How To Save For a Deposit on a House

Written by

Cara Bradley

5 min read

Updated: 21/06/2024

Buying your first home is a massive step.
No matter your age, becoming a homeowner is one of life’s most exciting yet nerve-wracking chapters.

The housing and mortgage market is one of many areas that has been affected by the cost-of-living crisis, meaning that saving for a deposit to buy a house is no mean feat.

As a budding first-time buyer, it can be really disheartening to hear reports of rising mortgage rates and house prices. Owning a home can sometimes feel like an impossible dream edging further and further out of our reach, despite the fact that many of us have spent years tirelessly saving.

Five interesting facts about the UK housing market

• In 2022, the average age of a first-time buyer was 32 years old.
• The average annual salary of a first-time buyer in 2022 was £34,000.
• In May 2023, a first-time buyer in the UK could be looking at an average house price of £251,894.
• Between 2021-22, 85% of house deposits were sourced through savings.
• A recent survey revealed that two in five UK non-homeowners do not intend to buy a house within the next five years, with 53% stating affordability as the main reason.

While we understand that it’s easier said than done, try not to feel discouraged or frustrated.
If a house is what you really want and you’re dedicated to saving, all the hard work will eventually pay off once you are approved for a mortgage, no matter how long it takes.
In the meantime, we have put together some tips that could help kickstart or boost your savings.

1. Do Your Research




The first thing to consider when starting your journey towards home-owning is deciding where to live.
Are you hoping to stay local to where you are now or are you looking to move further afield and embark on an entirely new adventure?
House prices can vary between areas and where you choose to live can have a huge impact on how much you can expect to pay.
Keep an eye on property websites to give you an idea of house prices in the areas you’d consider living in.
You’ll also need to have a think about the deposit you’d like to put down and how long you intend to repay the mortgage.
You can find a mortgage calculator on MoneyHelper’s website. This could give you an idea of how much you can expect to spend on your monthly repayments. Play around with the calculator to compare different mortgage durations and rates of interest.

Property websites you may find useful include:




• Rightmove. Here, you can also find a handy tool that allows you to see the prices houses sold for in the area of your choice. You can refine the data to a whole town, a postcode area, or even one particular road.
• Zoopla. Zoopla’s site boasts an abundance of information that may help to narrow down the search for your dream home. Want to know more about a certain location? Check out Zoopla’s area guide!
• On The Market. Not sure where to start? Try On The Market’s ‘wish list’ feature for inspiration.



2. Get serious about saving




It’s important to set a savings goal and devise a realistic savings plan. This will give you an idea of how long it will take to reach that all-important deposit amount.
How you choose to save is entirely up to you, and should suit your lifestyle and current financial commitments. You may find it easier to put aside a set amount of money every month using a standing order or, if applicable, you might prefer to save up any work-related bonuses instead – or as well.
You should never feel under pressure to save more than you can afford. The last thing you want is to leave yourself short and unable to pay for necessities.

MoneyHelper have a great savings calculator on their website, which can help you work out how long it could take to save for something.

Have you already got a savings account set up? If not, there are lots of options to consider, offering an array of features and incentives.
Use websites such as MoneySuperMarket to compare and shop around for an account to suit you.

If you are between the ages of 18 and 40, you could open a Lifetime ISA (LISA) account and save up to £4,000 a year, until you turn 50 years old. The government will top up your savings with a 25% bonus up to £1,000 per year.

The money saved in a Lifetime ISA can be used towards buying your first home if all the following criteria are met:

• You intend to buy with a mortgage;
• The overall cost of the property is £450,000 or less;
• You buy the property at least 12 months after your first Lifetime ISA payment; and
• A solicitor or conveyancer act on your behalf during the purchase. The funds will be paid directly to them by the provider.




You can find further information on Lifetime ISAs on the Gov.uk website.

3. Budget




Savings and budgeting often go hand in hand and the good news is that they aren’t nearly as scary as they sound!

It’s all about making small adjustments to increase the amount of money you have left at the end of the month.
You may even find that learning new ways to be frugal becomes a bit of a habit! Once you start, it’s likely that you will keep seeking new and inventive ways to save.

Some quick ways you could make savings




• Carefully go through your outgoings and look for areas you can cut back on. For example, are you paying for a gym membership that’s going to waste? Do you subscribe to any music or TV streaming services that you haven’t used for a while?
• Consider doing your weekly shop at a cheaper supermarket. In October 2023, Which? crowned Lidl as their cheapest supermarket, closely followed by Aldi.
• While we’re on the topic of food shopping, why not swap brands for own-label products? Cheaper prices do not necessarily mean a compromise in quality.
• Many of us love a new outfit before a night out or occasion. Why not check out second-hand sites such as eBay and Vinted before you hit the high street? You can filter your results by condition, so even if you’re looking for a brand-new item, you could still be in with a chance of bagging an absolute bargain!
• Reduce the cost of petrol or diesel by going by foot wherever possible. Are you guilty of jumping in your car and driving to the corner shop for a top-up loaf of bread? Why not take a brisk 15-minute stroll instead. Great for your wallet and your wellbeing!




Remember, saving doesn’t have to mean completely cutting back on the things you enjoy. Check out our blog for tips on how to save money on food, clothes, and days out.




4. Reconsider your situation




Times are hard; there’s no denying that.
What’s your current living situation?
If you feel as though the cost of renting is hindering your ability to save, you may wish to reassess your circumstances.

Could you move back home with parents?
You will need to have a conversation with your parents and agree on a payment plan to suit everybody. Some parents may be in a position to allow you to live with them rent-free while you save; however, you could be asked to contribute by paying board. The board charged by your folks may well be less than the rent you’re currently paying, though.

We understand that moving back home is not a possibility for everyone, but if the option is available, it may mean that you are able to reach your savings goal faster.

Alternatively, could you downsize to a smaller property with a lower monthly rent? While you may have to make some compromises in terms of amenities or the area you live in, remember that it won’t be forever. See it as a means to an end.

5. Savings SOS




Not everyone has the luxury of turning to the Bank of Mum and Dad, but sometimes parents may be willing to help fund a deposit or top-up your savings.
Got a birthday coming up? Why not ask friends and family for money to put into your house fund rather than presents this year?

6. Split the cost




Buying a house on your own can be costly, and saving up can take time.
Getting a joint mortgage with somebody else is a big commitment, but buying and sharing the house could split the cost.
Would you consider buying with a partner, friend, or sibling, maybe?
Of course, this option is dependent on your own personal situation; you may well prefer to buy on your own, even if it does take a little longer.

Something else to think about is Shared Ownership.
Shared Ownership is a government-run scheme in England, allowing potential homeowners to buy a share of a property from a housing association. Shared Ownership properties can include new builds and flats.
You can generally buy your share of the property with a smaller deposit, although you could also be responsible for covering any service charges or rent on the share of the property you don’t own. You may also need to pay ground rent.

You can find out more about Shared Ownership and see if you’re eligible here.

Home sweet home

Buying a house can be an overwhelming process. It can feel as though everyone wants to take money from you for various services, all the while hitting you with confusing terms and jargon.
You should never feel embarrassed if there’s anything you don’t understand. You have worked so hard for this and are about to part with a considerable sum of money – you are well within your right to ask questions!

It’s likely that the home-buying process will leave you feeling stressed at times, but when things get tough, just think about the end goal: a beautiful house of your very own.