Effective Ways To Save For A House Deposit

Published: 02/10/2020

Are you a first-time buyer with dreams of owning your first home? One of the first and most common questions asked is "how much do I need to save for a house deposit?"

It may seem like an impossible dream, especially if you live in a large city such as London, where the price of everyday life seems to increase on a regular basis. However, if you’re determined to make a go at purchasing your first home before the end of the year, then there are ways you can achieve this.

What is a mortgage deposit?

A mortgage deposit is a lump sum you pay up front towards the cost for the home you’re looking to purchase. The deposit amount can be a low as 5% of the overall property value, and as high as 20%, depending on the circumstances in the market at the given time.

Why do lenders require a deposit?

When you purchase a property, the lender is essentially lending you a loan to secure the property, which you pay back over a set period of time (tends to be 20-30 years minimum). As a result, the lender will require you to provide a deposit sum of the property amount, as a security on the loan you’re taking out with them.

How much does a deposit tend to be?

On average a first-time buyer typically puts down a deposit up to 20% of the value of the property they’re interested in purchasing, which in some circumstances can mean a hefty down payment being made.

However, in recent times deposit amounts have varied from 5%, 10% and 15% which is seen as more reasonable and realistic payment options. But it’s worth considering, the lower deposit percentage you pay at the start, the bigger the overall mortgage will be long-term.

For example, if the house you’re interested in costs £200,000, then:

A payment of £10,000 would be required for a 5% deposit, if you take out an 95% mortgage.

A payment of £20,000 would be required for a 10% deposit, if you take out an 90% mortgage.

A payment of £30,000 would be required for a 15% deposit, if you take out an 85% mortgage.

A payment of £40,000 would be required for a 20% deposit, if you take out an 80% mortgage.

There are several schemes to help first-time buyers make the leap onto the property ladder, such as Help to Buy, New Build and government schemes to help those with small deposits, purchase a house.

Reasons to save a bigger mortgage deposit

Although 5% deposits are still available in some instances and may be the best and most affordable option to consider, there is also reason to try and save up for a bigger mortgage deposit.

Cheaper monthly rates - Although it may seem obvious, the bigger the mortgage deposit, the cheaper the monthly repayments will be. It may not seem like a big difference at first, but long-term cheaper monthly rates can go a long way for you and your family.
Better mortgage deals - The bigger the deposit, the better the deals will be out there for you, as lenders will see it as less of a risk, meaning interest rates on the repayments could potentially be a lot less than a smaller deposit amount.
Bigger buying budget - On average, lenders tend to offer loans worth over four times the amount of your annual salary, so if your overall loan total is low then you would require a larger mortgage deposit just to be able to reach the amount required for the property.

Effective ways to save for a deposit

There are a number of ways you can look to save money for a deposit, some more effective than others but they all count, no matter how big or small!

Savings - If you’re determined to make the move in the next year, then set up a plan including how much you aim to save each month. No matter how big or small, whether it’s every month or every other month, it might not seem much at the start but down the line it could be the final amounts that help you secure the deposit for your house!
Borrow off family - Another option to consider is borrowing money from your family and set up a plan to pay them back on a monthly basis. The term ‘bank of mum and dad’ often comes into play here but if they are able to lend you a lump sum immediately, and you come to an agreement to paying it back over an amount of time, it is something well worth considering.
Sell your car - If you currently live in and around the city, have easy access to public transport links that can get you to and from work, shops, family and friends, then a potential solution to getting money together for your deposit may be to sell your car. Although it could be a short-term expense, you’ll reap the rewards long-term as it’ll help give you a chunk of money towards completing your house purchase. You could always look to buy a new car down the line, once you’re settled in your new home.
Stick to a budget - Are you the sort of person that loves multiple holidays a year? Maybe you like to splash out on shopping trips once payday comes around? Maybe you were looking to buy a new car this year? Whatever it may be, you’ll need to set a realistic budget for yourself as this is a more than effective way to see your savings shoot up every month! You’ll be surprised how much money can be saved should you reduce your holidays a year and postpone your monthly shopping trip to once every few months instead.
Downsize - If you currently rent a flat, then it might be worth considering downsizing? Moving to a cheaper area may also help reduce the cost and potentially save thousands over the course of a year.
Declutter and sell - If you have a clear out of items you no longer need, whether it’s old clothes or electrical appliances, you can then look to sell them online and make some money. Although it won’t seem like a lot, you’ll be surprised how much it can all add up!


Whether or not you’re a first-time buyer, location is the most important factor to consider. Should you look to be living in big cities like London or Manchester, then you can expect property prices being at a premium. If you’re a first-time buyer or a young family then it’s worth looking at cheaper, more affordable options, such as a commuter town or somewhere in between a big city, so you can still visit the city centre on a regular basis.

If you're a first-time buyer, check out our other articles below:

Who are GWlegal?

GWlegal are a property solicitors based in Liverpool, specialising in buying or selling, remortgage, declaration of trust, bridging and buy-to-let landlords.

If you have a legal matter you wish to discuss don’t hesitate to get in touch. You can call us on 0345 373 3737 email us discuss@gw.legal with your question.

Who are GWlegal? We’re a national firm with local values.

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Content correct at time of publication.

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