Home > Case Studies > I Rented While Saving for a Property: A Case Study

I Rented While Saving for a Property: A Case Study

By: Emma Eilbeck BA (hons) - Updated: 9 Jul 2015 | comments*Discuss
 
Home Property Rent House Mortgage Money

The property market may be a buyer’s dream at the moment, what with falling property prices and sellers finding it hard to shift properties, but for those that cannot afford a mortgage it is more like a property nightmare.

Jackie was in her twenties and had just come out of a messy divorce, she was looking to buy a one or two bedroom flat after having to sell her marital home as part of the divorce settlement.

She made a small profit from the sale of her and her husband’s home, but they had also fallen into arrears on the last two of their mortgage payments, so this had dented any profit from the sale of the house.

Saving For a Deposit

After Jackie had paid her legal expenses and relocation costs her overall settlement from the marriage was only around £10,000. When her and her husband took out the mortgage they had borrowed more than the value of the property, so unsurprisingly they were left with a pint size profit.

“I wanted to buy my own home so I could feel independent again and put the money from our divorce into a solid asset and one that would grow in value,” says Jackie.

However once she started searching for a home she soon discovered that her £10,000 would not stretch very far in the area in which she wanted to buy. The average price of a one bedroom property in her area was around £130,000 which meant even though she had a deposit it would not be enough money and amount to a 10% deposit.

Seeking Advice

“I went to visit my bank to see if they could help me. They were very helpful and said they were able to offer me a mortgage and lend me up to £120,000 because I had a good wage. However the rate they offered me was very high and I would have struggled to pay back my mortgage every month and still have enough to live on and have some kind of social life,” says Jackie.

The adviser in the bank told Jackie that if she was able to save up a few more thousand pounds it could make a huge difference to my monthly repayment rate and overall it would mean much lower payments.

Getting Out the Piggybank

There comes a time when unfortunately the wisest decision is to get out the piggybank and start saving for a deposit. Jackie had never been good at saving but she realised it was something she was going to have to do if she wanted to be able to afford a house or flat.

“I budgeted myself and rented out a small apartment. The apartment was not very big and it was outside of the area I was looking to buy, but this meant that the rent was a lot cheaper and I was able to save a lot more. I just had to keep picturing owning my own home in my head again so I was motivated to save,” she says.

“I found myself turning down nights out with friends and having a lot more nights in so I could save for a flat. I worked out that in two years I would be able to save another £6,000, which meant if property prices did not go up I would easily be able to afford a 90% LTV mortgage, as I would have a 10% deposit."

Lots of potential homebuyers hate the idea of renting as they see it as throwing money down the drain. While this is true in some cases, you need to be savvy about what kind of renting you decide to do or it could work out as a false economy.

Instead of renting the kind of place you would like to buy, rent somewhere that will allow you to save up as much money as possible, so the cheaper the better. Society has programmed us to think that we must have everything now, but sometimes it pays to wait.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
I am about to graduate as a Nurse. I have a job offer and I will start working in October. I havefound a flat that I want to let. How can I probethat I am a key worker if I haven't been working and I don't haveany pay slips to show to the housing manager. I have my job offer and confirmation for my starting date. I would be grateful for any advice.
Always reading - 9-Jul-15 @ 8:41 AM
Share Your Story, Join the Discussion or Seek Advice...
Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Becky
    Re: The Right to Acquire Scheme
    I am with Asra housing association and was given valuation of 204 thousand and after 3 months they said it’s 234 thousand as Waac…
    15 February 2018
  • Tas
    Re: The Right to Acquire Scheme
    Hi i have lived in my housing association house since 1998. I have been told that i do not have right to acquire because the…
    13 February 2018
  • glover_113
    Re: Shared Ownership Homes
    Hi we are wanting to move from our shared ownership property to another shared ownership but i can't go on the mortgage due to bad credit…
    12 February 2018
  • AffordableHomeAdvice
    Re: Low Income Housing
    Dee - Your Question:Hi, I've recently lost my house due to a house fire& I'm wondering if I'm priority. I am on a low income as I work part…
    8 February 2018
  • Dee
    Re: Low Income Housing
    Hi, I've recently lost my house due to a house fire& I'm wondering if I'm priority. I am on a low income as I work part time, how do I go about…
    7 February 2018
  • Ema
    Re: The Right to Acquire Scheme
    We have the right to accuire but trying to find a mortgage to do this has been a nightmare we are having to put a hold on this…
    6 February 2018
  • Gabby
    Re: Are You Classed as a Key Worker?
    I work in Westminster ,a day Centre for dementia, trained to work with all types of dementia am I a key worker
    1 February 2018
  • Maz
    Re: The Right to Acquire Scheme
    Me and brother lived all our lives he has the right to buy i don't can I make a joint claim to keep me safe so he does not just…
    29 January 2018
  • veronica1840
    Re: Planning Ahead
    Hello I'm a single mother and in this time is very difficult for me to pay private rent. I'm interesting to rent a room or studio flat with my…
    28 January 2018
  • AffordableHomeAdvice
    Re: Buying Your Council House
    Steve - Your Question:I would like to enquire about buyin my council houseOur Response:You can s
    19 January 2018
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the AffordableHomeAdvice website. Please read our Disclaimer.