23 Nov 2018

How to save for a house deposit 🏠

A house deposit is a lump sum of money that you pay towards the cost of a property. You’ll need a deposit to get a mortgage, which is essentially a loan you can use to buy a home.

This guide will help you work out how much you need for a house deposit and how to save for it.

Illustration of a book

Working out how much you need

The average first-time buyer shells out £33,127 for a house deposit in the UK. But the amount you need to save may be more or less than this. It depends on things like:

How much you want to borrow

A house deposit is worked out as a percentage of the property price. For example, if you saved £20,000 for a £200,000 house, you’d have a 10% deposit. This means you’d need a 90% mortgage.

You’ll usually find mortgages of up to 95%. It’s rarer to find a 100% mortgage these days, and these typically require a guarantor.

Generally, a larger deposit means smaller monthly mortgage payments, since you owe less. It can get you a lower interest rate – but be aware that mortgage providers tend to look at deposits in multiples of five. For example, you may get a better rate for a 10% house deposit than a 5% one, but bumping it up to 7% is unlikely to make a difference.

The property price

The more expensive the house, the more you’ll need to save. Prices often depend on location and property type, among other factors. Here’s an example of how they can vary:

  • Average detached house in London – £943,905
  • Average semi-detached house in London – £598,120
  • Average semi-detached house in North East England – £133,226

You can explore prices in your area on the government’s land registry website.

Working out how much you can save

Now you have a better idea of how much you need for a house deposit, it’s time to do a reality check. Take a look at your finances to see what you can put away each month.

If you’re saving over several years, remember that your income and outgoings may change – for example, you might get a higher paying job or start a family.

You should be able to calculate roughly how long it’ll take to save your target deposit. If you’re not happy with the result, you could think about how to reduce the amount you need or increase the amount you can save. For example:

Could you reconsider your goals?

You might be aiming too high when it comes to property price. Try exploring different locations and property types. Ultimately, it’s up to you whether you decide to compromise – and on what factors.

Could you share the cost?

Partner up with someone you trust

Buying a house with a partner, relative or friend can reduce the amount you need to save. You can pool your savings to create a bigger deposit, which can be used to get a joint mortgage. Just remember, there are risks to sharing your finances. You’ll also need to consider things like how you want to share ownership, and what happens if you break up or fall out.

Consider shared ownership

Another option is using a shared ownership scheme. These let you buy part of a home and pay rent to a housing association on the rest. This means you can get on the property ladder even if you can’t afford the deposit for a whole home. Plus, shared ownership schemes usually let you increase the percentage you own when you can afford to buy more.

Could you put more money away?

Budget better

Taking a good look at your spending patterns may help you find ways to save more. Remember that even small changes – like buying cheaper brands or swapping taxis for buses – can make a big difference in the long-term. You could also consider a big lifestyle change to help you save intensively, like renting somewhere significantly cheaper or moving in with relatives if you can.

If you have a Monzo account, use the Summary section to review your financial habits and consider setting a monthly budget to help you save.

Consider your current debt

It’s important to assess your current debt as well. Are you paying high interest rates on an overdraft, credit card or loan? Saving money while paying interest can feel a bit like shovelling snow while it’s still snowing. So, it may be a good idea to pay off your debt first.

Find ways to increase your income

Finally, it’s worth thinking about how you could increase your income. Landing a higher salary or finding a side job could give you more money to squirrel away.

Could you boost your savings with the right account?

It pays to be picky when choosing a savings account. Getting one with a high interest rate can help your money grow by itself – especially if your lender uses compound interest.

You may find it useful to open a Help to Buy ISA or a Lifetime ISA, which are specifically designed to help you save for a house. When you pay money into one of these accounts, the government will boost your savings by up to 25%. Just make sure you understand the criteria and risks first.


We hope you’ve found this helpful! Next, you might like to learn about how to choose between different types of savings accounts.

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