How to Save Money for a House

When buying a property, the typical deposit is 20% of the home’s value. The average house price in the UK is £284,691* (as of December 2023), so in this instance you’d need around £56,938*.

Some banks offer mortgages with a lower deposit of 5% or 10%, for example. So for that £284,691* home, you’d need around £14,234* for 5%, or £28,469* for a 10% deposit. This might mean less to save upfront, but your monthly payments could be higher, as these are dependent on your deposit and loan to value. A mortgage calculator can give you an idea of how much this will be.

Work out how much you need to save by looking at the average property prices in your area. You can research this on Rightmove for example, and from there, calculate what deposit you’re likely to need.

Don’t forget the other expenses when buying a home, such as solicitor’s fees, survey costs, stamp duty (if applicable), hiring a removal firm, any new furniture, home repairs and renovations. Factor all of these into a final savings goal.

Stamp duty is paid on properties in England and Northern Ireland costing more than £250,000*. For first-time buyers, stamp duty only kicks in on properties over £425,000*.

If you’re buying a home in Scotland, you’ll also have to pay Land and Buildings Transaction Tax on properties costing more than £145,000*. Read more on stamp duty here.

If you’d like a little help working out how much you need to save and what you can afford, contact a mortgage advisor who will help you through the process.

It’s useful to have a plan when saving for a deposit. Here are our tips to save money for a house:

• Audit your finances. Take a look at what you’re earning vs spending and think about ways you could cut your expenses. Perhaps have one less meal out every month, or compare prices on insurance or phone bills to get something cheaper. If you have a large outgoing for rent, could you move in with friends or family in the short term to save money?

• Find a savings account that fits your needs. Use a price comparison website to find the right savings account. If you know from your plan that you’ll be saving for that deposit for a few years, you won’t need an instant access account. Look for one with a higher interest rate to get more from your money.

• Save a set amount, monthly. Work out how much you can put aside each month and set up a standing order. If it automatically goes into your savings account, you’ll be less tempted to dip into those funds.

• Make the most of your Credit Card. Keep track of your spending with a Credit Card. You can even earn cashback and rewards. Do your research first so you understand the advantages and disadvantages of their use, but Credit Cards can be a great way to manage your finances and build your credit score.

• Gifts. Some homebuyers might receive financial help from their parents or other relatives. If you feel comfortable doing so, have a chat to see if any loved ones are able to contribute. Whether a gift or a loan, it’s a useful helping hand to get on the property ladder sooner.

• Look into government schemes. If you’re a first-time buyer, you might be able to get some financial assistance. Have a look at the Lifetime Individual Savings Account (LISA) and First Homes Scheme.

• Buy with someone else. If you have a partner or friend who’d also like to buy a property, you could pool your resources and buy together. Make sure you’re very clear about what happens if one or both of you wants to sell, and be open about finances so you don’t get any surprises along the way.