Saving for a deposit on a house? There's no need to give up your life.

By Craig Hore, Editor | March 12th 2020

Home ownership is one of the biggest decisions any of us will ever make. But, by treating it like a journey, with steps to complete, reaching your end goal becomes a lot more doable.聽

Picture the day you move into a home that you own. Every monthly mortgage payment going to your future 鈥 and not some landlord鈥檚 property empire!聽

The truth is, the dream of owning a home can feel pretty overwhelming, especially with today鈥檚 sky-high property prices. But think about it like this: in 15 years鈥 time you might be selling your first home and have made a decent profit from your investment 鈥 you just need to figure out how to get to that stage.聽

The first step to reaching your goal is to save up a deposit for your first home. So, where do you begin?

Work out how much you鈥檙e going to need to save

Most mortgages require a deposit equal to 10% of the value of the property. So, get online and browse property websites like Zoopla or Rightmove to get a feel for the cost of homes in your area.聽

The average price for a first-time home in the UK is 拢233,000 鈥 so you鈥檇 need to save just over 拢23k if you go for a regular mortgage (but there are alternatives available 鈥 see next point).聽

Look into Lifetime ISAs and Help-to-buy ISAs. These accounts are designed for saving for a home or retirement 鈥 each time you put money in, the government will top it up with another 25% of the money you put in.聽

Think about different ways of buying

Although property prices are sky high, there are a couple of schemes which aim to make it a little easier to get on the property ladder. If you think you鈥檇 struggle to put together a 10% deposit, consider:

  • Shared ownership
    This is a 鈥榩art-own, part-rent鈥 model and it works like this:
    A housing association will own a property, and you enter into an agreement with them where you buy a percentage of the home (usually 25% to start) then pay rent on the value of the rest. Over time, you can do something called 鈥榮taircasing鈥 where you buy a larger portion of the home.聽
    For example, imagine you found a flat on shared ownership worth 拢100k. The minimum share you can buy is 25% - or 拢25,000. You鈥檇 then only need a 10% deposit on that share, which is more achievable, and pay the bank back for the rest.
    The drawback, however, is that each month you still have to pay rent to the housing association on the remaining 75%. All the same, these payments usually work out to be less than renting on the open market, so it鈥檚 a fair deal. Then, once you鈥檝e paid off the first 25% you can either sell up or buy a larger share. The Share to Buy website is a good place to start.聽
  • Help to Buy
    The government鈥檚 Help to Buy scheme is aimed at letting you buy a full home when you can鈥檛 afford a 10% deposit. Once you find a home you like, you need to stump up 5% of its full cost. Then, the government will give you a loan of up to 20% (0r 40% in London) of the value of the entire home. That loan is interest-free for five years 鈥 all of which makes it easier to get a mortgage and pay off your debt.聽

Why not buddy up?聽

If you鈥檙e not married or in a civil partnership, it鈥檚 still possible to buy with other people and this can really help reduce the amount you need to save for your part of the deposit. If you have a friend, sibling or partner who is thinking about buying this can be a good way to go. 聽

If you do go down this route, it鈥檚 definitely worth asking a lawyer to draw up an agreement just in case you fall out or break up.聽

Choose the best saving options

There鈥檚 a whole universe of high rate savings accounts which aim to make your money grow 鈥 most of them will do better than a regular savings account with your bank. Sites like Money Super Market can help you compare and find the best deal for you.聽

Do you like the idea of the government giving you 拢25 each time you save 拢100?聽

Look into Lifetime ISAs and Help-to-buy ISAs. These accounts are designed for saving for a home or retirement 鈥 each time you put money in, the government will top it up with another 25% of the money you put in.聽

Do look into the small print though 鈥 as you only get those government benefits if you follow specific rules. 聽

Reduce housing costs while saving

People in the UK spend around 30% of their salary on rent. If you can cut that back, you鈥檒l have a lot more to put towards your deposit. We know, no-one wants to move back to Mum and Dad鈥檚, but if you can stick it out for a bit, you could move into your own place much sooner.

An alternative is to think about renting somewhere cheaper for a while. No one wants to downgrade but think of it as a step in that journey to complete freedom.聽

Make lifestyle changes

We鈥檙e not here to tell you how to live your life, but if you鈥檙e saving for a deposit on a home, it鈥檚 going to be a lot quicker if you cut back on the spending. If you can switch foreign holidays for something closer to home, or do more nights in than nights out, you鈥檒l get your deposit together sooner.聽

Set up a budget

Working out a budget is one of the best ways to save for a deposit on your first home. B贸 makes this super easy 鈥 each payday you can separate your spending money from your bills and rent, and make sure you鈥檝e got enough set aside to send to your savings account too.聽

Join B贸 in minutes

You must be 18 or over and a UK tax resident to be eligible for a B贸 account. You鈥檒l also need an iPhone on iOS 10 (or later) or an Android phone with 6.0 Marshmallow or above.

Get the app

B贸 is part of National Westminster Bank Plc (鈥淣atWest鈥), registered in England and Wales (Registered Number 929027). Registered Office: 250 Bishopsgate, London, EC2M 4AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. NatWest is entered on the Financial Services Register and its Register number is 121878. The Financial Services Register can be accessed at www.fca.org.uk/register. NatWest's registered VAT number is GB 243852752.

B贸 is protected by The Financial Services Compensation Scheme (FSCS). Read more here.

* If you have accounts with B贸 and NatWest, the maximum you would be able to claim across all accounts combined is 拢85,000.

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