Given that you’re unlikely to be able to borrow more than four or five times your salary with a mortgage, you can see why there’s an affordability problem the numbers just don’t add up.

Unfortunately, for those wanting to get on the housing ladder, there are no quick solutions. But there are things you can do to appear less risky to lenders, and that will help you borrow more and secure a cheaper mortgage.

The key message here is: You can land a cheaper mortgage by saving for a larger deposit and reining in your expenses.

Whether you can afford to buy a house really depends on two things: can you raise enough for the deposit, and can you convince the bank to let you borrow the rest?

Regarding deposits, the general rule is that the more you can put toward a deposit, the less you have to borrow, and the lower your interest rate is likely to be. Most first-time buyers will only be able to afford a deposit equivalent to 5 percent of the value of their house. But, here’s some advice: if you can scrape together at least a 10 percent deposit, you should – because this is the threshold for substantially cheaper interest rates.

Whether the bank will let you borrow the rest depends chiefly on your income, which you probably can’t do much to change. But one thing you can do is team up with another salaried person, which will effectively double how much you can borrow.

Your outgoings are also important. You’ll have to show at least three months of bank statements or two to three years of bank statements if you’re self-employed so it’s vital that you don’t default on any bills or make excessive purchases within this period.

This deep dive into your finances might seem excessive, but it should also make you think about whether you can actually afford to make the monthly repayments on a mortgage for the better part of your life. Or if you even want to.

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