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
  • AffordableHomeAdvice
    Re: Buying Your Council House
    jules - Your Question:I have been told that if you have lived as a council tenant for 20 years you are entitled to 70% of the total…
    20 November 2017
  • jules
    Re: Buying Your Council House
    I have been told that if you have lived as a council tenant for 20 years you are entitled to 70% of the total house price, is this…
    19 November 2017
  • Jobeeny
    Re: Questionnaire: Am I Eligible for Housing Benefit?
    I was claiming housing benefit as i was on a low income. I decided to work some cover work and even…
    10 November 2017
  • AffordableHomeAdvice
    Re: Buying Your Council House
    Fred - Your Question:My son and my brother want to buy my mums council house is this possible and neither are in the tenancy?
    10 November 2017
  • Fred
    Re: Buying Your Council House
    My son and my brother want to buy my mums council house is this possible and neither are in the tenancy?
    7 November 2017
  • Sue
    Re: Are You Classed as a Key Worker?
    Hi I am part time nurse in NHS am I suitable for key worker scheme
    7 November 2017
  • jamiam
    Re: The Right to Buy Scheme
    Hi i am looking at buying my council property, the tenancy is just in my name, but wanted to get a joint mortgage with my partner but im…
    3 November 2017
  • Jude
    Re: Are You Classed as a Key Worker?
    I am a sixth form supervisor in a college . Am I a key worker?
    1 November 2017
  • Tray13
    Re: The Right to Acquire Scheme
    Hi I've been told by my housing trust that I can purchase the property under the right to acquire, not right to buy scheme. I moved…
    29 October 2017
  • Mitch
    Re: Are You Classed as a Key Worker?
    I am working as An Associate Praxtitioner in NHS, am I eligible for key worker?
    27 October 2017
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.