The best ways to save for a house deposit

One of the biggest hurdles when it comes to homeownership is saving for a deposit. Building up a large lump sum can feel daunting, but there are plenty of ways to help boost your savings and move closer to securing your first home.

That’s why we’ve created this guide, breaking down the costs associated with buying a home and sharing actionable saving strategies you can put into practice. So, if you’ve been wondering how to save for a house deposit, you’re in the right place.

In this guide:

• What costs are associated with buying a home?
• What is the deposit on a house?
• Actionable strategies to boost your savings
• Different types of saving accounts
• First-time buyer programmes

What costs are associated with buying a home?

There are various potential expenses associated with buying a home. Here’s a list of few of the most common costs:

• Product fees: Cover the cost of setting up a mortgage deal with the lender
• Valuation fees: When a lender values a property to confirm a fair asking price
• Survey fees: A property surveyor will check for any issues with the property
• Conveyancer fees: A conveyancer handles legal documents
• Stamp duty costs: This is a payment made to the government as a form of property tax – the amount paid varies depending on the price of the home

And of course, there’s the actual deposit, which brings us onto our next point…

What is the deposit on a house?

The deposit is the amount of money you’ll pay upfront towards the full price of the property. Your monthly mortgage payments will then cover the rest.

For instance, if you saved 10% of the property price, you’d have a 90% mortgage. And if you’re buying a property worth £200,000, this would be a £20,000 deposit.

So, the more money you save for a deposit, the less you’ll need to borrow, and the less you’ll need to repay.

A lower loan amount could also help you secure a better interest rate, which can make a big difference over time. Not sure how interest rates work? We’ve got a handy interest rate guide that can help explain everything in simple terms.

How much deposit do I need for a house?

The amount you’ll need to save for a house deposit can depend on multiple factors, such as:

• Location
• Property type
• Lending practices in the region

Typically, deposits range from 5-20%. Over 10% is preferred by many lenders, and the average first-time buyer in the UK saves a 15% deposit. So, on a £240,000 home, this would be £34,500.

Many choose to put down a larger deposit when saving for a house, as it often means lower monthly mortgage repayments. Alternatively, there are schemes designed to help first-time buyers get on the property ladder, whereby just a 5% deposit is required.

If you’re a first-time buyer, start by working out how much mortgage you can realistically afford. Look at your annual income, spending habits, and any other financial commitments. There are plenty of easy-to-use home deposit calculators online to help you get a rough idea.

Actionable strategies to boost your savings

Now that you’ve got a picture of the costs associated with buying a home, it’s time to dive into how you can boost your savings. From budgeting to goal setting, here are our top tips on saving for a house deposit:

Create a detailed budget

Creating a detailed budget is one of the best ways to save for a mortgage, helping you track income, expenses, and how much you can put aside each month.

First things first, you’ll need to get a clear picture of your current spending habits. There are plenty of handy budgeting apps that make tracking expenses easy, or you could use the simple spreadsheet method. To help you along, we’ve got a free budgeting tool you could use over on our simple budgeting guide.

However you choose to do it, understanding your personal cash flow is key to managing your money and building a realistic budget.

Many people use the 50-30-20 rule to help them budget more effectively. It’s a simple method that splits your income into 50% for needs and essentials, 30% for lifestyle and wants, and then 20% for savings. It’s not a one-size-fits-all approach, but it’s a great starting point if you’re trying to get your finances in order.

You should also regularly review your budget. For example, one month you might be able to commit to saving more, or an unexpected cost might mean needing to save a little less. Don’t worry if your savings journey isn’t linear, simply commit to remaining dedicated throughout.

Set clear goals

The amount you’ll be able to put away each month is dependent on factors such as your income, your outgoings, and any other financial commitments. So, after reviewing your budget, it’s time to set clear goals.

For example, if you need to save £35,000 for a deposit, you’d need to put away £300 each month for approximately just under five years.

To spur you on, make sure to dive into our guide: how much can I save in a year? This is full of practical advice as well as some valuable money-saving tips.

Reduce everyday expenses

If you’re wondering how to get a deposit for a house quickly, reducing your expenses should be a top priority.

Small changes can have a huge impact when it comes to building up your savings pot. For instance, perhaps you can cut back on dining out, then redirect the money saved towards your deposit pot? You could also consider switching phone or broadband providers to a cheaper contract.

We’ve got an in-depth guide on how to save money each month if you’re looking for more tips.

Best types of savings accounts for a house deposit

It’s not only how you save your money which is important, but also where you save it. You’ll want to open a savings account specifically dedicated to your deposit. A few common options include:

• Limited-access accounts: These usually have a higher interest rate than instant access accounts.
• Traditional, instant-access savings accounts: In a regular, traditional savings account, you can take out and pay in money as and when you need to.
• Lifetime ISAs: Many choose to open a lifetime ISA to save for their first home. To do so, you must be over 18 and under 40, and you can put up to £4000 in each year until you are 50. The government will then add a 25% bonus to your savings (up to a maximum of £1000 a year).

Government schemes to help buy a home

If you’re looking for ways to make homeownership more affordable, especially if you’re figuring out how to save for a house in the UK, there are several government schemes that can help. These include:

• Lifetime ISA
• Right to Buy
• Shared Ownership
• Mortgage Guarantee Scheme

Some schemes help reduce the size of the deposit required, while others offer discounts on the property price or boost your savings with government bonuses. Below, we’ll explore some of the most accessible and practical programmes currently available and those struggling with how to save for a mortgage.

First-time buyer programmes

If you’re finding it tough to save for a deposit, you’re not alone. These government schemes are designed to give first-time buyers a helping hand toward homeownership.

Mortgage Guarantee Scheme

This scheme helps make ownership more accessible by increasing the availability of 95% loan-to-value mortgage products, meaning you’ll only need to save a 5% deposit. It’s a practical option for buyers who have a stable income but limited savings.

First Homes Scheme

The First Homes Scheme allows eligible first-time buyers to purchase property for 30-50% less than its market value, making that initial deposit much more achievable.

Shared Ownership

Shared ownership lets you buy a portion of a property (as little as 10%) and pay rent on the rest. Over time, you can buy a larger share, a process known as staircasing. This is ideal if you can’t yet afford to buy a property outright but want to get onto the housing ladder sooner.

No deposit mortgage government scheme

If you’re wondering how to buy a house with little or no deposit, there are options such as Family Springboard Mortgages. This type of mortgage involves a family member or helper putting forward 10% of the property’s value as security. If you make all your payments on time, their money is returned with interest after five years.

These programmes can make a big difference when you're working out how to save for a deposit or figuring out the best way to save for a mortgage. If you’re eligible, taking advantage of one or more of these schemes could bring your homeownership goals within much closer reach.

Final thoughts

Saving for a house deposit takes time, dedication, and real commitment, but the benefits of your hard work will be more than worth it when you’re settled in your new home. With the right strategies and a solid plan, it’s more achievable than you might think.

By understanding the costs involved with home ownership and creating a budget that works for you, you’ll be well on your way to hitting your goals and getting those keys in your hand.

Before you go, we’ll leave you with two simple tips to carry with you:

1. Start today
2. Stay committed!

The earlier you start, the more time your savings have to grow, and every little step counts.

Why not head over to the Moneyboat blog, and explore more financial tools and guides? Discover more practical advice, including tips to improve your financial wellbeing.

If you ever need help with money or debt, remember you can get free, impartial support from trusted organisations such as:

• StepChange
• Citizens Advice
• MoneyHelper

You’re never alone, and reaching out for support is always a positive step forward.