How to save for a deposit on a house

Getting on the property ladder can be a tricky business, especially for first-time buyers.

However, don’t let the initial hurdle put you off saving up to buy your own property. With some careful planning and consideration, you can be well on your way to achieving the home you’ve been dreaming of.

For many, the most feasible way of owning a property is to take out a mortgage. In order to be accepted for one, you will need to put down a suitable deposit. So how do you do that?

In this article, we will cover everything you need to know about saving up for a house deposit, including how much you’ll need to save, tips to save a deposit quickly, and what to do if you have already started saving but are finding it difficult to meet the deposit requirement for your chosen property.

How much do I need to save for a deposit on a house?

The amount you will need to save for your home will depend on the property value and the type of mortgage you are applying for. Usually, you will need to have a deposit of at least 5% of the value of the property, and the rest will be loaned to you by a mortgage provider and paid off in monthly instalments. The smaller the deposit, however, the less the repayments and interest rates — it will be more beneficial in the long term to save a bigger deposit if you can.

Mortgage lenders will generally loan you up to four and a half times your annual income. If you are buying a property with another individual, your salaries can be combined to work out the maximum amount you are likely to be offered. For example, if you and your partner are thinking of buying a property and your combined annual income is £60,000, you could be offered a mortgage deal for up to £270,000.

In some cases, the amount you can borrow in relation to your salary will increase if you are putting down a higher deposit. So, you may be able to take out a bigger mortgage loan for an 80% mortgage as opposed to a 95% mortgage.

Finally, there are some other costs you will need to factor in when saving up for a house, including:

  • Valuation fee – Your mortgage lender will evaluate the property to check it is worth approximately what you have offered to pay. The cost is can be up to £1,500 depending on the property price and deal terms.
  • Arrangement fee – This is the fee for taking out a mortgage which can cost up to £2,000.
  • Property survey – Costing roughly between £350 to £1,300, the survey is used to check the structure of the property for dangerous faults or any defects before purchase.
  • Solicitor’s fees – Solicitors handle the legal documents and the exchange of contracts. The cost of solicitor’s fees is in the region of £500-£1,500.
  • Stamp duty – This is the tax you pay for purchasing a property. If you are a first-time buyer and the property is less than £500,000 you will get a discount. You can calculate the stamp duty using the Government’s Stamp Duty Land Tax calculator.

Managing your Savings

Once you have a savings goal, you can start to put money aside. You may already have a bank account that you can deposit savings into, but it is best to weigh up your options for savings accounts and choose one that will be the most beneficial for your goal.

For example, an instant access savings account can be convenient, but they usually offer a lower interest rate. If you are not likely to need access to a chunk of money in the next few years, an account such as a Lifetime ISA may be more appropriate and help you reach your deposit target.

The terms of a Lifetime ISA are:

  • You must be between the ages of 18 and 40 in order to open one.
  • You can deposit up to £4,000 per year until the age of 50.
  • It can be used to purchase your first home or to save for the future.
  • You can only withdraw from the ISA if you are purchasing your first home or over the age of 60.
  • There is a withdrawal fee of 25% if you take out money for any other reason.
  • The Government will add a 25% top-up for the lump sum in the account, up to £1,000 per year.

When you are saving money for a property, it can be helpful to work out how much you can afford to put aside from your earnings and set up a direct debit to deposit a set amount into your savings account. This will not only help you budget monthly, but if your money is in an account you cannot access without a penalty, you will likely be less tempted to dip into your savings.

How long does it take the average person to save for a deposit?

With the average house price increasing, it will understandably take most individuals longer to save for a deposit. Most first-time buyers take eight years to save for a house on average, starting from the age of 24 and purchasing when they are 32.

How can I save for a mortgage deposit quickly?

If the thought of spending up to eight years saving does not appeal to you, you are not alone. Of course, it will take commitment and planning to save for your deposit, but thankfully there are plenty of things to do to reduce the time it takes to buy a property. These include:

  • Set a savings goal and create a budget – it will be far easier to save money if you have a clearly defined goal to achieve.
  • Reduce your outgoings – The more you can put aside each month, the quicker you will be able to reach your target for a house deposit. Cutting back on unnecessary purchases such as unused subscriptions, luxury items, and takeaways might seem minor. However, these things add up throughout the month. Furthermore, saving on bills by comparing and potentially switching providers can dramatically reduce your monthly outgoings.
  • Increase your income – It seems simple but increasing your income can make saving for a deposit a speedier process. Try looking for alternative ways to make some extra cash on the side of your usual salary, such as freelancing, taking part in paid surveys, and selling unwanted clothes and homeware.
  • Use Government Support – Using a Lifetime ISA or a Help to Buy ISA (if you opened one before the closing deadline) will top up your savings, helping you reach your deposit goal quicker.
  • Cancel your holiday plans – The average holiday for a single person for 10 nights is £947, and for a family of four, that jumps to £3,796. If you can cut back on this additional spend, you can save a considerable amount of money.

What can I do if I can’t save enough for a deposit?

If you are finding that despite your best efforts to save for a house deposit but you still can’t quite hit your target, there are some additional things to consider to help you get onto the property ladder.

Buy with a friend or relative

Buying a home with another person, such as your sibling or friend, will increase the amount of money mortgage lenders will be likely to offer as your combined salaries will be taken into consideration. You will also not be solely responsible for mortgage repayments, and furthermore, if you split the deposit between you, it will be less money to save by yourself.

Ask your family for financial help

Many parents help their children by contributing to their deposits to help get them on the property ladder. This can be done by offering a cash deposit which is declared to the mortgage advisor, and the appropriate documents are filled out to put it on record.

Alternatively, you could consider a guarantor mortgage which means that a friend or family member uses their savings or property to secure your mortgage. In this case, a smaller deposit is required but if you default on payments, your guarantor will be responsible for paying them meaning it is not without some considerable risk.

Consider shared ownership

Shared Ownership is a scheme whereby you buy a share (usually between 25-75%) in a property and pay rent the remaining amount. You will also be able to buy the remaining share if you can afford it in the future. The only downside is that this can be hard to do if the value of your property increases further down the line.

Consider a Help To Buy equity loan

If you are purchasing a new-build home, you may be eligible for a Help to Buy equity loan. This is where you put down a 5% deposit, the Government loans you an amount of equity, and you take out a mortgage to cover the remainder of the property’s value. The Government loan rates are as follows:

  • 40% in London
  • 20% for the rest of England
  • 20% in Wales
  • 15% in Scotland


Start your journey to buying a house by setting out a budget and determining the deposit amount you are likely to need for your chosen property. Once you have done this, you can start actually saving and depositing into a suitable bank account, whether that’s a savings account or of the more specialist bank accounts such as a Lifetime or a Help to Buy ISA.

In order to save your deposit quicker, adjust your spending and lifestyle where possible to maximise the amount of money you can put aside monthly. You can do this in a number of ways, including cutting down on expenses, making use of Government support, and increasing your annual income.

If you still find you are struggling to hit your target, consider other avenues such as taking out a mortgage with another person or utilising a buying scheme like the Shared Ownership scheme.