“I Saved £40,000 In Less Than 10 Years to Buy My First Home”
After almost a decade of saving up a deposit of £40,000, we follow a recent first-time buyer as she buys her first flat in the latest article in our My First Home series.
Bhavna Koli, a client services associate working in fintech, began saving for a house deposit in her early 20s. Just a few years later, she had built up enough of a nest egg to find her own place at the age of 29.
Read on to follow Bhavna’s experience as a first-time buyer and find out her top tips for getting on the property ladder in the latest My First Homes feature.
“I wanted to invest in my financial future”
Growing up in Ealing, West London, Bhavna lived with her parents and two sisters in their family home. But in the spring of 2021, she decided it was time to find a place of her own.
“Coming from a traditional Indian background, I wasn’t expected to move out until I got married or settled down with someone. But as I hit my late 20s it felt like the right time to fly the nest and find a place of my own,” says Bhavna.
Buying a home was also a top priority for Bhavna to secure her financial independence and invest in the future.
Bhavna continues: “Owning a home brings a sense of financial security and opens a lot of doors. Not only would it be the biggest asset I own, but it could also be a form of income in the future if I decided to move and rent it out.”
“Over 9 years, I was able to save up a deposit of £40,000”
After starting her first job in retail when she was 16, Bhavna began to understand the importance of saving and putting money away for a rainy day. She worked on weekends and sometimes during the holidays while studying for her GCSEs and A-levels.
When she left school, she went straight to university where she studied chemistry and had to use some of her savings to cover day-to-day expenses and trips out.
“When I got my first job, I was very conscious of putting money aside. But I’d always find myself dipping into my savings, so the amount I could save fluctuated a lot.”
Eventually, Bhavna set her sights on homeownership and committed to saving for a house deposit.
She continues: “During my 20s, I became much more intentional about saving money. From my first graduate job after university and my roles ever since, I’ve saved more money and put salary increases towards saving for a house deposit.”
Bhavna saved at least half of her monthly salary and used the rest to help with household bills and her monthly expenses.
“Over nine years, I saved up a deposit of £40,000. I still dipped into my savings now again for things like holidays, but I always made sure I topped it back up,” she says.
“I didn’t know anything about the mortgage process”
When it came to applying for a mortgage, Bhavna initially felt overwhelmed.
“I felt out of my depth, as I didn’t know anything about the mortgage process before I started my application,” Bhavna explains.
Luckily, she could reach out to her eldest sister, Kavita, who had experience of buying a property, to ask for help. She also spent a lot of time reading mortgage advice guides online to find out more about the different types of mortgages and how they worked.
Bhavna eventually decided to use a mortgage broker to help her find the best deal.
“Applying for a mortgage was quite daunting in the beginning and having an expert give additional guidance and support really helped me,” Bhavna says.
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“I fell in love as soon as I walked through the door”
Although Bhavna wanted to remain close to her family and friends in West London, she had a lot of other factors to consider before deciding where to start looking for a home.
Bhavna says: “I wanted to be a commutable distance to central London, as I love the buzz of the city and enjoy going out and socialising. But house prices were a big factor too. London house prices are exceptionally high and I had to balance that with my quality of living.”
After careful research, she narrowed down her search to properties in Surrey and Berkshire. She found properties online and then arranged viewings with estate agents.
At first, she looked for homes that were cheaper and needed renovation. But after a few viewings realised that the cost of the renovations would likely outweigh any savings made on the house price.
“I switched gears and decided to look for something that needed less work. In the end, I viewed about 20 flats,” she says.
Then Bhavna went to see a recently renovated two-bedroom leasehold property in Ashford, Kent, which was an instant hit.
“I fell in love [with it] as soon as I walked through the door. It ticked so many boxes for me. Everything had recently been refurbished, so it was quite modern and fresh. It also was really bright and had lots of natural light, which is quite important to me,” says Bhavna.
After viewing the flat a second time, she decided to make an offer and was delighted when the sellers agreed to lower the asking price.
“I offered £10,000 less than the asking price, and the sellers said that they’d meet me in the middle at £5,000, which I agreed to right away,” says Bhavna.
However, Bhavna later noticed that there were only 90 years left on the lease, which would potentially make the flat harder to sell in the future because its value would reduce as the lease got shorter. It would also be expensive for Bhavna to pay to extend the lease. Fortunately, she was able to renegotiate the offer.
“I spoke to the sellers and said that I’d match their initial asking price if they extended the lease to 125 years. They agreed to this, which was a huge relief.”
Moving into her first home
It took longer than expected for both buyer and sellers to get the moving date confirmed due to delays with conveyancing.
Although the apartment was chain-free, problems with processing the paperwork made it difficult to organise the move and make plans like ordering new furniture, for instance.
But the move date was finally confirmed in December 2021, and she was then able to get the ball rolling quickly.
Once she moved in, Bhavna says: “It was just a case of cleaning the property and setting up the furniture.”
“My top tip for first-time buyers”
Starting your savings journey as early as possible is one of Bhavna’s first-time buyer top tips.
“Even if you can only put a small amount of money away, it all adds up. It also helps to know about the different types of savings accounts available and how they can help your money grow,” says Bhavna.
She also suggests boosting your savings power by using higher interest savings accounts and government schemes, such as the Lifetime ISA or Help to Buy ISA (which is no longer open to new applicants), that can help first-time buyers top up their savings.
The Help to Buy ISA was introduced in 2015 to help first-time buyers save for a home. The government tops up your savings by 25% (up to £3,000) when you buy your first property. Help to Buy ISAs closed to new applicants on 30 November 2019. If you have a Help to Buy ISA, you can keep saving up to £200 a month into the account until November 2029 and your 25% bonus must be claimed by November 2030.
Bhavna continues: “When I was saving, my money just sat in a basic savings account earning minimal interest. But looking back, I’d definitely try to diversify my accounts or take advantage of one of the government schemes where you can earn a bonus on your deposit savings.”
Have you recently bought your first home?
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Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more