How to save for a house deposit

The first step towards buying your own home is to save for a deposit.

When buying a house, the deposit is the lump sum of money you’ll need to pay upfront towards the cost of your property.

Gathering together a big deposit can seem daunting, so here’s what you need to know to start you on the road to savings success.

What you need to know

How much do I need for a deposit?

Use our mortgage calculator to find out how much you can borrow.

Depending on factors such as where you want to buy and how much you earn, you would normally need to save at least 5% as a deposit towards the cost of your home, and take out a mortgage loan to cover the rest, however in recent times you are likely to need a higher deposit of between 10-15%.

It can be helpful to find out how much you might expect to spend on a property in your area. For example, if you want to buy a home costing £220,000, which is the average for first time buyers according to Zoopla, then you’ll need to save at least £11,000 (5%).

Make a plan

Now you know how much you need for a deposit, it’s time to make a plan to work out how to save that sort of money.

Regular saving is the key. But how long it will take to save enough depends on how much you can afford to set aside each month. Once you have that figure in mind, work out how long it would take you to save your deposit: the First Home Steps app can help you do exactly that.

How to save for a deposit quickly

You might not be able to afford to save much money each month. So, it’s time to consider how you could cut your outgoings and boost your savings.

Could you make any changes to your lifestyle that would help you achieve your home-owning dream sooner? You could, for example:

  • Reduce your bills and everyday spending. If you’re renting, then see if you can cut your household bills. Use price comparison sites to find cheaper deals for things like energy, broadband or your mobile phone. Also, consider what things you spend money on that you really don’t need: do you really need that morning takeaway coffee or expensive new pair of trainers?
  • Consider a budgeting app. These let you view your income, outgoings and spending habits all in one place to help identify the best ways to save.
  • Move in with mum and dad. It may seem drastic, but by moving in with your parents – or other family or friends – for even just a few months, you could save a lot of money on rent, even if you’re contributing towards bills while at their house. Alternatively, consider whether you could rent a cheaper property, or share your existing rental with a roomie, for example.
Help is at hand

There are also several types of government help available for first time buyers:

  • Shared ownership: if you can't quite afford to buy 100% of a home, then with Shared Ownership you can buy a share of the home - between 25% to 75% - and pay rent on the remaining share.
  • Help to Buy: Shared Equity depending on where you live, the government will lend you between 15% and 40% of the price of the property you’re buying. You will need to put down a deposit of at least 5% and get a mortgage to cover the rest of the property's value.
  • Lifetime ISA: you can use a Lifetime ISA (Individual Savings Account) to buy your first home. You can put in up to £4,000 each year. As well as being tax-free, the government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.

These options aren’t available to everyone however so you should check to make sure you are eligible.

You’re not alone.

As well as being more careful with your finances, there are several ways you could cut the amount you need to save for a deposit. For a start, you can turn to your loved ones for help.

Perhaps you could buy a home with friends, to share some of the financial burden?

And then there’s the famous bank of mum and dad: might your parents, or grandparents, help you with your deposit?

Click here to download the First Home Steps App

Find out more >

 

And remember...

By putting a plan in motion and making the most of the help that’s out there, your savings target might just become that little bit less daunting.

Click on the sections below to explore what you need to know at each stage of your home buying journey:

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Finding >

Couple looking outside

Buying >

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Moving >

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