How to save for a house deposit

Last updated: November 2023 | 4 min read

How much will you need to save to buy?

The property value is often the primary factor that determines how much deposit is required.

In the UK, most mortgage lenders typically ask for a lump sum deposit of 5-20% of the property's value. If a property costs £200,000, a typical 10% deposit would be £20,000.

However, securing a larger mortgage deal may require a bigger deposit.

Property prices fluctuate, and hence it's crucial to consider the price range for your desired property. This will allow you to estimate your savings goal for the house deposit.

Consider that you might save more than just the minimum required to obtain a mortgage. Better interest rate deals typically are given to borrowers who have higher deposits.

Other costs to factor in

When you're saving for a deposit, don't forget about other costs that come with home ownership.

These may include moving costs, stamp duty, valuation and survey fees, and solicitor's fees for conveyancing work. In addition, once you become a homeowner, you'll need extra money to pay council tax, home insurance, utility bills, and maintenance costs.

These costs can make a significant difference to the amount of money you'll need to save.

How to save for a deposit

When you're thinking of buying your first home, the prospect of saving for a house deposit can seem daunting, but with a strategic approach and disciplined saving, you can achieve your goal. Here are some strategies to consider.

Reduce your rent

Lowering your living costs is an effective way to save money for a house deposit. The money saved from paying rent can be added to your deposit fund.


If you're renting a larger property, consider moving into a smaller space. You could save a significant amount of money by moving from a three-bedroom flat to a one-bedroom flat or a studio.

While you'll have less space, you'll pay less rent and be able to save more money for your deposit.

Move to a cheaper area

Property prices and rents vary significantly across the UK. If you live in an expensive area, you could save a substantial amount of money by moving to a more affordable location.

Find a lodger

If you have a spare room in your rented property, you could rent it out to save money. This could help you offset the cost of your rent and allow you to save more towards your house deposit.

Check whether your tenancy agreement contains a clause the subletting is forbidden. If it doesn't, you should be able to let a spare room.

For courtesy, ask your landlord or letting agency first.

Consider moving in with parents

If you're fortunate enough to have the option, moving back in with your parents could help you save a significant amount on rent.

While it may require sacrificing some of your own space (and putting up with their quirks), the money saved could help you reach your savings goal more quickly.

Become a property guardian

Property guardianship is an arrangement where individuals live in vacant buildings, such as old schools or office buildings or even holiday homes, at a reduced cost.

In exchange, they help secure the property from vandalism and squatting.

Reduce everyday spending costs

Reevaluating your everyday spending can reveal areas where you can make savings.

Whether it's reducing your mobile phone bill, cutting back on eating out, or shopping at discount stores, there are many ways to cut back and save money.

Reduce your utility and food bills

One way to save money is by reducing your utility bills. Simple measures like turning off lights and unplugging devices can lower your electricity bill.

Similarly, careful meal planning and buying groceries in bulk can help lower your food costs.

Think about the 80/20 rule - most costs come from a few things and concentrating on reducing the things that contribute the most will mean you don't have to cut back on the smaller things.


A well-planned budget is a powerful tool for saving.

It helps you understand where your money is going and identify areas where you can cut back. Keep track of your income and expenditure and make adjustments as necessary.

Earn on the things you do spend on

Consider using cashback credit cards or apps that provide rewards for your regular purchases.

While this won't make you rich, it's a way to make your money work harder and contribute to your savings.

Just be careful not to start relying on credit for everyday purchases.

Take on a second job

If your current income doesn't allow you to save as much as you'd like, consider taking on a second job.

This could be anything from part-time weekend work to freelancing or gig economy jobs. Just ensure the extra work doesn't affect your main job.

Where to keep savings

Once you've started saving, it's important to consider where to store your savings. Putting your money in the right place can make it grow faster and bring you closer to your goal.

Saving into a Lifetime ISA

A Lifetime ISA allows you to save up to £4,000 per tax year towards your first home, with the government adding a 25% bonus on top.

It's worth considering as part of your deposit savings strategy, as it can add a substantial amount to your deposit fund.

Saving into a regular savings account

A regular savings account can be a good option if you're saving for a house deposit.

Some banks offer savings accounts specifically for first time buyers, which often come with competitive interest rates.

Instant-access vs fixed-rate savings accounts

Instant access savings accounts allow you to withdraw your savings at any time, whereas fixed-rate savings accounts typically require you to lock your money away for a set period.

While fixed-rate accounts often offer higher interest rates, instant access accounts provide more flexibility.

Investments when saving for a mortgage deposit

Some first-time buyers choose to invest their savings in the stock market to potentially achieve higher returns.

However, investing carries risk and it's possible you could lose money, so it's essential to understand the risks and seek professional advice if needed.

Be wary of schemes that seem too good to be true. A good rule of thumb is whether your grandparents would understand it. If they wouldn't, it is probably too risky for your house deposit.

As well as the interest rate you'll expect to receive, consider how liquid the investment is. Can you get your money out quickly when its needed?

Things to do while you save

While you're saving for your deposit, there are several things you can do to prepare for buying a home.

Ensure you have a regular income

Mortgage lenders like to see regular income.

If you're self-employed or have a variable income, it may be harder to get a mortgage.

Make sure you have regular income and try to maintain stable employment.

Work on your credit history

A good credit history can improve your chances of securing a good mortgage deal.

Pay your bills on time, avoid taking on too much debt, and check your credit report regularly to ensure it's accurate.

Register for the electoral register

Being registered to vote at your current address can improve your credit score. It provides proof of address and shows stability, which mortgage lenders favour.

Prepare all your paperwork

When applying for a mortgage, you'll need to provide a lot of documentation, such as payslips, bank statements, and ID.

Getting this organised in advance can save you time when you're ready to apply.

Start to house hunt

Even if you're not ready to buy yet, start looking at properties to get an idea of what's available in your price range.

This can help you refine your savings goal and give you a better idea of what you're working towards.

If you can't save a big enough deposit

If saving a large deposit isn't feasible, there are other options available to help you onto the property ladder.

Buy with friends or relatives

Buying a property with friends or family can make it more affordable. You can split the deposit and the mortgage payments, making it easier to afford.

However, make sure you have a clear agreement in place to avoid any disputes down the line.

Get help from your parents

If your parents are in a position to help, they could lend or gift you money towards your deposit.

Find a guarantor

Alternatively, some mortgage lenders offer guarantor mortgages, where a family member agrees to cover the mortgage payments if you can't.

Shared Ownership schemes

Shared Ownership schemes allow you to buy a share of a property (between 25% and 75%) and pay rent on the remainder. This can significantly reduce the size of the deposit you need.

How to choose a mortgage

When it comes to choosing a mortgage, there are many options available, and what's best for you will depend on your individual circumstances.

You might choose a fixed-rate mortgage, where the interest rate is set for a certain period, or a variable rate mortgage, where the interest rate can change.

Consider using a mortgage advisor to help you find the best rate for your circumstances. Many are paid by the lender, not by you, so they are effectively free.

Ending your tenancy agreement

When you're ready to buy a home and switch from renting, you'll need to end your current tenancy agreement.

How to end your tenancy

To end your tenancy, you'll usually need to provide your landlord with a notice to quit.

The length of notice required will depend on the terms of your tenancy agreement.

When to end your tenancy

Timing the end of your tenancy can be tricky.

You'll need to ensure you're not left without a place to live if your home purchase doesn't go through as quickly as expected.

It's usually best to wait until you've exchanged contracts before giving notice to your landlord.

Consider that the end of your tenancy might overlap with the completion day, so you might need extra cash to pay for the last few weeks of rent as well as for the mortgage.

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