How to save for a house deposit

Deciding to buy a house can seem overwhelming at times, with many people worried about how they will be able to save for a deposit. However, having a plan in place with realistic goals can help make the dream of home-ownership become a reality. At Chorley Building Society, we look at all our mortgage applications on case by case basis so we encourage anyone thinking about buying a home to talk to us about it. We are keen to offer a flexible approach which means we will consider each applicants individual circumstances rather than a computer making the decision.

First steps to saving successfully
First of all, you need to understand how much money you may need to save for a house deposit. Use websites such as Rightmove and Zoopla to see how much properties cost in your area. In general, the amount of deposit needed is worked out as a percentage of the value of the house you want to buy. The mortgage is then based on the amount left and that is what you need to borrow. As an example if the house you wanted to buy cost £200,000 and you had £20,000 as a deposit, you would require a 90% LTV mortgage as you would need to borrow £180,000.

As a guide, in 2020 the average deposit paid in the North was £29,563 and in London was £130,357.*

Once you know how much you need to save, it’s much easier to put steps in place and focus on a plan to achieve this.

*Halifax, 12 months to December 2020, UK Finance

But once you know how much you need to save, is saving for a house deposit difficult?
As a first-time home buyer you can make several changes and take proactive steps to make saving for your house deposit a reality.

In this guide to saving for a house deposit we will look at:

  • Reviewing your living situation
  • ‘Cash in the Attic’
  • Everyday spending
  • Cashback
  • Growing your savings

Review your living situation to maximise savings
If you’re currently renting you could consider making one of two changes to your living situation: moving into shared accommodation or living with family.

While these options aren’t viable for a lot of people, they are one of the most effective ways of saving for a house deposit.

Shared accommodation means you’d move in with a group of people – who may even be in the same situation as you! You can look for shared accommodation opportunities online or get a group of your own friends together to share rented accommodation. Shared accommodation gives you the opportunity to reduce your living costs across the board, splitting rent, utility bills, council tax, and even food costs!

If we look at average living costs outside of Manchester city centre for one person, we can see basic cost breakdowns:

Living Expense Monthly Cost
1 bed flat rental £541.04*
Council band B £117.04
Utility bills £65**
Internet £30
Food £100
TV license £39.75
Total monthly cost: £892.83



Now, if we considered a shared accommodation for 3 people in the same area:

Living Expense Monthly Cost Total Individual Monthly Cost
3 bed rental £890.74 £296.91
Council band B £117.04 £39
Utility bills £101.75** £33.92
Internet £30 £10
Food £256 £85
TV license £39.75 £13.25
Total monthly cost: £478.08



That’s a massive saving of £414.75 a month, and nearly £5,000 over the year!

If shared accommodation is a viable option for yourself, it’s an incredibly effective way to save for a house deposit.

Another option is to move in (or move back in) with family.

While it may seem a step backwards to move back in with parents or guardians, it is an effective way to save up cash for your first house deposit. If it’s something you could see yourself doing for even just a year, you’ll be able to add a healthy amount to that savings account!

Do you have ‘Cash in the Attic’?
A recent survey by Ebay says the average household has £2600 worth of unwanted goods stored away. Some of the most popular items that many people have and no longer use are old smart phones, gym equipment, tents and kitchen goods such as bread makers and mixers.
Selling some of your old items that you no longer use on sites such as Ebay, Gumtree or Shpock can certainly help towards building that deposit for a home.

If you’re already a seasoned second-hand seller, you could even consider spending time finding rare gems in local charity and vintage shops to resell yourself online for a profit. You’d be amazed by what you could achieve in a weekend!

Turn everyday spending into everyday savings
It often comes as a surprise to some people how much they are spending on everyday items.

A good place to start is to have a look at your bank account and see what you spend every week.

How much is the weekly takeaway costing? How many times a week do you stop for coffee and a croissant on the way to work? Are you using your gym membership to its fullest?

A review of your outgoings will help identify any cost savings and where you can make changes.

For example, if you treat yourself to a Costa coffee and croissant twice a week:
1 medium americano x2 times a week = £2.95 x 2 = £5.90
1 all butter croissant x2 times a week = £2 x 2 = £4
Total weekly spend = £9.90
Total monthly spend = £39.60
Total yearly spend = £475.20

While £475.20 might not seem like a lot in the grand scheme of house deposit savings, that money could cover most of the cost of your home buyer survey!

Another example would be if you only manage to make it to the gym once a week. Can you take part in a couple of YouTube free online classes instead or switch to a lower cost fitness app?

For many of us there are lots of ways we can cut down on our outgoings to make savings if we take the time to review and plan ahead.

Regular Savings Accounts
Using a regular saver account is a good way of building up the little extras that you manage to save following a review of your spending.

If you don’t want to commit to saving a specific amount every month you may want to consider an automatic savings app.

Autosaving apps are designed to help you save some of your money, without you noticing. There are different types of app with most either ‘rounding-up’ your purchases to the nearest pound and saving the change in an account for you. Also available are apps that calculate how much you can afford to save each week and automatically moves money into a savings account. A few of the most popular apps are Plum, Moneybox and Chip.

Use cashback sites
Cashback sites work by giving you money back on the items that you are likely to have spent money on anyway.

This could be anything from your weekly grocery shop to a new mobile phone contract and can vary from a few pennies up to 15% of your original purchase price.

Two of the largest cashback sites are Quidco and Topcashback. However, be aware that it can take some time for the cashback to reach you, so do not plan on having the money available straight away.

If you do use a cashback site, our top tip would be to set up your account to ensure withdrawals go straight to your savings account.

Generally, cashback will be paid into your online cashback account which you then need to withdraw. Making sure these withdrawals go into the savings account for your house deposit not only means that you’ll gain a higher interest on the money but also won’t be tempted to spend it from your current account.

How to look after your growing house deposit savings
If you follow some of our savings tips, you will start to see your deposit build for your first home.

It is important to maximise your savings pot and having the right savings account for your house deposit, is one way to do this. To find out how Chorley Building Society can help you save for your dream home visit our website or give one of savings team a call on 01257 235003.

Take a look at our guide detailing the current Government help schemes, available to those looking to take their first steps on the mortgage ladder. Click here to view the guide

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