How to save for a mortgage deposit
Saving for a mortgage deposit is the first step towards buying a home. But it can be a big step for many.
Why you need a deposit
A deposit is needed to provide security on your loan, helps prevent negative equity and determines the loan to value (LTV) ratio of your mortgage. Typically, a deposit should cover between 5% and 15% of the total purchase price of the property.
There are lots of ways you can save for a deposit – from simple lifestyle changes to getting more from your savings.
1. Set a budget for yourself
Working out a monthly budget is a good way to see what you regularly spend money on. It can highlight areas where you can make cutbacks. We have a range of tools to help you manage your money.
Set a target of how much you’d like to save per month. Use our free budget calculator to work out how you can reach it then open a regular Monthly Saver account to start saving.
2. Lower your monthly outgoings
Saving for a deposit while paying rent can seem daunting, but there are a few things you can do to make it easier:
- Downsizing – moving somewhere smaller than your current place could reduce your monthly rent and make it easier to save.
- Getting a lodger or housemate – sharing your home can help split your bills and rent. Check first that your landlord agrees to this.
- Selling what you no longer need – this can help raise extra cash towards your deposit.
- Moving to a house share – reduce the cost of bills and rent, so you have more money to save.
To take control of your monthly outgoings, find out more about reducing your bills.
3. Make the most of your savings
To get more from your money, pick a savings account that offers a good interest rate. These will usually be fixed savings accounts which offer a more favourable fixed rate of interest in return for putting your savings away for a longer term.
If you go for an ISA with a fixed term, think about when you want to move. Make sure you’ll be able to get the money when you need it.
We can’t offer financial advice, so speak to an impartial financial adviser first.
4. Sharing the cost
You may not be able to afford a deposit alone, but you might have more options with the support of your family or partner.
- Buy with your partner - this can make it easier to save as you could split the deposit and save together.
- Cash gifts from your family - sometimes, parents can help by providing all or part of the deposit.
- Buying with a family member - you can apply for a mortgage with a family member, or friend. It doesn't have to be a partner.
Find out more about how your family could help.
5. Find out if you’re eligible for any government schemes
We’re proud to support a range of government schemes to help you take your first step on the property ladder, including:
- Shared Ownership
- First Homes scheme
- Help to Buy: equity loan scheme
- Right to Buy
Learn more about the help available and if any of the schemes could be right for you.
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