I’m a mum & I set up a savings scheme with my friends to buy £320k first home – it was easy and helped me save quicker
MUM-OF-TWO Lola Aremu found a nifty saving method to help her get onto the property before her eldest son started secondary school.
The 43-year-old set up savings scheme with seven friends, to help build up enough funds for her first home deposit.
The peer-to-peer idea is similar to a scheme run by StepLadder, which asks groups of savers to contribute a set amount of money for several months.
Lola and her friends decided who would receive the cash when, based on their savings goals.
Everyone in the group had a different reason for saving, some for their first home and others for a holiday.
Lola chose to receive her cash last, and in three separate chunks, to make sure she had the £32,000 that she needed.
Lola, a compliance analyst, contributed £3,000 a month, while others contributed £1,000.
This was a deal Lola was comfortable with, as her financial circumstances meant she was able to add a little more.
It’s risky though. The schemes aren’t regulated, meaning your cash could be lost or someone could decide to stop contributing.
But Lola said she wasn’t worried as she trusted her friends to be completely transparent and reliable with their payments.
She got her cash around 12 months after joining.
Lola got the keys to her new £320,000 home in Manchester in May 2023, where she lives with her two sons, aged nine and 11.
We sat down with Lola to chat through her experience of getting on the property ladder for The Sun’s My First Home series.
Tell me about your home
It’s a three-bedroom house in Countryside’s development in Belle Vue, Manchester.
Downstairs there is a living room and a separate kitchen-diner, as well as a cloakroom and a toilet.
There’s also a relatively large back garden.
There are two bedrooms and a bathroom on the second floor and a master bedroom and ensuite on the third floor.
We also have a driveway.
How did you decide on the location?
Better schooling and extra-curricular activities were the main priority when I started my house search.
I felt like moving out of Kettering was the best way to ensure my sons had a bright future.
I am now surrounded by great schools and activities to keep the boys busy.
Everything is just a short walk or drive away which is so handy as before I was forever taking them into London on the weekends to keep them entertained.
How much was it?
My house cost £320,000 and I put down a 10% deposit of £32,000.
I took out a mortgage of £290,000 for 28 years with a fixed rate of 3.9% for two years.
My mortgage payments are £1,426.41 a month.
At the time, interest rates were really high so I was reluctant to take out a longer fixed-rate mortgage and be stuck with a high interest rate for a lengthy period of time.
I’m hoping that by the time my fix ends, rates will have come down.
How did you save for it?
I joined a rotating savings scheme set up by myself and a group of seven friends.
This is similar to the one run by Stepladder.
Each person contributed £1,000 each a month, but I added £3,000 because this was affordable for me.
The money would then be put into a savings account until our turn came around.
We decided between ourselves when we wanted to receive our cash.
Because I had contributed more to the scheme, I received three monthly payouts.
We started the scheme in August 2021 and I had my full deposit by August 2022 and paid the deposit in October 2022.
I found the savings scheme really helpful, as I knew I wouldn’t commit to putting away the cash each month otherwise.
You also didn’t want to let the other people in the group down by not contributing, so that was an additional motivation.
It would have been tempting to spend it on something like a holiday otherwise, so it definitely helped me buy a property sooner.
We all stayed in touch and we all trusted each other completely as we were all friends.
This is why I chose to save this way, rather than going through an organisation like Stepladder, where you don’t know the other people involved.
We also didn’t have to pay a fee this way, like you do with organisations like Stepladder.
How did you cut back on your spending?
I was in a pretty well-paid job, so I knew that making a £3,000 contribution was affordable for me.
It was around 90% of my monthly salary, but I still had to make cut backs.
My monthly bills worked out at around £1,100, including £600 on rent and tutoring for my children.
These were my only monthly outgoings so I cut out all other activities, like eating out, to make sure I could keep up with the payments.
How did you afford to furnish it?
I am buying everything in stages as I think it’s important not to rush into purchases.
The house came with integrated appliances like a fridge-freezer and oven, as well as smaller details like chrome sockets and light switches.
I also had a lot of furniture that I bought with me from Kettering which has helped me to save on costs.
Do you have any advice for other first time buyers?
If you’re serious about getting onto the property ladder, you need to develop your own saving method.
Finding a good savings system is the key to getting your deposit sorted quickly.
Do a lot of your own research on the location to make sure it suits your future needs.
Meanwhile, we spoke to one couple who managed to bag their first home using a “lifeline” small deposit scheme.
Plus, one first-time buyer bought with his mum after an easy mistake ruined his credit score.
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