How to save for a mortgage

fa-homebuyers ["Mortgages Explained"]
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Saving for a house deposit can be tricky. You’ll need to know how much you need to save, then work out ways to put money away – and how often – to hit your target.

How much should I save for a mortgage deposit?

How much you’ll need to save will depend on the value of the home you want to buy. It will also depend on the mortgage deal you want.

For example:
  • A 95% mortgage means you’ll need to save 5% of the total home value.
  • A 90% mortgage means you’ll need 10%. 
The average UK house price is £283,000 as of March 2024, according to the Government.
If you need a 10% deposit, then you’d need to save a deposit of £28,300.
Use our deposit tool to see how much you might need to save and how much you’ll need to put away a month to reach your target.

Should I save for a bigger deposit?

The more money you can pay upfront, the more mortgage deals may become available to you.

Lenders offer mortgages based on risk. If you have a bigger deposit, the lender is taking on less risk and may offer a lower interest rate.

With a smaller deposit, lenders might compensate by charging you higher interest payments. 

Ways to save for a mortgage deposit

Here are some money-saving tips to help you save for a mortgage deposit: 

Consider a flat share

If you rent on your own, you may be able to cut your rental costs by moving in with friends, a partner, or flat share.

Move in with family

If you can, moving in with family may be a way to save on rent costs. A temporary move into your parents, for example, could mean you are able to save the money usually spent on rent.

Open a savings account

If you’re saving in a current account, you may not get much interest. A savings account might offer a better return as you build up your deposit.

Find ways to reduce your outgoings

While you’re saving up, you may need to cut back in other areas, like takeaways or buying new clothes. Don’t cut off everything you like doing, but a few quiet months may help you to save more.

Review your spending

Check your spending and look for anything you could do without. For example, you might spend more than you think on eating out or want to swap to a cheaper supermarket.

Look for bargains

Loyalty cards may reduce your grocery bills, while doing a weekly online shop can cut out impulse buys.

Move with a partner

If you’re able (and willing), getting a joint mortgage with a partner will mean you can save for a deposit together. 

Other ways to prepare 

While saving for a deposit is an important step, a lender will look at lots of factors, such as:
  • Your credit history 
  • Your ability to make payments
  • Your outstanding debts
  • Your everyday spending
  • Whether you’re registered to vote.
If you’re a permanent employee, you may only need your last three months’ payslips and bank statements to prove your income. 

If you’re self-employed, a lender may want to see more documents, such as:
  • Your future earnings
  • Your last two years of accounts
  • Income from grants.

Mortgage deposit schemes

If you’re finding it tricky to save for a deposit, there is support out there which could be useful:

95% Mortgage Guarantee

This mortgage scheme aims to give buyers the chance to get on the housing ladder with a 5% deposit.

Shared Ownership

The Shared Ownership scheme lets you own between 10% and 75% of a home and pay rent on the rest.
The content on this page is for reference and is not financial advice.
For impartial financial guidance, try MoneyHelper.