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10 Smart Ways to Save for a House Deposit in the UK

The uncertainty of life is a factor that can never be controlled, only managed. One of the most crucial part of future planning is purchasing a home. The investment in a house is a significant milestone in every individual’s life. When you have a property in your name, you can bank in the comfort of knowing that you would not have to pay rent, throughout your retirement.

Investing in a house is more than just purchasing a building. Rather, you are creating a home that represents a place of comfort, serenity, community and family values. A house, in your name, empowers you to have a sense of belonging and ownership. It illustrates your transition into being a responsible adult. It’s an achievement!

With that said, investing in a home can also be financially advantageous in the long run. In fact, the likelihood that the value of your house will increase over time, is relatively

high. In the future, if you decide to sell your home, you can make a hefty gain. In the current economic climate, several experts believe that investment in property is a much safer route, in contrast to investment in the stock market. Additionally, homeowners also have the advantage of securing loans, as they are deemed to be reliable candidates. Therefore, if you ever run out of money, owning a house could secure you a low-interest loan.

Moreover, you can also generate income through your home. If you live alone or have a spare bedroom, you can put it out on rent, and attain a steady monthly income. Taking this into account, it can be said that owning a house has numerous advantages. Therefore, if you are thinking about investing in a home, refer to the following guide, so you can speed up the process!

1. Understand the True Cost of Owning a House

The first step to investing in a property is gathering an idea of how much money you actually need. While buying a house is advantageous in the long run, the process can seem pretty intimidating when you start out. However, if you make the calculations beforehand, you wouldn’t be surprised when the costs hit you. In order to buy a house, you need to save enough to pay for the following:


The most important cost would be your initial deposit. Typically, you need to pay a deposit that pertains to at least 15% of the property value. The rest of the amount can be taken care of by the bank or any other mortgage-providing institution. However, the 15% can vary, depending on the neighbourhood, as well as your income. If you generate a larger income, you will be approved for a directly proportional mortgage amount. Similarly, if you invest in a property jointly with another individual, you would be approved for a larger mortgage. Hence, it is imperative to study your options prior to making a decision.

Stamp Duty

Stamp Duty refers to the amount of tax money that you pay for investing in a property that costs more than £125,000. Stamp Duty is calculated with a certain percentage rate of the purchase price, which ultimately depends on the property value.

Solicitor’s Fee

When buying a house, you would need a solicitor or a licensed conveyor to handle all the legal requirements. These individuals usually charge around £850 to £1,500, including VAT at 20%.

Additionally, solicitors are employed to perform local searches which is generally part of the solicitor’s fee. However, if they are charged extra then these searches can cost around £250 to £300.

Mortgage Product Fee

Mortgage Product Fee is also known as a booking fee, as it is the price of the deal. Normally, this fee can be around £450 to £1,500. However, this charge can be added to your loan amount. It is recommended to choose this option, as in the case that your mortgage is rejected, some lending institutions might refuse to refund your mortgage product fee.

2. Have a Target Time Period for Saving

The subsequent stage of saving for a home is deciding a time frame. Before you start saving your income, you need to set a duration, by which you would want to save enough funds to be able to buy a house. Setting a deadline for yourself can help you devise an effective budgeting strategy. This way, you can calculate your total income, set apart the amount that you need to save every month, in order to achieve your final goal.

However, when you are setting a deadline, be sure to stay realistic. Do not put yourself under the pressure of becoming an overachiever. If you wish to set a target duration, take the following advice into consideration.

Find out the average price of a home in your desired neighbourhood

In order to set a time duration for saving money, it is imperative to have an idea of the exact amount of the money you need to save. Therefore, find out the average cost of homes in the neighbourhood that you have your eye on. Next, determine the rate of deposit, and add it to the other charges (discussed earlier). Once you have a premeditated idea of what you might have to spend, you can move onto the next stage.

Take your monthly income into account

The next aspect, which you must consider, is your total monthly income. You must calculate the amount of money that you can invest in your savings. To determine this number, you can subtract your total monthly costs from your total income. The left-over amount should technically your savings for each month. Once this amount is computed, calculate the amount of time it would take or you to reach your savings goal. This can be done by taking the total funds needed to buy the house (including deposit, stamp duty and other costs) and dividing it by the monthly savings.

Add a month as a contingency

Lastly, when you are deciding the time, you can add an extra month to eliminate the setback, caused by unintentional or emergency spending. This way, you can stay on track and remain motivated to achieve your goal.

3. Budget, Budget and Budget!

Essentially, saving for a house would require you to manage your spending. Therefore, you would need to create a budget, which can facilitate an effective allocation of income. If you have never created a budget before, you can educate yourself on the different strategies of forming budgets, such as envelope budgeting, 50/30/20 budgeting and zero-based budgeting. However, if you do not stick to your created financial plan, all your efforts would go in vain.

Despite devising a spending strategy, if you still struggle to find extra cash that you can allocate to your savings, you can make some changes in your lifestyle. For instance, you can switch to frugal living methods, or save money by reducing your current living expenses. In order to achieve the latter, you can take the ensuing measures:


If you currently renting, you can downsize, so that you would have to spend a relatively less amount on rent. You can also achieve this objective by moving to cheaper neighbourhoods, however, when you take this approach, make sure that your move does not increase the cost of commute by decreasing the cost of the rent.


Lodging refers to renting rooms in houses, along with the owner. While this may not be the most ideal solution, it can help you save a lot of money, so you can pursue your dream of achieving lifelong comfort. However, if you are choosing this option, make sure that your new room is close to your work. This way, you can save more on travel costs.

Moving in with your parents

If your parents live in town, moving back in with them is one of the most intelligent options.  In doing so, you can save a large amount of money from not paying your monthly rent. As a result, you would be able to reach your goal amount fairly quickly, thus enabling yourself to become a young homeowner.

4. The Mediums of Saving – What is the most effective method of Saving?

Fundamentally, you would also need to consider the different mediums of saving. While you do have the option of saving cash, it is possible for the money to lose its value over time. Additionally, when you save cash, you might not be punctual in making your monthly payments. Therefore, choosing any of the following options is recommended.

Cash ISA (Individual Savings Account)

Cash Individual Savings Account (ISA) is quite similar to a normal savings account, as it allows you to generate interest on your savings, without the deduction of tax. Cash ISAs are advantageous in the way that it enables you to increase the value of your cash, so you can benefit from it in the long run. In addition to this, cash ISAs encourage you to deposit your money over a set period of duration.


Investing in stocks is another mode of savings. However, this method would only be effective if your investment can be liquidated, when you need it. Additionally, due to the volatile nature of the stock market, there is a possibility that your investment could lose value. Therefore, choosing stocks as a medium of saving may not be the best choice.

5. Manage Your Outstanding Debt

If you owe money to lending authorities, it is imperative to pay it all off first, before you decide to make a deposit. Having debt in your name could affect the ‘loan to value’ figure – the percentage of your mortgage over house value. If your mortgage application has any hint of debt, some lenders may not agree to approve your mortgage. In the case that your mortgage application is approved, you would be charged high interest on your loan. Therefore, before even thinking of buying a house, it is essential to liberate yourself from all debts. To achieve this objective, you can:

Avoid missing any payments

The only way to get rid of debt is by making regular payments. You can set up a budget that enables you to make regular payments from your monthly income. You can consider the different budgeting strategies to ensure that your debt payment is prioritised. Additionally, you can set up an automated payment system, so you can set your debt repayment as a priority.

Make changes in your lifestyle

In order to pay off your debt, you may need to make some changes in your lifestyle. For instance, you can switch to more economical means of living, such as cooking a home, restricting impulsive purchases and switching to affordable transport methods (i.e., taking public transport). Once you start saving money in certain areas of life, you can allocate that amount to debt repayment.

Increase your monthly income

If you are struggling to repay your debt, while also saving for a house, you can try to increase your monthly income. To do this, you can pick up some extra shifts at work, or try freelancing to generate more money. If you have a particular set of skills, you can also start providing your services to friends, family members and general public. For instance, if you can manage finances, offer your services as a bookkeeper make money off of it.

6. Temporarily Scale back on Vacations

Buying a house would require you to make some major changes in your life. For some time, you may have to give up on luxuries that bring you joy. One of these things could be vacationing.

Going on vacations, every year could cause a dent in your savings. Hence, it is essential to temporarily give up on this opulence. However, this doesn’t mean that you cannot enjoy a good time. In fact, you can switch to cheaper alternatives, such as the following.

Go camping in your backyard

If your usual vacations are all about getting in touch with nature, you can enjoy a similar experience from the comfort of your own home. If you have a lusciously green backyard, you can camp outside for a few days in a week. To spice up your stay-cation, you can ignite a bonfire, use an outdoor grill to cook and create a realistic camping environment.

Have a Spa Day

Another way to enjoy your time off is to enjoy a spa day, without having to leave your house. To make this stay-cation more fun, you can call all your friends, wear face masks, give each other massages, and create a spa-like environment. For instance, you can serve up cucumber and lemon water, make French sandwiches and offer refreshments. This option would not only save you money, but it would also recharge your battery, so your performance at work can be improved.

Enjoy a Yoga Retreat

You can also enjoy a Yoga retreat, without having to leave your home. You can convert your home into your own personal temple of peace, by rolling out a yoga mat and watching tutorials online. To make the environment more realistic, you can mix up lemon, honey and warm water to make some detox water.

You do not need to spend a lot of money to enjoy your days off.  Rather, you can simply look for cheaper options to ensure that your money is allocated towards creating a better future for yourself.

7. Benefit from Government Schemes

If you are struggling to make ends meet, as it is, you can benefit from the government-engineered schemes for homeowners.  Some of these include:

The Right to Buy Scheme

The Right to Buy Scheme is a program extended by the government, which allows council tenants to buy their council home at a specific discount. However, to benefit from this scheme, you are required to meet a certain set of criteria, which decides if you are eligible for this plan. The Right to Buy Scheme has different requirements for different regions; therefore, it is imperative for you to study these regulations to see if you meet the benchmark.

Commonly, you can buy your council home from the Right to Buy Scheme if the home is your only or main home, if it is self-contained, if you are a secure tenant, and if you have had a public sector landlord for at least three years.

Shared Ownership

The Shared Ownership scheme enables you to own a percentage share of your home (ranging from 25% to 75%) while renting the rest. You can be considered eligible for shared ownership if your household generates an income of £80,000, per year or less. However, this amount may vary, depending on your circumstances. Later on, you would be eligible to purchase the rest of the ownership in the property, however, the prices may be hiked up or reduced, depending on the housing market.

You would also be eligible for shared ownership in case you are a first-time buyer. If you were a previous homeowner, but are unable to afford a home in the current economy or if you are an existing shared owner. Additionally, if you are more than 55 years of age, you can purchase 75% of your home, via the Older People’s Shared Ownership (OPSO) scheme. Once you gain ownership of this amount, you would not have to pay rent.

8. Sell Unwanted Belongings

You can also speed up the savings process by allocating more money to your savings fund. To execute this plan, you can make an attempt to sell your unnecessary belongings by setting up a garage sale, or by using online platforms. This initiative will ensure that you earn some extra cash, while also allowing you to get rid of the clutter. This way, you can have a fresh start, once you purchase your own house.

Sell on eBay

If you own things that you do not need, you can get rid of them, while simultaneously making money off sale proceeds. For instance, you can sell your old furniture, clothes, electronics, and other unnecessary items, at a fair cost. This can give you a boast in the short term and increase your contribution in the house-savings fund.

Sell on Etsy

Etsy is a platform that encourages you to sell your handcrafted, hand-made or vintage items online. If you have a talent for making artsy pieces, you can monetize from your passion, and use the money to fund your purchase of a home. You can meticulously devise the cost for each item to make sure that you generate enough profit from your hard work. For instance, you can sell handmade jewellery, custom handbags and designer clothing.  In order to sell on Etsy, it is essential to promote items that are entirely original.

Sell on Gumtree

Gumtree is another platform that encourages the sales of used items online. As this platform has a variety of users, all over the country, you can reach out to a wider range of audience demographic. On this platform, you can sell used furniture, clothing, kitchen supplies, and any other item that you need to get rid of.

9. Get a Part-time Job

Buying your first house is no cakewalk. In order to save enough for that initial deposit, you would have to put in the effort, such as working a part-time job. The technological advancements have made it fairly simple for you to maintain a balance while working multiple jobs. You can take advantage of the following opportunities for work.

Work as a Closet Organiser

If you have a Marie Kondo residing inside of you, you can use that to your advantage. With task performing platforms, such as TaskRabbit, you can respond to advertisements for performing simple jobs, such as organising a closet. You can schedule a time that feels convenient, and allow yourself to generate an additional income.

Work as a Ride-Share Rider

To perform this job, all you need is a car. In order to work as a rideshare rider, you can partner up with any ride-sharing application (such as Uber or Lyft) and pick up rides, when you have the time. As this job extends a flexible schedule of work, you can generate additional cash, while simultaneously working full-time.

Work as a Tutor

Your knowledge can take you far in life. If you hold expertise over a certain domain, you can bring in additional income by tutoring. You can extend your expertise on online platforms, or by taking a traditional approach of posting advertisements on university notice boards. As a tutor, you can work in accordance with your own free schedule.

Work on Movie Sets (as an extra)

You can get paid a decent amount, just by appearing in the background of a TV show or a movie. However, this option would require you to create a resume, and line up some professional headshots. With that said, you can earn up to £80 per day, simply for being present on the set. You can sign yourself to appear as an extra, through online platforms, such as Casting Collective and Extra-people.com.

10. Finally, Ask Family or Friends for Hel!

When you are investing in your first home, there is no shame in asking for help from family and close friends. Requesting for financial assistance can be daunting, however, swallowing your pride, now, can be beneficial for you in the future. To make this process easier, you can take the ensuing tips into account.

Select the right person

Requesting financial assistance is not easy. Therefore, it is imperative that you ask for help from the right people. The person you choose must have disposable income. This means that they should be able to lend you money that they do not need in the near or immediate future. Additionally, it is further recommended that you select an individual, who can be trusted enough to keep your transaction confidential. In most cases, your parents are the best candidates to fit this profile.

Mention that you have tried all other resorts

When asking for money, it is important to let the other person know that you have tried all other measures to secure payment. While it may not be necessary, it can help you feel less guilty about requesting financial assistance.

Set clear boundaries

Mixing money and friendships is never a good idea. However, when it becomes a necessity, you should take every measure to protect your relationship. To do this, you can inform the person about the specific amount that you desire to acquire and provide them with a comprehensive plan of repaying back the money. If it helps, you can also sign up a legal contract to give the person full confidence in your ability to return the money.


Saving for a deposit is no child’s play, especially in this economic climate where rents are sky rocketing, rising cost of living and lower standard of living. It is imperative that above listed steps are taken with utmost sincerity to ensure that you achieve the ultimate goal of having your own home.


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