Saving for a home deposit can be challenging. With house prices rising faster than wages in recent years, and the cost of living squeezing household budgets, saving money may feel unachievable.
According to research carried out for The Building Societies Association (BSA) in 2026, the biggest issues people face are affordability (64%) and saving for a deposit (53%), with more than half (59%) of first time buyers having less than £10,000 in savings. One-in-three (32%) believe they will never achieve home ownership.
But with a clear plan and the right savings strategy, it can still be possible to achieve your dream.
Affordability
Mortgage affordability is the maximum amount lenders will allow you to borrow, based on your income, expenses, and overall financial situation. Lenders will want to make sure you can afford your monthly repayments, even if interest rates rise.
Affordability can therefore be challenging for aspiring homeowners. House prices have remained relatively high, and although growth has slowed in some areas, the average deposit needed is still substantial. Alongside this, rising rents, energy bills, and food prices, among other living expenses, make it harder to put money aside.
Despite this, many people are still buying homes. Careful budgeting, financial planning, and taking advantage of any incentives on offer can help. What matters most though is having a realistic goal combined with a strategy that works for you.
How much should you save for a deposit?
By the end of 2025 the average home in the UK cost around £270,000. Therefore, if you were looking to buy a home for that price, based on the following percentages, your deposit would be:
- 5% deposit: £13,500
- 10% deposit: £27,000
- 20% deposit: £54,000.
Knowing how much you’re aiming for can help motivate you to save. While it may be possible to secure a mortgage with a 5% deposit, having a bigger deposit will unlock more options. A bigger deposit may also help you to secure a more competitive interest rate, which can help make your monthly payments more manageable.
To help get an idea of how much you might need, you could consider:
- The type of property you want i.e. a house or a flat.
- The area you plan to buy in. This might be in a certain city or town, or a more rural location.
- Current mortgage lender requirements and their related fees.
- How much you might be able to borrow, based on affordability criteria.
Many lenders have online mortgage calculators on their websites. These will give you an idea of what you might be able to borrow. They’ll also indicate what the repayments might be if your application was successful.
You may even decide to complete a decision in principle form on a lender’s website. This will give you a better idea of whether they can help you and how much you may be able to borrow. Importantly though, it won’t commit you to taking out a mortgage with them.
Speaking with a mortgage adviser or broker can also help narrow your options down to a realistic goal.
It’s also worth remembering that you don’t have to take out a loan for the maximum amount you’re eligible for. Giving yourself some leeway could provide more flexibility for other expenses further down the road.
Set a budget and stick to it
Setting a budget for your savings is the key to success. Of course, you do then have to stick to it, or it won’t work. While many people know they should budget, tracking your spending and ensuring your money goes where it’s supposed to, will help keep you on target.
To build an effective budget you could:
1. List all your income and essential expenses, such as rent, utilities, council tax, food, and transport.
2. Think about what non-essentials you buy. Think carefully about what really is and isn’t essential.
3. Identify areas to cut back, such as eating out, subscriptions, unused memberships, or impulse purchases.
4. Allocate a fixed monthly savings amount and treat it like any other essential bill.
5. Track your spending using an app or spreadsheet. If you deviate from your budget at any point, think about why it happened. This will help you avoid doing it again.
Budgeting doesn’t mean giving up everything you enjoy. But it can help ensure your money supports your long-term goals.
Save on a regular basis
Consistency is the key to saving for a home deposit. Even small amounts add up over time if you save regularly.
Saving regularly can help by:
- Turning saving into a habit
- Keeping you focussed on your goal
- Helping you benefit from compound interest
- Removing the temptation to spend your money elsewhere.
Setting up a monthly standing order that pays money into your savings account is one of the easiest ways to achieve this. Treating your savings as you would any other bill can help make it feel like less of a strain.
A Lifetime ISA (LISA) can be useful if you’re saving for a house deposit. The government will top up your savings by 25%, up to a maximum of £1,000 per year, so it can significantly boost your total.
While LISAs have several benefits, they also have restrictions. Importantly, if you withdraw funds for anything other than your first home or retirement, you’ll incur a penalty.
Consider a dedicated savings account to compliment your LISA
Because of the annual contribution limit and withdrawal rules that come with LISAs, you may want to have an additional savings account alongside it. This can give you more flexibility, while ensuring you utilise the government bonus that comes with a LISA.
Having an additional savings account can:
- Help you to continue saving if you exceed the annual £4,000 LISA limit.
- Build a separate fund to help with related expenses, such as conveyancing fees or furniture.
- Keep your deposit savings organised and trackable.
- Potentially access your money if you need it for other purposes.
There are plenty of options to consider. You may want to explore everyday savings accounts, regular savers, or fixed term accounts, for example. Each can work well depending on your time frame and how long you’re comfortable locking away your money for.
How we can help you
Our House Deposit Savings Account could be just what you’re looking if you want to get on the housing ladder.
It pays a variable rate of interest on your overall balance, plus bonus interest on money you’ve saved in the current anniversary year, if you save regularly. We’ll even throw in a retail voucher when you buy your home. It also provides a way to save for your deposit if you’ve reached your LISA limit.
It’s open to anyone aged 18-35 who’s saving for a house deposit and allows you to save anywhere from £10 – £1,000 per month.
You may be buying your first home, or have owned a home before, but don’t anymore, so are looking to get back on the ladder. You can also open it by yourself or with someone else, if you prefer.
If that sounds interesting, head to the product page for more details, or contact us today to find out more. However you decide to save for your deposit, make sure you consider all the options carefully before you make any decisions. And if in doubt, speak to an independent financial adviser.
