How to save for a house while renting

Before you start saving, try to pay off any expensive debts, like pay-day loans, credit cards or store cards. If you have a student loan, the decision of whether to save or pay off your student loan depends on several things, like what other debts you have and when you studied. If you’re struggling with debt, Money Helper offers free independent debt advice so you can get your debt under control, before you turn your attention to saving.

Once you know how much you need to save to buy your first home, it's time to get planning.

Remember, the more you can afford to save towards a deposit, the more likely you’ll be able to access competitive mortgage deals (and the lower monthly repayments). It’s important to be realistic about how much you can set aside each month – don’t overstretch your finances. Even if that means having to wait a little longer before buying your own place. 

You can work out how much you need to save each month towards your deposit with our house savings calculator. And for a guiding hand each step of the way, download our First Home Steps app. Our free app for first time buyers lets you create and manage your own savings plan to get you your deposit (plus the extra home-buying costs) and demystify the process each step of the way. 

Saving little and often is the way to go. And you need to choose the right way to save to make sure you get the best rate of interest on your savings.

You might put your money into a great savings account or use a scheme like Help to Buy ISAs or Lifetime ISAs. Although Help to Buy ISAs are no longer available to new customers, if you already have one then you can continue saving into your account until November 2029.

It’s not easy, but see if you can at least shave some money off your rental bill. For example:

Could you consider moving to a smaller place or a cheaper area for a short time?
Are you able to share a place with others for a while to cut your rent and bills?
Do you have a parking space or storage space you don’t use? If your rental agreement allows, you could make money from renting it out.

Make sure you're not paying over the odds for essential services like gas and electricity, and internet.

One of the easiest ways to do this is to regularly compare deals from comparison websites and switch to a cheaper deal.

You want that deposit back when you leave your rental place. So, look after the property and leave it in a good state. The charity Shelter provides some great advice on how to make sure you get your deposit back, and what to do if your landlord refuses to return your money.

You’re probably going to have to cut back on a few things to reach your saving goal. Don’t worry, we’re not going to tell you that cutting out the odd takeaway coffee is the magic answer but spotting small ways to change your habits can translate into savings over time. Some ways to save could be: 

Change your ‘treat yourself’ mindset: if you want to spend on a treat, challenge yourself to put the same amount in savings first - then reward yourself.

Curb your subscriptions: keep the things that are useful and essential; but make sure you’re not wasting money on subscriptions for things that you don’t really value or use.

Make the most of loyalty cards and cashback schemes: If you use loyalty cards or your bank offers cashback on certain spends – keep an eye on them and use them to their full advantage.

Use a budgeting app: Keeping up to date with your income and outgoings can really help you spot opportunities to save. Most apps will also give you a breakdown of what you tend to spend your money on the most – so you can make a change if you think it’ll help your savings.

Looking for a job where you can work from home: Ok, this would be a big change! But if it’s a possibility you could set aside the money you would have been spent on commuting and put it into savings instead.

Batch cook: it takes effort but meal planning and batch cooking for the family can shave pounds and pennies off the weekly shop. 

Embrace ‘free’ fun: You don’t have to completely rule out spending money on fun activities but make the most of free stuff you can do with your friends, family, and partner. Walk to the local museum. Ditch the cinema for movie night at home and a living room picnic. Have a crafty afternoon with materials you can find around your home or garden. Take a stroll on the beach. Offer to walk a friend or neighbour’s dog.