Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.
This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from money saving tips to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…
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Ana* is 31, newly single and works full-time as a civil servant. She lives at home with family in Manchester and wants to buy her own place. Here’s her money month…

I live at home with my parents in Manchester. I moved back in with them last summer after I broke up with my boyfriend of five years. We’d been renting a place together, so it was a bit of a shock moving back in with mum and dad at the age of 31. But they’ve been brilliant, they let me contribute to bills and food shopping but they’re insisting I put aside whatever I was spending on rent towards saving for a deposit on a flat of my own.

I’m a civil servant, I’ve been in my job for almost four years now. I enjoy it most of the time, working from home in the pandemic has been hard, but I have a lot of friends who’ve lost work or been on furlough so I feel lucky to have it. And there’s good scope for career progression too – I’m hoping for a promotion in the next few months which would mean a bit more money.

When my ex and I split up I felt like I not only lost a relationship, but also the prospect of being able to afford to buy a place in the next few years. It’s pretty much my biggest financial anxiety right now. If I want to live on my own again, either renting or buying, it’s so much more expensive as a single person. Having said that, the money I’ve saved not paying rent and not going out or going on any holidays in the past year have meant that I now have a decent amount of money to put towards a deposit.

I’ve seen that the government is now doing a 95% mortgage guarantee, but I’m not entirely sure how it works. I have a savings pot of just over £12,000 in my cash ISA – which would be 5% of a property worth £240,000, but it seems too good to be true that I’d get a mortgage for that much? And I’m sure there are loads of other costs involved in buying a property too, so I’m guessing I’ll need to save more before I can consider this (plus, if I used my entire savings on a deposit, I’d have no safety net left in case I lost my job). Is owning my own place in the near future a total pipe dream or is the 95% mortgage guarantee something I should be seriously looking into?

MY ACCOUNTS

Current account: £657
Savings account: £12,300

MY INCOMINGS

Annual salary: £32,000 pre-tax; £24,656 post-tax and deductions
Monthly wage: £2,667 pre-tax; £2,055 post-tax and deductions
Any other incoming payments: £0

MY OUTGOINGS

Rent: Living with my parents rent free
Bills: I contribute £200 a month towards bills and food; phone bill, £25; Spotify, £10; Netflix, £10; charity donation, £20 I recently went through my accounts and cancelled lots of standing orders and subscriptions to reduce how much I’m spending.
Other: I try to put £800 into savings per month now I’m not paying rent.
Splurges: I’ve bought some new clothes lately in anticipation of lockdown easing, and my sister got a new job recently so I sent her a bottle of champagne to celebrate.
Weekly budget: I know I should, but I don’t really have one!
What I spent this month: Around £500 so far.

MY DEBTS

Just my student loan– I think I have about £20k left to pay off. I have a credit card, but I don’t use it much and pay it off each month.

MY MONEY THOUGHTS

What I want to save for: A place of my own! My parents are great but I don’t want to still be living at home in a few years’ time.
How I want to plan my money for the future: I guess property is an investment, but if I was to get myself sorted with a mortgage, I’d consider trying to invest in future.
My worst money habit: Worrying about money, splurging on clothes or furnishings for my future flat to make myself feel better, and then feeling guilty about spending.
My biggest money worry: Being able to afford to live alone.
Current money mood: 🕵️‍♀️ 🤞 🏡

WHAT OUR EXPERT SAYS

1. Single problems
It’s one of the biggest injustices of the mortgage market; unless you’re coupled up, an investment banker or a trust fund kid, the reality is: buying a flat is going to be hard. There’s a very real and understandable pain in watching friends in relationships zip past you in the fast lane to home-ownership. I can only imagine how difficult this must be following a break-up but I think you’re in a better place than you feel. Let me talk you through your options…

2. The magic bullet?
With the March budget came lots of big news for home buyers and sellers; the extension of the stamp duty holiday and the shiny new 95% Mortgage Guarantee scheme designed to turn generation rent into generation buy. Woop. Exactly what we need, right? Well, sort of. The scheme means that lenders can issue mortgages backed by the government. Specifically, they’re 95% LTV (loan-to-value) mortgages. This is a mortgage to purchase a property with a deposit as low as 5% and will run for 18 months until December 2022. The reason this isn’t necessarily the solution you’re hoping for is that you’re still constrained by the affordability assessment: like any other mortgage, you can typically borrow between 3.5 to 4.5 times your household income, which for you is around £145,000. This could be enough to buy a small flat in Manchester, but this is the real sting for single buyers – team up and you can borrow a whole lot more.

3. Income power-ups
Things get more positive from here, I promise. So, the mortgage guarantee scheme isn’t exactly groundbreaking, but there are other ways to make buying more possible. One obvious but easier-said-than-done option is to boost your income to boost your borrowing and deposit. Your promotion will come in handy here, but other options might be starting a side-hustle or the less desirable move of switching jobs. Although of course, public-sector security is not to be sniffed at. Another shortcut to boosting your savings is with the Lifetime ISA, where you’ll get a free 25% bonus every year on savings up to £4,000 (that’s a sweet £1,000!)

4. Scheming
Of course, boosting your income can help, but there’s still potentially hundreds of thousands between the amount you and your coupled up mates can borrow. To bridge this gap, your best bet is schemes. The Help to Buy Equity Loan scheme allows you to borrow up to 20% of the cost of a new home (40% in London) from the government in addition to your mortgage. In the North West of England, the maximum property price using the scheme is £224,000, so let’s say you found a Help to Buy property at £200,000, used the maximum Help to Buy equity loan amount of 20% (£40,000) and saved a deposit of £20,000, you’d then require a mortgage of £140,000 which could be doable with your income. Of course, there are things to consider: while the equity loan is interest-free for the first five years, costs can accelerate from year six onwards and new builds are notoriously inflated in price. Do your research on the Help to Buy equity loan scheme here before making the move.

5. Stay hopeful
Your final option could be the Shared Ownership scheme, which helps you to buy part of a property and rent the rest. It’s a great option for some but understanding the risks and advantages is super important, so take a look here and here for more. My parting advice is not to be disheartened. You have a good salary and your break-up has afforded you the silver lining of spending precious time with your parents and the opportunity to save a deposit. While the temporary restrictions on your independence are a pain, it’s not forever and you’ll soon have a place for all your home furnishings!

Alice Tapper is the author and founder of Go Fund Yourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor. *Name has been changed.