Mortgages & Property

How to Save for a House Deposit UK — Complete Guide

Practical guide to saving for a house deposit in the UK. How much you need, best savings accounts, government schemes, and strategies to reach your goal faster.

By PocketWise · · 4 min read

Mortgage information is general guidance only. Mortgages are regulated by the FCA. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Consult an FCA-regulated mortgage adviser before making decisions.

Saving for a house deposit is the biggest financial challenge for most first-time buyers. Here’s how to reach your goal.

How Much Do You Need?

Deposit Requirements

Deposit Size Typical LTV What It Means
5% 95% Minimum for most lenders
10% 90% Better rates available
15% 85% Good range of options
20% 80% Best mainstream rates
25%+ 75% or less Premium rates

Real Numbers by House Price

House Price 5% Deposit 10% Deposit 15% Deposit
£150,000 £7,500 £15,000 £22,500
£200,000 £10,000 £20,000 £30,000
£250,000 £12,500 £25,000 £37,500
£300,000 £15,000 £30,000 £45,000
£350,000 £17,500 £35,000 £52,500

Additional Costs

Cost Typical Amount
Stamp duty £0-£12,500 (FTB relief available)
Solicitor fees £1,000-£1,500
Survey £300-£600
Mortgage fees £0-£1,500
Moving costs £500-£2,000
Total extras £2,000-£15,000

Best Accounts for Deposit Saving

Lifetime ISA (LISA)

Feature Details
Government bonus 25% on contributions
Maximum contribution £4,000/year
Maximum bonus £1,000/year
Age limit 18-39 to open
Property limit Up to £450,000
Withdrawal penalty 25% if not for property/retirement

LISA Example

Years Saving Your Contributions Government Bonus Total
1 £4,000 £1,000 £5,000
2 £8,000 £2,000 £10,000
3 £12,000 £3,000 £15,000
4 £16,000 £4,000 £20,000
5 £20,000 £5,000 £25,000

Other Savings Options

Account Type Best For Typical Rate
Regular saver Monthly deposits 5-7% (limited)
Easy access ISA Flexibility 4-5%
Fixed-rate bond Definite timeline 4.5-5.5%
Notice account Slight restriction 4.5-5%
Premium Bonds Tax-free, safe ~4% average
Account Purpose Amount
Lifetime ISA Long-term deposit £333/month max
Regular saver Bonus interest Up to limit
Easy access Emergency fund 3 months expenses
Easy access Surplus savings Remainder

Saving Strategies

The Fundamentals

Strategy Potential Saving
Automate savings Prevents spending
Pay yourself first Saves before spending
Track spending Find waste
Budget properly Know your numbers

Major Cost Cuts

Expense Potential Monthly Saving
Live with parents £500-£1,500
House share vs solo rent £200-£500
Move to cheaper area £200-£400
Downsize current place £100-£300
Give up car £200-£400

Smaller Wins

Change Monthly Saving
Cook at home £100-£200
Cancel unused subscriptions £20-£50
Switch energy/insurance £30-£50
Reduce takeaways £50-£100
Cheaper phone contract £20-£30

Increasing Income

Method Potential Extra
Overtime Varies
Side hustle £200-£500/month
Sell unused items One-off £500-£2,000
Rent spare room £400-£700/month
Career progression Long-term gains

Timeline Planning

Realistic Timelines

Monthly Saving Time to £25,000 Time to £40,000
£300 7 years 11 years
£500 4 years 6.5 years
£750 2.8 years 4.5 years
£1,000 2 years 3.3 years
£1,500 1.4 years 2.2 years

Assumes LISA bonus on first £4,000/year

Setting Your Target

Step Action
1 Research house prices in target area
2 Decide deposit percentage (10-15% ideal)
3 Add £5,000-£10,000 for other costs
4 Set realistic timeline
5 Calculate monthly saving needed

Government Schemes

Help for First-Time Buyers

Scheme How It Helps
Lifetime ISA 25% bonus on savings
Shared Ownership Buy 25-75% of property
First Homes 30-50% discount on new builds
Forces Help to Buy For armed forces
Stamp Duty Relief No stamp duty under £425,000

Shared Ownership Benefits

Feature Details
Deposit needed 5-10% of share bought
Example 25% of £300,000 = £75,000 share
Deposit on share £3,750-£7,500
You pay rent on Remainder (75%)
Can buy more “Staircasing” up to 100%

Getting Help from Family

Family Support Options

Method How It Works
Gifted deposit Parents give money
Family loan Informal borrowing
Guarantor mortgage Family provides security
Joint borrower sole proprietor Parents on mortgage, not deed
Family springboard Parents’ savings as security

Gifted Deposits

Consideration Details
Documentation Lenders need gift letter
Tax implications Usually none (PET rules)
Relationship proof May be requested
Repayment expectation Must be genuine gift

Protecting Your Savings

Keep Your Deposit Safe

Rule Why
Don’t invest deposit Risk of loss
Use FSCS-protected accounts £85,000 per institution
Spread large amounts Across different banks
Don’t touch it Maintain discipline

Build Emergency Fund First

Priority Amount
Emergency fund 3 months expenses
Then deposit saving Everything else

Common Mistakes

What to Avoid

Mistake Why It’s a Problem
Not using LISA Missing 25% free money
Investing deposit Risk losing it
No emergency fund May need to raid deposit
Underestimating costs Surprised by fees
Saving inconsistently Slower progress

Summary: Deposit Saving Checklist

Getting Started

Action Done
Open Lifetime ISA ☐
Set up automatic transfers ☐
Build emergency fund ☐
Calculate target amount ☐
Set timeline ☐

Maximise Savings

Action Done
Max out LISA (£333/month) ☐
Cut major expenses ☐
Consider increasing income ☐
Review and adjust monthly ☐

Before You Buy

Check Done
Deposit reaches target ☐
Extra costs covered ☐
Emergency fund intact ☐
Mortgage in principle obtained ☐

Saving for a deposit takes time and discipline. Use the Lifetime ISA for the 25% bonus, automate your savings, and stay focused on your goal. Every pound saved now means lower mortgage payments for decades.

Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance — we do not offer financial advice. Seek independent mortgage advice before making decisions about borrowing.

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Sources

  1. FCA — Mortgages
  2. MoneyHelper — Buying a home