Getting onto the property ladder with a mortgage takes grit, determination and an all-important deposit. So buying your first home, or saving to move into your next, is no walk in the park.
According to Lloyds Banking Group, the average cost of a first-time buyer home in 2024 was £311,034 and deposits averaged 20% of the purchase price. This means the average first time buyer was putting down a deposit of £61,090.
“Saving for a deposit is often cited as the biggest barrier to homeownership,” award-winning mortgage adviser Jo Jingree says. “Of course not everybody will put down a 20% deposit as there are mortgage options available where only a 5% deposit is required,” Jo continues. “But no matter whether you’re saving for a 5%, 10% or 20% deposit, it can take years’ worth of scrimping, saving and sacrifice to build up your down payment.”
Tips on how to save for a deposit
While there are no shortcuts when it comes to saving for a deposit, there are a few tips you can take to make your money work as hard (if not harder) as you do.
We could wax lyrical about mortgages. But to help with the money side of things, we spoke to Rakhee Wood, managing director and financial planner at Butterfly Financial Planning. Here’s what she had to say:
1. Set a clear goal
Before you start saving, it’s imperative to have a clear idea of how much you need for your deposit.
Be prepared to be flexible but have an aim of when you want to have acquired your first home by, and write this down, along with an image of your ideal pad, and stick it somewhere you see it often, like the fridge or your desk, to help motivate you.
2. Create a budget
Review your monthly income and outgoings. The more detailed and extensive it is, the better. Consider non-essential spending like eating out, subscriptions, or impulse
purchases—these are areas you can reduce or eliminate temporarily. But be honest with yourself and your lifestyle, you do have a life to live in the interim!
As an example, you might be able to cut back on that morning high-street coffee fix (perhaps take in a flask) but that Friday night pizza might be set in stone!
3. Open a dedicated savings account
To keep your deposit savings separate from your everyday spending, consider opening a dedicated savings account.
A Lifetime ISA (LISA) is a super way to beef up your deposit savings, which offers a government bonus of 25% on savings (up to £1,000 per year) if you’re using it to buy your first home.
4. Set up automatic transfers
Make saving for your deposit automatic by setting up a direct debit or standing order to transfer money into your savings account each month.
This way, you’re less likely to spend it elsewhere. Set the date of the payment on or just after payday so that the money is saved before you might be tempted to spend it.
5. Consider additional income
If you’re able to, consider finding ways to increase your income. This could be through a part-time job, freelancing, seasonal work or monetising a hobby (like tutoring, pet-sitting, or selling handmade goods online).
Every extra bit you earn can go towards your deposit.
6. Track your progress
Monitor your savings regularly to stay motivated. Apps and spreadsheets can help you track your monthly contributions and seeing your deposit fund grow can keep you on track to reach your goal.
7. Remind yourself of your ‘why’
If you are paying rent, either to the owner of your property or even to your parents/guardians, it’s money lost.
When you have your own place, every mortgage repayment is increasing your asset wealth and likely decreasing your loan-to-value—setting you up for the possibility of upsizing in the future.
When the time is right
“The good news is that there are a range of alternative ways to get onto the property ladder,” Jo adds. So, while you’re saving for a deposit, discover how to get mortgage ready or to find out how much money you can borrow, check out our handy mortgage calculator.
It’s also worth speaking to mortgage adviser Jo, who has more than 20 years’ experience in the industry. Jo offers a no obligation 30-minute consultation and can answer any questions you might have. So get in touch.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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