How Can I Save for a House Deposit? 7 Tips to Help You Buy Your First Home
Mortgage rates in the UK (October 2024) are at their lowest since summer 2023. For first-time buyers, this means it could be a great time to look into buying your first home.
Of course, in order to get a mortgage in the first place you have to raise enough money for the deposit. Which leads us to the million-dollar question: How can I save for a house deposit? And equally relevant, How much should I save for a house deposit?
We know that saving for something as monumental as your first home is no easy feat. In the midst of ongoing cost-of-living and energy crises, most people’s bank accounts are taking a hit—making saving a challenge.
In this straightforward guide to saving for your first house, we’ll answer your questions and explore some of the most effective and innovative ways you can save up enough money for a deposit, as quickly as possible. Let’s get started!
How much should I save for a house deposit?
Before you start saving for a deposit on a house, you’ll need to know roughly how much money to aim for! This all depends on the price of the house you want to buy and how big of a deposit you want to put down.
Whilst it is possible to get 100% mortgages in the UK (which means you don’t need a deposit), these are both few and far between and can carry financial risks. Most traditional mortgages require a deposit of between 5% and 15% of the total purchase price of the house—i.e., the price you pay for the property.
To get a better sense of how much you might have to save for a house deposit, let’s look at average house prices in the UK in 2024-25.
Average house prices in the UK 2024-25
House prices can vary quite dramatically from one country or area to another, and one type of property to another.
For example, it will cost you a lot more to buy a four-bed detached house in London than it would to buy the same type of property in Cardiff. Just like it could cost a lot less to buy a flat or apartment compared to a house and garden.
Bearing that in mind, here are the average house prices in the UK right now:
- The average house in England costs £305,370
- The average house in London costs £523,134
- The average house in Scotland costs £192,488
- The average house in Wales costs £215,518
- The average house in Northern Ireland costs £185,025
Example mortgages in England, Scotland, Northern Ireland and Wales
Now that we know some of the average house prices in the UK, we can calculate roughly how much you’d need to save for a deposit in each area. We’ve calculated these figures by working out what a 5-15% deposit would look like against the average house price.
- England—You’d need to save between £15,268 and £45,805
- London—You’d need to save between £26,157 and £78,470
- Scotland—You’d need to save between £9,624 and £28,873
- Wales—You’d need to save between £10,776 and £32,328
- Northern Ireland—You’d need to save between £9,251 and £27,754
Other things to budget for…
It’s worth remembering that your house deposit isn’t the only thing you’ll need to save for. Once you’ve bought your dream first home, you’ll also have to cover moving and legal fees, stamp duty (for properties over £250,000), buying any new furnishings you need, and paying your first month’s mortgage!
How can I save for a house deposit? 7 tips for saving up
We’ve established that the deposit you’ll need to save for buying a house can vary, depending on where you want to buy and what type of property you’re looking at.
On average, home buyers in the UK should be aiming for a savings pot of roughly £28,800—that’s a 10% deposit on the national average house price of £288,000.
But how do you save for that kind of house deposit? Don’t worry, you’re in capable hands! Let’s take a look at the 7 most effective saving techniques you can use to get you over the savings-account finishing line.
Tip #1: Cut down your current rental costs
Undoubtedly one of the fastest and most effective ways to save cash is to pay less than you currently are on rent. This could mean moving to a cheaper area of your town or city, or if you’re living alone, bringing in housemates to split the rent.
There are other options, too, like co-living. Co-living developments are ones in which you rent your room, but share communal areas like the bathroom and living room with others—kind of like a grown-up version of student halls.
Tip #2: Ask your family if they can help you
This option isn’t available to everyone, so feel free to skip ahead of tip #3 if you don’t have family or your family isn’t in a position to offer financial assistance. For many first-time buyers, however, help from the family can make the difference between getting onto the property ladder when you want to, and not.
Family can help in many ways, from giving you a loan or gift of cash, to acting as a guarantor for a mortgage your income doesn’t quite cover.
There are even some mortgages available which don’t require a deposit, provided a family member is able to pay 10% of the property price in cash—they get their money back after five years (with interest), provided you’ve made all of your mortgage payments on time.
Alternative, non-financial assistance your family might be able to provide can include offering you a room and place to stay for no or low rent whilst you save for a deposit.
Tip #3: Look into government grants and first-time buyer schemes
Other support avenues you can go down, whether your family are able to help out or not, are also available.
The UK government, for example, offers a First Homes scheme designed to help first-time buyers in England purchase houses for 30% to 50% of the home’s market value. Similar help-to-buy schemes currently also exist in Wales and Scotland.
Be careful, though, these schemes are set to expire in 2025, so if you’re saving for a house deposit, consider whether or not you’ll actually be able to apply for such a scheme by the time you’ve saved up enough cash.
Tip #4: Ask your bank for first-time buyer advice
It’s equally worthwhile speaking to someone at your bank or building society, even shopping around between different local banks to find the best mortgage deals. Different banks have different offers on the go, many of which can both help you save for your deposit on a house and/or make the deposit and mortgage more affordable.
Tip #5: Set up or dip into a Lifetime ISA
Lifetime ISAs—standing for ‘Instant Savings Accounts’—are designed specifically to help UK residents save for one of two big financial commitments: retirement or buying your first home.
You put away money into a Lifetime ISA and it stays there, building interest with competitive interest rates, until it comes time to buy your first home. In a sense, a LISA (as they’re often known) is just another type of savings account. The difference is that, because you can’t instantly access the money there, the interest rates are high—ultimately turning your savings into an even bigger pot of money by the time you come to buy.
For some lucky folks out there, they may already have a LISA in their name which a friend or family member has been quietly putting money into for a while. If that’s the case, you may already be well on the way to meeting your savings goals without realising it!
Tip #6: Be more tax efficient
It’s also worth double-checking your tax code—making sure you’re paying the right amount, not too much (or too little)—so that you’re not surprised by any unexpected charges.
Tax efficiency is especially key for self-employed people, like sole traders and owners of small businesses. Make sure you’re doing everything you can to make your money work for you as efficiently as possible.
Tip #7: Start a savings plan
Last but most certainly not least, it’s important to budget like a pro. That deposit money isn’t going to save itself. Without a robust savings plan most of us, we can surely admit, would struggle to put enough away, often enough, to build up a deposit for a home.
Spreadsheets are really handy for setting up a savings plan because you can clearly track the money coming into your account as well as the money going out. That way, you can see where there’s room for saving—maybe cutting down on nights out, eating out, or clothes shopping—and put this money away somewhere safe until it’s time to buy your first house.
Top Tip: Most digital banking apps already have savings plan tools built into them, and there are literally thousands of other savings apps available on your app store to try out, too!
Conclusion: How You Can Save for a House Deposit
Buying a house—whether your first or fifth—should be an exciting time! The thrill of house hunting, the joy of finding your dream home, the nervous excitement of moving in… But saving enough money to put down a deposit can be difficult, especially if this is the first time you’re doing it.
Thankfully, there are lots of ways you can save money for a house deposit consistently and carefully, like the saving techniques we’ve described in this guide! There are also other things you can do—like shopping around for mortgage deals and researching government grants—which could help bring the savings goal posts closer to you in the first place.
Get started saving for your first house deposit today with our expert guidance, and remember that you can always turn to money professionals if you need an extra helping hand!
