- get a mortgage
- get a council house
- find a live-in job
And so the master plan began - only I got impatient and wanted an item that cost more than my savings, so I got a bank loan to pay for it! The loan was only £800 repayable over 12 months but getting it became a defining moment. It taught me, rightly or wrongly, that the easiest way to buy something major is to use someone else's money and pay it back over time, preferably with as little interest added on as possible. It all seemed so easy until interest rates rose to an incredible 15%, that's when things can go pear-shaped. It certainly taught many of us why we should pay more attention to financial and property-related news!
Since then, various Government initiatives have evolved and different home ownership possibilities introduced. There are affordable rent options, social housing, shared ownership and even social enterprises that incorporate housing.
Gentoo Group is one such social enterprise, based in North East of England, with "a vision to improve the Art of Living."
Their work is focused around three key areas to maximise impact: people, planet and property. They allow you to find a property you like, move in and pay rent, as a tenant, but your payments can also contribute towards buying the house – no need for a huge deposit or even a mortgage!
Social enterprises help further increase your chances of getting onto the property ladder and I suspect that this route may provide solutions to those who would, otherwise, have little possibility of ever owning their own home.
Long gone are the days of my three basic options and total exclusion from the property market if you find yourself with insufficient income to qualify for a mortgage. Now we also have:
- Help to Buy - Government backed scheme for first time buyers offering tax-free top-ups to mortgage deposit savings.
- Shared ownership - You can buy shares worth between 50% and 75% of the market value of the property and you pay rent on the remaining share.
- Rent to buy - 'Genie' properties are let at rates slightly above those of social tenancies, but they are still considerably below current market rents. Of course, due to their popularity they are allocated on a ‘first come, first served’ basis and on an Assured Shorthold Tenancy agreement.
- Part exchange - A bit like trading in your old car for a bigger or better one, you could start small and then work up to your dream home.
Take care of the pennies, don't spend the pounds foolishly, take advantage of meaningful bargains and bank your savings safely so they can't be frittered away on 'stuff'. Try to ensure your money is attracting the best possible interest, even when rates seem ridiculously low, and be prepared to move quickly if your dream home presents itself.
A LITTLE BIT EXTRA
To help me with my own savings plan, I charted a timeline. It began with house hunting, then progressed through house viewing, surveys, moving costs and then on to legal expenses. It wasn't until all of those costs, which were several thousand pounds, could be met that I started saving for the actual house! Each month the balance grew with tax-free ISA interest, I rounded it up to the nearest full pound. Pound-rounding became quite habit-forming, so it wasn't long before I was rounding up to the nearest £5, then the nearest £10, until it eventually got to the hundreds. It all took time. Social enterprise options could definitely provide many with far quicker results and it is something I fully intend to explore further. How about you?
Feel free to ask questions, comment, get involved in the frugal forums discussions or share these posts and good luck with your personal savings goals.