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How to save for a house deposit

Saving for that first deposit can feel like an insurmountable task - but we've got some tips to help you get there.

How to save for a house deposit


In the past few years it has been more challenging for First Time Buyers to get a mortgage without a large deposit. Many lenders expect a deposit of between 15% and 25% of the property value, although there are government schemes that aim to make saving for a mortgage easier.

But once you've decided which account to open, how do you save up the money? How much do you actually need for a deposit?

Create a savings goal

Consider what kind of property you want, and what area you're considering, then do some research. Consider the house prices in that area, and work out what 10-15% is. Now you have an idea of what you're working towards. Keep that number visible, near your computer or in your wallet - a good reminder every time you reach to buy something you don't need!

Get information from a mortgage lenders or mortgage broker 

Understanding your mortgage options is one of the best things you can do. To understand what you can and cannot afford, speak to lenders about their lending policies to find out about their deposit requirements and how much you are likely to be able to borrow based on your income. As an alternative to approaching separate lenders directly, you might prefer to use a mortgage broker, who can search all the deals on the market and provide advice on which lender and mortgage are right for you. 

We recommend speaking to the Mortgage Advice Bureau to learn more about what mortgage is right for you.

Cutting out the ‘extras’

Are you partial to a regular midweek takeaway? Do you buy lunch at work rather than make your own food at home? Could you do without your extravagant smartphone and top-tier monthly contract?

As difficult as it may be, you should look to tighten your belt as much as possible, whether that means scrapping your regular nights out, skipping your daily coffee or lowering any expensive contracts or gym memberships. Even relatively minor lifestyle changes, such as stricter budgeting on your weekly food shopping, can help save a surprising amount of money over the longer term.

Keep your goal in mind, and plan a (reasonable) treat for yourself once a month, so you don't start suffering from FOMO (Fear Of Missing Out). 

Lighten the luxuries

If you’re serious about saving money for your first house deposit, then it should take precedence over life’s other luxuries. It can be hard to say 'no' to those theatre tickets that became available, that holiday package that's on sale, or that new piece of technology you really want. But you get used to it. Remember the end goal, and how good it will feel to own your own home.

Moving back in with your parents

This may not seem ideal, but moving back in with your parents is actually one of the most sensible decisions you could make when saving for a house deposit. If your parents appreciate your position they may allow you to pay a smaller, token sum toward living expenses.

Moving back into a parental home is becoming increasingly common as house prices rise and mortgages are more difficult to secure. Limiting the outgoings on rent, utilities and bills is one of the best ways to save larger chunks of money.

Just make sure you set rules upon moving back home - you're moving home as an adult, which may mean new territory, for both you and your parents. It's also worth setting a deadline date, which will make it easier to adjust to being back home.

The bank of mum and dad

While you might feel uncomfortable asking for or receiving financial help from your parents or other family members, the so-called “bank of mum and dad” has been helping to fund more and more property purchases in recent years. In fact, according to a recent YouGov survey, 24% of First Time Buyers asked, who bought from 2020 onwards had help from their parents with their deposit, as opposed to 13% between 2000-2004.

Even if your parents can't offer a lump sum towards your deposit, there are other ways they can help, for example acting as a guarantor on a certain type of mortgage. If your parents are keen to help you get on the ladder, there are multiple ways they can help.

Shop around for the best savings accounts

Think carefully about what you need from a savings account, and shop around for an account that gives the best combination of good interest rates and the necessary level of access to your money. If you are going to be saving over a number of years, consider accounts that will allow you to pay in regularly and reward you for not touching your savings. Conversely, if you have saved enough to be actively looking at properties, then you will want your money in an account that you can access quickly in the event of finding the home of your dreams.

ISAs (Individual Savings Accounts) allow you to invest a certain amount each year and receive tax-free interest on your savings. Setting up a Lifetime ISA is a popular option for First Time Buyers. If you already have a Help to Buy ISA then you can continue saving there as normal, but you can no longer open one of these accounts if you haven't already.

Other home-buying costs

Your deposit will be the single biggest cost when you buy your first home. However, it’s also important to remember to factor in other costs, including mortgage arrangement fees, conveyancing fees, house survey costs and stamp duty – currently charged on properties over £425,000 for First Time Buyers – as well as the costs of moving your furniture or belongings to your new home if you use a removals firm. Adding these on to your savings goal (so you can continue saving whilst looking at properties) means you won't have a nasty shock later down the line.

You can also use our Moving Home Calculator to see how much it will cost you to move. 

Good luck, savers! If you'd like more savings advice, check out our three savings guides - Starting Saving, Sacrificing to Save, and Supersizing your Savings.

Updated November 2022 by Jeremy Greer

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