A SINGLE mum from Somerset saved a £9,000 house deposit in a year by moving 50 miles away for cheaper rent.
Jo Middleton, 39, bought her £180,000 three-bed home in Taunton two years ago, and lives with her 17-year-old daughter Belle.
13 Jo Middleton, 39, with her daughter Belle, 17Credit: Apex News
But the pair had to move 50 miles away from their rental home in Bristol to Somerset in Taunton in order to save the cash to buy.
Despite moving to a similar sized house, Jo’s rent bills dropped dramatically from £1,275 a month in Bristol to £675 a month in Taunton, so she stuck the £600 saved straight into a separate bank account.
Moving house also cut her council tax bill down by £40 a month and Jo, who’s eldest daughter Bee, 23, had already moved out, found she ate out less too as there was less choice on the high street.
Overall, her savings went from nothing to up to £800 a month and within a year, she had enough for a five per cent deposit.
13 Jo bought her three-bed house in June 2017Credit: Apex News
But despite earning up to £60,000 a year as a self-employed writer and blogger, she struggled to get a mortgage with such a small deposit.
Many lenders tend to be more cautious towards self-employed borrowers because their income is considered less secure and therefore more risky.
Normally, self-employed homeowners need at least a 10 per cent deposit, but Jo turned to a specialist lender, Aldermore, which offered her a loan with a five per cent deposit – but it came at a price.
Typically, first-time buyers can expect to pay around 2 per cent for a two-year fixed-rate mortgage but Jo ended up paying 4.8 per cent, making her monthly payments £935.
To put it in perspective, Jo recently remortgaged to a deal that charges just 2 per cent interest, bringing her payments down to £640 a month.
13 The single mum feared she had missed out on ever owning her own homeCredit: Apex News
13 The previous owner had redone the kitchen but Jo paid for an extractor hoodCredit: Apex News
Now, the savvy mum plans to overpay every month and make one-off extra payments to bring down the 30-year mortgage term.
We spoke to Jo for this week’s My First Home to find out what it took to buy a home on her own.
What’s your home like and how much did you pay for it?
I live with my youngest daughter Belle, 17, and three cats in our three-bedroom semi-detached house in Taunton that I bought in June 2017.
It’s a 1970s dormer bungalow with two floors. There is a garage too that is part of a block of garages.
It’s about a mile and a half out of the town centre. I normally cycle through the town’s main park to get to the co-working space I use a couple of days a week.
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The station is a couple of miles away with trains direct to London Paddington in less than two hours.
I bought it for £180,000 with a five per cent deposit – so that was £9,000.
13 The house has three bedrooms and it’s semi-detachedCredit: Apex News
13 Belle was happy to move away from Bristol as it meant she could be closer to familyCredit: Apex News
It was on the market for £200,000. They had already turned down an offer of £180,000 a month before – and it had been on the market for six months.
I was honest with them and just said £180,000 was my absolute maximum offer and they could take it or leave it, and they went for it.
Was it hard leaving Bristol and moving 50miles away?
I had grown up near Taunton but I always wanted to live in Bristol because I think it is such a lovely city. We moved there in 2011.
My eldest daughter, Bee, now 23, was a teenager and I wanted her to experience living in the city, so that she felt confident enough to go anywhere for university.
Jo’s top tips for first-time buyersFIRST-TIME buyer Jo Middlton shares her top tips on saving for a house:
Do not be afraid to find out your options – I had been put off before I had even realised getting a mortgage was a possibility.
Do your research or speak to a mortgage broker to suss out what the options are.
A Help to Buy ISA is free money – I easily transferred money from my current account into it.
Use a broker. This made a massive difference to me. It is fairly complex finding the best deal and can be time-consuming – especially with the remortgage. I might not have even thought to remortgage without them prompting me.
I paid £1,600 a month in rent for a three-storey five-bedroom house for a year – it was a ridiculous amount but it was a lovely year.
We then moved to a three-bed house very close by which was a lot smaller and paid £1,300 a month in rent. We lived there for two years.
I got fed up of spending that much money on rent for somewhere that was so small really. It was smaller than where we live now.
As lovely as Bristol is, when you are spending so much on rent you have none left to enjoy going out and doing nice things there.
13 Jo has completely transformed the garden – it used to be all gravel when they moved inCredit: Apex News
13 Jo’s enjoying making her mark in the garden even if the plants won’t be fully grown for another few yearsCredit: Apex News
We moved to Taunton in the summer of 2015 but it wasn’t until a year later that I really started get my head down and save.
By that time, Bee had moved out and left for university and Belle hadn’t started her GCSE years yet so it was a good time to move.
Belle really didn’t mind moving even though she had to change schools because it meant that we were closer to family.
How did you save and get a mortgage?
My Grandmother had offered me the cash for a deposit when I was in my early twenties and I became a mother, but I felt it was too much responsibility to take on at the time.
As I got older, I realised buying a house was something I really wanted to do but I knew it wasn’t affordable in Bristol.
I went from paying £1,275 per month in rent in Bristol to £675 a month for a similarly-sized house in Taunton and so immediately cut the rent by £600 a month.
It was a no-brainer really.
What help is out there for first-time buyers?GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The Government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
There were the additional benefits of living somewhere cheaper too such as lower council tax.
I wasn’t spending as much on eating out as there aren’t as many places in Taunton. In Bristol the temptation is to go out more.
My family is in Somerset too so I was spending less money on driving up and down the M5 to visit them.
Luckily I get to review a lot of things with what I do for a living so I never felt like we were giving anything up.
13 The previous owners updated the bathroom before they moved outCredit: Apex News
Other expenses stayed the same – I pay both my daughters’ phone bills so I am responsible for three phone bills every month on top of the usual utilities.
I also contribute £400 a month to my pension which is a decent chunk.
In all, I managed to put away the maximum £200 a month into a Help To Buy Isa and another £500 to £600 a month into a savings account.Was it hard to get a mortgage being self-employed?
I didn’t know that buying with a five percent deposit was an option until some new houses near Taunton station caught my eye.
I went into the estate agent that was marketing them and their mortgage adviser told me I could get a £180,000 mortgage with a £9,000 deposit.
My mortgage broker did initially go to a more mainstream lender but while my credit rating was fine I think the combination of only having a five percent deposit and being self-employed just put most lenders off.
13 Jo recently remortgaged her house and the payments have dropped by £300 a monthCredit: Apex News
I ended up going to Aldermore Bank that specialises in mortgages for self-employed people.
I had to show six months worth of the books before being considered for the £171,000 mortgage.
I was offered a two-year fixed-rate of 4.98 per cent and my monthly payments were £935.
I just remortgaged last week and switched to a three-year fixed-rate of 2 percent with HSBC. My monthly payments have come down to £640.
I hadn’t realised what a difference a couple of per cent would make.
If I hadn’t bothered to switch, I’d have been rolled onto a variable rate and my bills would have gone up by £100 a month, so all in, I have saved about £400 a month.
It was frustrating because I knew I was paying over the odds. On the other hand I’d been paying more when renting in Bristol.
I have been self-employed for 10 years and had a consistent level of income in all that time.
13 The writer and blogger struggled to get a mortgage with a low deposit because she was self-employedCredit: Apex News
When I started being self-employed I was earning £20,000 to £30,000. The past three years I have earned between £60,000 and £80,000.
I tend to think being self-employed can be more predictable. If you are an employee you have no control over the business you work for going bust or making you redundant.
The only downside with me getting on the property ladder later in life is that with a 30-year mortgage, I’ll be 69 by the time I pay it off.
How did you afford stamp duty and other fees?
In the time I had between realising I could get mortgage and it going through – four or five months – the money I saved in that period was able to pay for other fees.
Stamp duty was £1,100, for example. I also got the Help to Buy Isa bonus which came to £2,200.
It is slightly weird that you don’t get the money until afterwards when you actually need it sooner but it made a difference to contributing to extra costs.
The previous owner had done the kitchen but they didn’t have an extractor hood. They hadn’t set up for a washing machine either and we also had the loft boarded up.
How did you afford to furnish the flat?
I already had furniture as I have always lived in unfurnished rented accommodation. My family were supportive and helped me move.
13 Jo has no plans to move house anytime soonCredit: Apex News
13 Jo says the downsize to buying a house older is that she’ll be nearly 70 by the time she pays off the mortgageCredit: Apex News
The previous owner had also put in a new bathroom as well as a kitchen and done up the paintwork as it had been quite outdated.
The garden was a square of gravel when we moved in. I feel like I have made my mark on it: I have done some basic landscaping, had a shed made to fit a corner and bought some nice pink wooden frames to hang plants on.
Do you think you’ll stay there for a long time?
I can’t imagine living anywhere else now. It is a different feeling owning a property.
I always thought it would be a weight of responsibility but it actually feels like a weight has lifted.
There is a different level of investment in this house. I am even planting things in the garden that I know won’t make their mark fully for a few years.
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I plan to overpay and continue to pay £935 every month. I have done it for two years so I know I can afford it.
If I do have anything left over at the end of the year then I may make a one-off additional payment.
I do not want to pay a mortgage for the next 28 years if I can help it as I will be almost 70!
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