We bought our £255,000 first home through an auction – and only paid a 5% deposit

SIMBA and Marika Kugwe thought buying a home at auction was something you just see on TV – until they bought their dream £255,000 first home.

The couple were looking for a roomier home in Hertfordshire, but on a tight budget, there was little listed on the market that they could afford.

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According to Rightmove, average house prices in the area had reached a whopping £518,332 – nearly £200,000 more than what they had budgeted.

Determined not to give up the search on their dream home, content creator Simba, 27, and graphic designer Markia, 24, finally struck gold when they saw a three-bed home listed for auction on Zoopla.

Although the couple originally wanted to avoid buying a property this way, they did their research, bit the bullet, and put a bid in.

It was accepted, and the pair rushed to pay a £4,800 holding fee for the property, putting down a 5% deposit of £13,000.

That’s because they were able to find a lender, Nationwide, which agreed to give them 95% loan-to-value mortgage.

If you’re tempted to bag a property Homes Under The Hammer style, you’ll want to be clued up on how the process works.

Homes listed at auction are usually cheaper than similar ones listed on the market – but buyers can lock horns in bidding wars, driving prices up much higher than the starting price.

If you win your home, contracts are usually signed straight afterwards – which means there’s no time to change your mind and you must have the money saved up already.

There are also usually extra fees you’ll have to pay when buying a property under auction that you wouldn’t have pay to buying through more traditional means.

Plus, many homes listed on auction sites need a lot of work – which means you must have cash spare to do it up.

In many cases, you may not even be able to visit the house before you buy it, which means you’re not entirely sure what you’re taking on.

Simba and Marika’s home was also a doer-upper, but they weren’t afraid of the challenge.

They’re currently renovating the house in stages, saving up as they go to turn it into their forever home.

We sat down with them both to see how they went from savers to homeowners for The Sun’s My First Home series.

Tell me about your home

It’s a three-bed house in Hertfordshire.

There are two living rooms, an open plan kitchen and diner, one bathroom, a back garden and a front drive.

We wanted to find a home big enough to be a family house – we’re planning on staying here for a while.

That meant we were happy to take on a project, do up a house and make it more of a forever home.

How did you decide on location?

Location was key for us.

We’ve always lived around the area, and wanted to stay close to where we’ve been for our whole lives.

We also needed to live somewhere with good links to London for work.

The house was listed on Zoopla as being an auction property, and we stumbled across it in June last year.

We were avoiding looking for auction properties, as we knew there would be extra charges to save up for like reservation fees – and thought it was out of our budget.

But after doing our research we decided to go for it and put a bid in for the house.

How did you buy it?

We really did our research and figured out ways to save costs buying our house through an auction site.

To reserve the property, for example, would have cost us £11,000 in reservation fees – but we spoke to the agent handling the property and asked if we could negotiate on this.

The agent contacted the seller, who offered to pay the reservation fee or knock £11,000 off the price tag if we put a bid in he liked.

There was a week left on the online auction, so we put our heads together and came up with a price we could afford.

We put in a bid of £255,000, which was accepted – even though it was much lower than the listed starting bid of £265,000.

We got the impression the seller wanted a quick sale as he had struggled to find a buyer – hence why it was listed on auction.

There were a few fees we had to pay for on top.

We paid £300 for a buyers auction pack, which contained all the legal documents about the house.

A £4,800 holding fee for the house was paid upfront, which was taken out of our 5% deposit of £13,000 for the house.

We completed in December 2021.

How much did you pay for it?

We paid £255,000 for our home.

Our mortgage repayments are £944 a month.

We took out a £242,250 loan over a 35-year term at a two year fixed rate of 3.09%.

Any complications?

We had a bit of a struggle getting a mortgage initially.

Lenders seemed to be stricter when it came to agreeing to lend money for auction properties.

Our first application was declined, and then the second time we applied, a surveyor went to the property and said it wasn’t habitable, which meant the bank declined to offer us a loan.

We then decided to get a mortgage advisor who specialised dealing with people buying auction properties.

They helped us apply for another mortgage with Nationwide – and that time around, it was approved.

How did you save for it?

We first started seriously saving for a house a year and a half ago.

To keep on track with our savings, we followed a budgeting rule of putting 25% of our monthly salary towards saving for a house, 20% towards renovation works and emergency funds, and the rest of our cash – the remaining 55% – went towards our bills and outgoings.

That meant we were putting away at least £1,000 a month for the cost of buying and doing up our home.

We then raided our bills to see if we could make any further savings.

We froze our gym memberships, freeing up £50 a month, and closed our Netflix account, banking us roughly a tenner a month.

Plus, we made a conscious effort not to drive as much. We’ll share lifts together as much as we can instead of taking our separate cars everywhere – that’s saved us around £160 in fuel per month.

We also had a piggy bank we put all our spare change in for a year.

At the end, we counted it up and we have saved £150.

We saved for the deposit ourselves – we were given no financial help from family or friends.

We also set up our own business, Sloag, during the first lockdown, which raised £3,000 for the deposit.

We make our own art, clothes and prints and sell them.

It’s been great to help us fund renovation works – which we’re budgeting around £20,000 for.

Advice for other first time buyers?

Never be afraid to ask questions if you’re unsure of how the auction process works.

We didn’t know anything, and made sure we found out all the information we needed by talking to professionals.

If you’re someone who panics easily or is not able to handle pressure, we wouldn’t advise buying a house via auction.

Definitely find a mortgage advisor who works with auction properties who can advise you and guide you through the process.

Here’s how one couple bought a £340,000 home with a tiny deposit.

Here’s how one savvy saver used the envelope savings trick to save £10,000 for the deposit needed for her £199,000 first home.

Another first-time buyer used the 50/40/10 budgeting rule to help her save for her £210,000 first home.

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This post first appeared on thesun.co.uk