How to save for a deposit
Saving for a deposit is often the biggest challenge first time buyers face in getting on the ladder. Most lenders require a minimum 10% deposit. Our guide helps you to work out how much deposit you will need and how to speed up your saving efforts to get that much needed deposit to buy your first home.

Budget
Before you start to save for a deposit, make sure you know how much you can afford and therefore how much you need to save. Not sure where to start? Don’t worry see our guide How much can I afford?
It’s not a quick win and it involves sacrifice. But setting a budget and sticking to it is still one of the best ways to make sure you’re not spending more than you earn and identify possible savings. Take the time to sit down and work out where your money is going. Where can you cut back? Prioritise what you really can’t do without and what you may be able to sacrifice for 6 months. How much would this save you? Look at your insurance policies and utility bills and use comparison websites to see if you can get them cheaper. It’s also a good idea to look at how to improve your credit rating
Make your savings work
Savings rates are at miserly lows so scour the market for the best deals and take advantage of ISAs if you can.
- Use up all of your ISA allowance so you have some tax-free savings. You may want to take advantage of the government Help to Buy ISA or Lifetime ISA
- Fixed rate saving accounts tend to have better rates than quick access. If you think you can do without touching some or all of your savings lock them away for a few years to get the best rates.
Reduce your rent
We all know the Catch-22: you can’t save for your own place because all your money goes into renting. If you want to break this cycle, chances are you’re going to have to compromise. Just 6-12 months of not renting and living on a budget could make a huge difference to your deposit. Here are some options:
Move back with Mum and Dad
While this won’t be a practical option for everyone, if your parents have the space, you get along and they are happy to have you then you’re really just throwing money away not staying with them for a short time. Before you do move in though, sit down and discuss what financial contribution you will make, how long you’ll stay and any other ground rules they may have.
Move in with friends
Perhaps you have a friend in a similar situation with a spare room. Why don’t you move in and halve both your rents?
Shared Houses
Getting a room in a shared house rather than renting on your own will be cheaper and give you the chance to save up. These houses can be very sociable, but can also try your patience. For one of our members, the best house share she ever did included a cleaner. Everyone split the bills and it meant the bathroom, kitchen and shared areas were always sparkly clean. No more weekends cleaning and because the costs were split they were still able to save.
Get a Lodger
If you have a spare room yourself then this is a great way of cutting your rent. You will want to check with your landlord that this is acceptable. There are a number of websites that you can use to advertise your spare room.
Borrow from the bank of Mum and Dad
More and more people are relying on help from their parents to raise a deposit. And there are also options for those parents who want to help but don’t want to hand over their savings. For example, some lenders may take into account parents taking out an additional charge over their own property.
Keep an eye out for new mortgage products
The mortgage market is constantly changing so make sure you regularly check what’s out there. With lending restrictions much tighter than a few years ago lenders have had to become more innovative with their products to get viable customers through the door. From mates mortgages to 95% mortgages (with help from a wealthy relative) there are plenty of options.
Mortgage Finder
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Consider getting help from the government
Over the last few years the government has launched (and re-launched) several schemes aimed at helping people buy a home. Help to Buy (2021-2023) allows first-time buyers to buy a new build with just a 5% deposit and from April, 2021, the Mortgage Guarantee Scheme allows you to get a mortgage with just a 5% deposit. The 95% mortgage scheme will run for 18 months until December 2022.
To find out more about these and other government schemes check out our guide on how the government can help you buy a home.
- The HOA Step-By-Step Guide to Buying a Home
- Mortgages made simple
- How much can I afford?
- How to improve your credit rating before getting a mortgage
- How the government can help you buy a home. An overview of schemes
- Help To Buy ISA vs Lifetime ISA
- The legal side of buying a home explained
- How do I know I’m not paying too much?
- 10 Truths of Household Budget Planning
- The Bank of Mum and Dad – how to help your child buy a home
- What is Build to Rent?
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