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How to save for a mortgage deposit

Saving up for a deposit is one of the first milestones to buying your first home. Your deposit is a portion of the overall property price that you’ll pay upfront. It can impact things like the interest rate and mortgage deal your lender will offer. That’s why it’s important to start saving for a deposit as soon as possible.

Check out the three steps to follow when saving for a deposit and get tips on how to save for a mortgage with us.

Step 1.

Work out how much deposit you need

Usually, when saving for a mortgage deposit, the bigger the better. Lenders might see you as less risky, and you might get access to better mortgage deals at a lower rate. But most lenders need a deposit ranging from 5% to 20% of the purchase price.

Once you know the amount of deposit you need, you can work out a plan to raise the money. Our handy mortgage calculators will help you work out how much you could borrow based on the deposit you have. Adjust the deposit amount to see what different amounts could mean for your deal.
 

Use our mortgage calculator

Step 2.

Weigh up your mortgage deposit options

Having a clear and realistic plan can make saving for a deposit feel much more achievable. Weighing up the different options available can help you work out just how much to save.

Here’s some of the mortgage options to consider.

Lower deposit

Thanks to the government’s Mortgage Guarantee Scheme, you might not have to save a large deposit to get on the property ladder. A 95% mortgage could mean you only need to save a 5% deposit.

Gifted deposit

Has a family member offered to gift you part or all of your deposit? Make sure you factor this into your goal, so you know exactly how much you still need to save.

You’ll need it in writing that you don’t have to pay the money back, and that the person doesn’t have a stake in your property. You can do this through a gifted deposit letter.

Shared ownership

Shared ownership is another housing scheme that lets you buy a share of your new home and pay rent on the rest. As you’ll only pay a mortgage on your share of the property, your deposit may be lower than if you were buying it outright.

You can then choose to buy the rest of your home when you can afford it.

First Homes Scheme

If you’re a first time buyer, you may also qualify for the government’s First Homes scheme. This can help you buy a new build property in England at a discounted price. If you qualify, this can help bring down the amount you’ll have to save for a deposit.

Learn more about the government housing schemes available.

Step 3.

Start saving for a mortgage deposit

Now you’ve calculated how much deposit to save, it’s time to think about where to save it. You might want to set up a savings account that you use just for your mortgage deposit. This will help you separate your long-term financial goals from your immediate wants and needs.

ISAs can also offer a tax-free saving option. With the government Lifetime ISA scheme you can boost your deposit savings with a 25% bonus, up to £1,000 a year. While we don’t offer a Lifetime ISA at Halifax, we do have other ISAs that might be useful.

Mortgage deposit saving tips

Saving for a mortgage can feel like a challenge, but there are tips you can try to help you reach your deposit goal.

Try to cut down on everyday spending

Making small changes to your everyday spending could have a positive change on how much you save over time. Look at your spending insights to see where your money goes each month and look for things you could cut back on.

Use our budget calculator to build out your new spending and saving habits. Maybe it’s as simple as ending memberships you no longer use or setting yourself smaller budgets for dining out and shopping. The 50 30 20 rule could help you work out how much to save.

Make it easy to save

Look for ways to take the stress out of saving money. You could set up a standing order just after pay day, so you automatically transfer money into your savings. If you bank with Halifax, you can also switch on the Save the Change® feature. That way, when you spend using your Halifax debit card, we’ll round up the amount to the nearest pound and put the change in your Halifax savings account.

See if you can reduce your bills

Reducing your bills will help you free up some money to put towards your deposit. Shop around for cheaper mobile and broadband packages. See if you could switch your energy bills to cheaper tariffs and cancel any unused music and TV subscriptions.

Look for ways to make extra money

Increasing your income could mean more money to put to your savings, without impacting your current spending habits. You could sell things you no longer need or look for a side hustle or part-time job that would give you a second income – as long as your employer agrees. Just make sure to submit a self-assessment tax return if needed for any extra income you make.

Make your savings work harder

When was the last time you checked the interest rate on your savings? If your original term has ended, you might be able to renew and get a better rate. Compare your current savings account with other options that might work better for you.

Looking for more ideas? Check out some of our other money saving tips.

Ready to start saving for your deposit?

Why not open a savings account just for your mortgage deposit?

That way, you can easily keep track of what you’ve saved so far and how much more you might need to save.
 

Find a savings account

Frequently asked questions

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