How to save for a house

Discover how to save for a house, get that deposit together and cover all the necessary fees.

Saving up enough money for the deposit on a house can feel like a daunting prospect but it is possible and is something you can do quite quickly with the right savings techniques.

The best way to save for a house

  • Decide on your budget 
  • Try to stop renting 
  • If you must rent, downsize 
  • Get support with your deposit
  • Review your savings account regularly and get saving

1. Decide on your budget 

Before you do anything, you’ll need to decide what your budget is for your house purchase, and there are a couple of ways to approach this. You may want to start from how much you want or can afford to pay in mortgage repayments each month and use a mortgage affordability calculator like this one from the Money Helper to work back from there to find the house prices you can afford. Or, perhaps you know what type of house you want to buy, and your budget will be determined by the cost of that house, even if it means saving longer to put down a bigger deposit. 

Once you’ve set your price range, you’ll need to work out how big a deposit you want to put down – while knowing that typically mortgage providers ask you to put up at least 10% of the price as a deposit – and much you can afford to save towards this each month. This will let you know, realistically, when you’ll be able to buy. 

For example, a house that’s on the market for £200,000 will require a deposit of £20,000 (plus the cost of legal fees, stamp duty and removal fees). Putting away £200 a month means it will take just over 8 years to save up the deposit you need. It helps if there are two of you: £400 a month could see you with £24,000 in five years – more than enough for a deposit, plus the fees associated with buying a property. 

2. Stop renting 

We know this is easier said than done and for many, it isn’t an option. But if you can find somewhere to live temporarily that costs less than you’re currently paying to rent, this can save you a lot of money that can then be put away for a house deposit. 

Who can you move in with to save money for a house deposit?

If you choose to move out of your rented home while you save to buy, it’s important everyone understands that buying a house isn’t always a quick process and you could be living with them for a while. You should also ensure the amount of money they may want you to put towards the bills actually allows you to save and leaves you better off than when you were renting. Here are a few options to consider:

  • Your Mum and Dad may not be able to give you the cash for your deposit, but they can still help you save in other ways. Speak to them about moving back into the family home while you save, perhaps offering a small amount towards the bills or cover your keep by helping around the house. 
  • Have a friend who has a room you can move into for a few months? This could be a lot cheaper than renting on your own. 
  • Ask siblings or grandparents if they have any spare room to set up in while you put some money away for that deposit. 

Become a housesitter 

Another idea is to look into temporary lodging. People will pay for house sitters and if you plan things right, you could have a place to stay while you save – without a penny to pay in rent or bills. 

You can find houses to stay in all over the world, and while you’ll need to ensure they are kept secure and well maintained – perhaps with a pet or two to care for – it’s definitely worth considering. There are plenty of sites out there to check out, such as Mind My House and Trusted Housesitters (although there is a fee to join this service).  

3. If you must rent, downsize 

If you’re not able to move in with anyone to save money, look instead at downsizing your property and moving into a smaller house or flat. This should mean you’ll pay less rent and potentially less on your bills – as it won’t cost as much to run and heat. The beauty of renting means you can move once your contract is up, so wait for the next renewal date and look for a smaller property. 

Of course, bear in mind that moving home, even between rental properties, does come with some costs of its own. However, the upside definitely outweighs the downside as after a few months of paying lower rent, you’ll have recouped your moving costs and then some,  allows you to save more to put towards buying a house. Factor in that you’ll need to pay another deposit before you receive your current one back, as well as a month’s rent up front. So, you may need to find this money first before you can do anything. 

4. Look to see where you can get support 

There are a range of schemes out there that can help to boost your savings or accelerate the house-buying process if you meet certain eligibility criteria.  

Help to Buy Equity Loan 

The Help to Buy loan can help you get on the property ladder, with the Government covering up to 20% of your house price as a deposit. You will need to pay this back but the first five years are interest-free. This option is mainly used when purchasing new build properties and in most cases, you will need to provide a 5% deposit and have been approved for a 75% mortgage to be eligible. For many, it’s offered them the opportunity to buy a home that best suits their needs, that they can live in for years to come. 

Shared ownership 

A shared ownership scheme allows you to buy a percentage of the property and rent the rest. It’s a great way to get on the property ladder, as it allows you to buy more of the property as time goes on and you can find more savings. This process is called ‘staircasing’. To qualify, you must have an income of less than £80,000 as a household and have no credit issues. 

Key Worker Housing Eligibility 

If you have worked in a certain industry such as the NHS, the police or for the Ministry of Defence then, if you’ve worked there for more than five years, and have more than five years left before you’re due to retire, then you may qualify for a Keyworker mortgage or a rent to buy scheme. These are managed by your local authority or housing association and have their own set of criteria you must adhere to. You can find out more here

Starter Homes Scheme

This scheme hasn’t started yet, but you can register your interest. The idea is that new build developments will offer properties available to buy with a 20% discount – making the deposit required smaller. You can find out more about the Starter Homes scheme.
 

5. Budget carefully and save, save, save

Once you’ve decided your route, looked into schemes and know how much you can afford to save and later spend on your property, it’s time to save. Set up your Help to Buy ISA or look into savings accounts offering higher than average interest rates to transfer money into regularly – plan to move your savings at the start of the month as part of your regular budget. 

How to save a deposit for a house quickly 

You may be itching to buy but saving money takes time – however, there are ways to slightly speed up the process. 

  • Look for a high-interest savings account –
  • Higher interest = higher return, so depending on the account you could have a comfortable amount deposited into your account each year. 
  • Cut back to free up money for savings –
  • Cancelling unneeded subscriptions and finding cheaper alternatives are just a couple of ways to free up money that can then be put towards your savings. 
  • Find another source of income –
  • A part-time job, selling crafts or artwork you create or even selling unwanted clothes or items around the home can all contribute towards your savings. 

FAQ Information Hub

We’ve answered some common questions around saving for a house.

  • No, loans cannot be used to fund a house deposit. You will be asked to confirm where you obtained the money for your deposit and it must be from a non-repayable source such as savings or given as a gift.

  • This can make obtaining a mortgage more difficult and so you may need to do some work beforehand to improve your credit score or be prepared to pay a larger deposit.

Looking for more information on credit and your home?

Want to know more about renting and buying a house? Take a look at our other guides, here on the site.

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