5 tips on how to save for a house


Back

If you’re thinking about buying a house, you’ll need to save for a mortgage deposit. House prices vary across the UK, so how much to save to buy a house will depend on where and what you’re looking for. Take a look at some of our available homes below and use our 5 tips to get started on your home-buying journey.

Find your next home >

1. Do the maths

Firstly, work out how much you’ll need to save and how much you can borrow. A recent study by Halifax has shown that, on average, first-time buyers need to save for a 20% deposit with an 80% mortgage[1]. However, as house prices differ greatly across the UK, it won’t be surprising that a 20% deposit in the North West is a much smaller amount than a 20% deposit in Greater London.

Average Deposit in the UK in 2019 [1]

Region Average Deposit Deposit as price %
Greater London £109,885 24%
East Anglia £43,188 20%
Scotland £29,950 20%
South West £42,584 19%
Northern Ireland £25,317 19%
North £24,091 18%
Yorkshire and the Humber £27,598 18%
North West £29,472 18%
East Midlands £32,917 18%
West Midlands £34,178 18%
South East £54,425 18%
Wales £25,704 17%
UK £46,187 20%

If saving a 20% deposit seems overwhelming, there are schemes available – such as the Government-backed Help to Buy, where you could buy a home a small deposit. Find out more about how this scheme works here.

The larger deposit you save, the less a bank will need to loan you as a mortgage to meet your property price. This means the bank will view you as lower risk, and you’ll get access to better mortgage rates. You can use an online calculator or speak with an adviser about the size and type of mortgage you can afford.

Remember, when buying a home you’ll need to save for more than just a house deposit. The Government’s current Stamp Duty holiday will reduce some of your upfront costs, but to save for a house you should also factor in things like:

  • Valuation fees
  • Mortgage arrangement fees
  • Search and survey fees
  • Legal fees
  • Buildings insurance
  • Council tax
  • Money transfer fees
  • Land registry fees
  • Moving van costs
  • Furniture and furnishings

2. Cut your spending

It may seem obvious but reducing your outgoings is one of the quickest ways to start to save for a house. You may find you can make savings in unexpected places.

  • If you’re renting, could you move somewhere cheaper or back home with family?
  • If you own your current property, could you get a lodger?
  • Switch your energy and utility bills to a cheaper provider
  • Downgrade your phone or broadband packages
  • Cancel any unused subscriptions

Budgeting is key when saving for a mortgage deposit. Try to cut down on your everyday spending and reduce unnecessary extravagances like clothes shopping, dining out, taxis, and takeaway meals or coffees.

There are many different apps available that can sort your spending into categories, helping to identify areas where you can start to budget.

3. Be resourceful

One of our top tips to save for a house is to make the most of what’s already at your disposal.

  • Have a bulk clear-out and sell any unwanted items on eBay
  • Switch your gym membership for free outdoor exercise
  • Maximise any reward schemes or loyalty points you’re signed up to
  • Cash in any unused gift cards you’ve been hoarding
  • Got a hidden talent? Freelance and share your skill or set up an Etsy shop

There are several financial products and accounts that can help boost your savings too.

Cashback credit card: This card lets you earn a percentage of what you spend as credit on your bill. It’s best to use this card for your everyday spending, but make sure you pay off the balance in full each month to avoid paying extra interest.

Savings account: Putting money away into a designated savings account (rather than your debit account) can earn you interest. Some accounts will reward you further for not touching your savings. Although consider how quickly you’ll need access to your money – if you’re looking to buy a home soon, you’ll need your savings in an account with instant access.

Individual Savings Account (ISA): You can invest a certain amount into an ISA each year and get tax-free interest on what you’ve saved. There are many different types available, from Lifetime ISAs to Help to Buy ISAs. (Help to Buy ISAs are no longer available as of 30 November 2019, but if you already have one set up, you can still use it until 30 November 2029). Shop around and talk with different banks’ advisers to see which is right for you.

4. Share the cost

It’s easier to save for a house deposit if you’re sharing the load. Could you buy with a partner, a relative or friend? Buying with someone else comes with risks, so make sure you talk this through with a legal adviser.

If you’re concerned about how long it will take to save for a house, consider Shared Ownership. This means you own a percentage of your home and pay rent on the rest. It’s still yours to decorate as you wish, and you can pay more to increase your share or move any time.

You’ll need a smaller deposit with Shared Ownership, so you should be able to buy more quickly. Barratt Homes has partnered with the Government-backed Shared Ownership scheme, Home Reach. You could buy with Home Reach if:

  • Your household income doesn’t exceed £80,000 a year
  • You have a 5% deposit (of 50% of the property value)
  • You’re a first-time buyer or don’t currently own a home outright
  • You currently live in and own your home with Shared Ownership, and would like to move
  • The property will be your main and only home

Check out some of our new homes available with Home Reach here >

5. Get a helping hand

There are many Government schemes that can help you own a house by reducing the amount you need to save. With Help to Buy, the Government will lend you a percentage of your property’s purchase price, meaning you could buy a new build home with as little as a 5% deposit.

The current Help to Buy scheme is available until March 2021, for both existing homeowners and first-time buyers. There will be a new scheme on 1 April 2021 for first-time buyers only. You can find out more about these changes here.

You can make your savings go even further if you already have a Help to Buy ISA. (These are no longer available as of 30 November 2019). The Government will pay a £50 bonus for every £200 you save for a house deposit – earning you up to £3,000 tax-free

Use our Help to Buy calculator to find out how much you need to save to buy a house, and see which of our spacious new homes would suit you.