Since Fiona Tucker, 30, moved to London from Australia in 2003 her life has had its lows as well as highs.

Six years ago Fiona travelled half-way round the world to Britain to further her career in publishing, and all seemed to be going well until late November last year. That was when, only a month before Christmas, Fiona was made redundant. Even worse, when she lost her job she had worked for her employer for just short of two years, so she was not entitled to statutory redundancy pay.

Out of a job and with few savings to fall back on, she says that the following months were “a struggle”. However, she kept searching for a new role and in February landed a new, better-paid job as a commissioning editor for the BSI (British Standards Institution).

Now that she feels on a firmer footing she would like to sort out her finances. Her main aim is to save up a deposit that would enable her to buy a place with her boyfriend, Nick Kelly, who works in the financial printing industry. At present, Fiona is renting a flat in West London for £410 a month, including council tax, while Nick is living in Essex, where he pays about £250 a month.

She says: “We would like to have our own place by the end of next year. Ideally, we would like to live either in Essex or London as I work in the capital and Nick works in Essex. What sort of deposit should we be aiming for?”

Fiona and Nick have a joint income of about £56,000. “Given that we may be earning about £65,000 jointly by the time we come to buy,” says Fiona, “how much will banks and building societies be willing to lend us?” Her savings amount to about £2,500. She opened an ING savings account recently that pays 3 per cent interest, in which she holds £1,500. Another £1,000 is stored in an HSBC deposit account.

Nick has about £6,000 in a high street savings account and £5,000 in a cash Isa.

Fiona asks: “To achieve our goal of saving a deposit, how much should I be putting aside each month and where is the best home for that money?”

Although Fiona realises that she may have to make sacrifices, she would prefer, if possible, not to change her lifestyle. She spends about £50 a month on household bills and £35 to £40 on her mobile phone. Gym membership costs another £60 a month out of her pay packet and her monthly travel costs are £70.

But this is small fry compared with the £200 a month she spends on going out and £300 a month on shopping. “My worst habit, which I know I have to curb, is shoe shopping,” Fiona says. “I suspect that the experts will tell me I should spend more nights in watching DVDs, but I would prefer not to change my lifestyle too radically.” Previous spending splurges, however, have taken their toll. Fiona has £6,000 on a personal loan from HSBC charging interest of about 15 per cent. She took out this loan two years ago to pay off a £9,000 credit card balance.

She says: “The loan charged less interest than my credit cards. I don’t have any credit cards now as I know how dangerous they can be. I have another three years to go before I pay off the debt. When we are ready to buy a house, will I be able to roll up the loan in a mortgage to benefit from a lower interest rate?”

Her only other regular expense is her pension contributions. Fiona tops up the regular contributions she and her employer pay into her company scheme each month with another £90. “It doesn’t feel like a huge outgoing so I would rather not change it. Given that I keep reading that most people are not saving enough for retirement, surely the more I can save now the better?”

What the experts say

Mortgages & property: Michael White, Email Mortgages

“When considering their potential income in a year’s time, Fiona and Nick could be eligible to borrow up to about £260,000. But the minimum deposit required to secure such borrowing would be 10 per cent. This would equate to a purchase price of around £290,000, requiring a deposit of £29,000.

“There will also be other associated buying costs of which the largest sum would be £8,700 for stamp duty at 3 per cent. Unfortunately, 95 per cent or 100 per cent mortgages for first-time buyers are no longer available. Monthly outgoings for a new-purchase mortgage will be substantially higher given the restricted product range and associated rates for 90 per cent first-time-buyer products.

“By way of example, currently one of the most competitive products would be from HSBC, which is available direct only, at 5.99 per cent fixed for two years. Based on a maximum mortgage of £261,000, the monthly repayments would be about £1,683.89.

“Given the costs related to a purchase of this size, and also in view of Fiona’s lifestyle expenditure, I would recommend considering a lower purchase price target. In terms of stamp duty for purchases over £175,000 to £250,000 the cost is just 1 per cent.

“Assuming a slightly lower purchase price of £250,000, the reduced loan amount of £225,000 would represent a monthly repayment of about £1,452.16 with HSBC. Plus the much reduced stamp duty outlay of £2,500 versus £8,700, and a deposit of £25,000 rather than £29,000.

“The good news is that would not detract from a first-rate selection of high-quality, new-build apartments in Greater London and Essex. The consensus view on house prices for the next year is not particularly exciting. But at least the worst of the falls are now seen to be behind us, which is positive for first-time buyers.”

Action plan

Be prepared to save a deposit of at least 10 per cent.

Consider stamp duty costs.

Financial planning: Nic Round, Murray Round Wealth Management

“Fiona should check that the loan has no early repayment penalties and, if not, repay the loan as soon as possible to reduce the interest charges.

“After it is repaid, she should look for the best monthly saving rates similar to her ING account and set up a cash Isa. [She can save £3,600 for 2009-10, increasing to £5,100 for 2010-11]. As she has an account with ING, this is the easiest Isa option and the current rate of 2.5 per cent is reasonably competitive.

“In terms of how much to save, Fiona needs to work out the maximum she is prepared to save so that it ‘hurts a little’, and then add a bit more each month. She should set up a high-interest savings account for the money and try her best to meet the payments every month. If it’s impossible to maintain, she can adjust the amount.

“Learning to compromise now is vital because when Fiona eventually gets her home, and if interest rates rise, the impact will almost certainly curtail her lifestyle, so it’s wise to set good habits now.

“Saving for retirement is an excellent attitude. However, is there a possibility that Fiona may return to Australia in the future? If so, perhaps saving into Isas might be more flexible.”

Action plan

Repay the loan as soon as possible.

Set up a cash Isa.

Budgeting: Beccy Boden-Wilks, National Debtline

“Fiona says that she enjoys her lifestyle of shopping and going out and is reluctant to change. However, this money could substantially reduce the level of her debt and boost her savings for that all-important deposit to buy a property.

“It might be helpful to open a separate bank account for essential expenditure such as household bills. This should make it easier for Fiona to stick to her budget.

“With regards to consolidating the personal loan together with a mortgage, she should consider this carefully. Currently, the loan is an unsecured debt, which means that if she were unable to afford the repayments, she could try to negotiate affordable reduced payments with the lender and only her credit rating would be affected. If this loan has been rolled up into the mortgage and she is unable to keep up her mortgage payments, the lender could repossess the property.

“The best advice is to try to save as much as possible for a deposit, even if this means that Fiona will have to buy fewer shoes.”

Action plan

Open a separate bank account for essential expenditure.

Don’t rely on rolling up loan into a mortgage.

Fiona’s response: ‘Clearer goals will help me to budget’

The most vital information was to find out what sort of mortgage Nick and I could afford. As this would be our first property, we would definitely be aiming for the lower price range suggested (£175,000–£250,000).

It is good to know that our joint incomes could support us. Knowing the estimated costs of stamp duty was also a great help, as the “extras” often add up.

Having the facts presented to me in this way has helped me to solidify my goals and has made me feel that they are achievable, with a bit of hard work and a little less time spent at Jimmy Choo. This will help me to budget much better over the next 12-18 months.

Some of the action points are things I’m already doing. I have a separate “household bills” bank account, and have been looking into the cash Isas, so I feel reassured that at least I’m doing some things right.

I plan to settle here in the UK and not return to Australia, so making extra contributions to my pension plan was the right decision.