How to save money to buy a house in the UK: 5 top tips

If you’re a first-time buyer of any kind of property in the UK, chances are you’re looking for a mortgage. Unfortunately, most of us don’t have the six-figure sums to purchase properties upfront!

In this case, you’ll need to save money towards a deposit on your ideal house. This means doing some money-shuffling and perhaps even changing your lifestyle and expenses until you hit your ideal total.

Thankfully, there are plenty of surefire ways to rack up the deposit cash, and in this guide, I’ll take you through some of the best routes to get started. First, however, let’s take a closer look at what saving for a deposit on a house is all about.

Saving money for a deposit

In the UK, mortgage lenders will expect you to pay a percentage of the total cost of a house upfront to secure it. This is your deposit, and on average, first-time buyers will pay between 10% and 20% to seal the deal. More often than not, it’s closer to the 20% mark.

Doing a bit of the maths here, if you find a property that’s ideal for you and worth £300,000, you’ll probably need to find between £30,000 and £60,000 to secure it. For many of us, that’s a lot of money to find upfront!

However, some mortgage lenders will let you secure a house for a lower amount, potentially as low as 5%. It’s worth shopping around.

To save money for a deposit, you will ultimately need to set clear savings goals based around your current income and expenses. Keep in mind, however, that the less you save per month, the longer it will take to secure your ideal home. However, this option is often the most feasible choice for people looking to get onto the property ladder.

As well as saving money for a deposit, mortgage lenders will also need to check a few of your details so they’re confident you will pay their money back. For example, they’ll check your credit history, your current residential status, and income.

There’s a lot to remember when applying for a mortgage – but the best thing you can do right away is start building that saving mentality. Remember, the more you save for a mortgage deposit, the more chance you’ll get accepted for finance. Banks and lenders want as much confidence in you as possible, and that sometimes means paying more upfront!

Top tips for saving towards a house

£60,000 might seem like a lot of money as a lump sum, but you never know what you could save if you adjust your everyday habits. Here are a few quick tips to help boost your deposit-saving potential.

1. Get into budgeting

If you don’t already have a weekly or monthly budgeting plan, now’s the time to make one.

If that sounds scary, you don’t have to worry about muddling around with calculators and spreadsheets. Apps such as Money Dashboard, Emma, and Hyperjar are all completely free to download and connect to your bank accounts.

These apps will show you where your money goes each month and help you categorise your spending. Budgeting this way shows you where you could potentially shave costs and redirect the money you spend into a savings pot.

2. Be ruthless on expenses

To get into a saving mindset, you need to cut back on your monthly spending – there are no two ways about it. For example, consider all the services and subscriptions you might pay for each month. Do you really need them?

As a further example, let’s look at streaming services in the UK. While you might already pay for Amazon Prime at £7.99 a month, there are extra channels and services – such as Netflix, BritBox, and Disney+ – all of which, while small and incremental, all add up.

Look at the services you use regularly and check your bank statements to tighten up your spending. Cut out luxuries where possible until you have a firm foothold on a saving habit. Even if you only cut £100 a month by being ruthless on expenses, that’s an extra £1,200 a year to put into savings.

3. Look into home ownership schemes

Beyond saving for a standard deposit on a home, it’s worth considering cheaper ways to move to where you want to go. First-time buyers previously had access to the government’s Help to Buy: Equity scheme, and while this has since ceased, other avenues are available.

Shared ownership schemes, for example, allow buyers to effectively pay for a portion of their desired property and pay a landlord rent on the remainder. Rules vary on such schemes across the UK, but you could end up only paying as little as 5% on upfront fees and then only pay rent for the remainder.

It’s not an ideal setup for everybody, but it’s one of several ways the government continues to offer assistance onto the property ladder for those who are struggling to save.

4. Take out store and credit cards

I’m not advising you to take credit cards out lightly – they’re great for spreading costs in many ways – but you need to use them responsibly or risk spiralling into debt. Credit and store cards are great for home savers, however, as they can boost credit scoring (thus potentially reducing the deposit you need to pay) and give you money back on purchases.

For example, consider taking out a cashback card, which allows you to claim money back as a percentage on anything you spend. Consider taking this type of card out, maximising the balance, and paying it off each month to avoid excess interest.

Again, it’s not necessarily a fast track towards saving for a deposit, but if that’s an extra £1,000 a year saved, you’re an extra step closer towards grabbing that mortgage deal.

5. Make money via side hustles

The gig economy or side hustle craze has never really gone away, and with the UK continuing to experience economic turbulence, it’s not surprising so many people are still making money on the side.

You could look into taking small steps to boost your weekly income, for example. Consider heading to apps such as eBay and Vinted as a priority, for example, where you can sell off unwanted items at a profit.

Etsy, too, is another fantastic app and service that lets you sell crafty items and artworks – if you’re the type of person who loves to get creative.

There are also plenty of freelancing and work-from-home opportunities through websites such as Fiverr, where you can offer to complete small tasks or projects for one-off payments.

Ultimately, one of the best ways to save money at all is to simply make more money – and when you can’t get a pay rise or extra hours at work, it’s worth considering how to use your free time to generate extra cash wisely!

How to buy a house in the UK with no money

It’s entirely possible to claim a mortgage without a deposit – you’ll need to look for an LTV (loan to value) mortgage or a 100% LTV mortgage. In these cases, lenders or banks will let you borrow the entirety of the value of the property you’d like to buy.

100% LTV mortgages are rare. Through the various ups and downs of economic crisis over the past few decades, the British housing market has tightened itself up to focus on deposits as a priority. However, there are still a few options out there.

For example, you could set up a guarantor mortgage, which means someone acts as a guarantor to pay your mortgage by default if you can’t pay the monthly agreed rates. You could ask a family member or friend to support you – but there will, as always, be risks for them, too.

In 2023, Skipton Building Society bucked the trend by offering a ‘track record’ mortgage. Essentially, this mortgage option allows buyers to take out a mortgage at 100% LTV without a guarantor. It’s the first of its kind for over ten years, though it still comes with a few strings attached.

For example, you’ll need t pretty clean history of paying rent and important bills on time for at least a year. Could Skipton be a trendsetter for other mortgage lenders to follow suit? Time will tell!

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