Saving for your first home can feel overwhelming, but plenty of mortgage lenders only require a 5% deposit these days – so getting your foot on the property ladder could be more achievable than you think. Here’s our guide to help you save.
What is a mortgage deposit?
When you buy a home, you almost always need to put down a lump sum upfront – this is your deposit. It’s usually expressed as a percentage of the property price, and forms what’s known as your equity.
You’ll then need to take out a mortgage to cover the remainder of the purchase price. This is a large, long-term loan that’s paid back, with interest, in monthly instalments over a set number of years.
So, for example, if you put down a 5% deposit, you’ll have 5% equity in the property at the outset and the remaining 95% will be covered by your mortgage.
Find out what first-time buyer mortgages might be available to you
How big does my deposit need to be?
While there are a couple of 100% mortgages available, most people need a deposit of at least 5%. But if you’re able to save more than this, it’s a good idea to do so.
A larger deposit not only means a smaller mortgage, but – usually – lower interest rates and access to better mortgage deals. That’s because, with more equity in your home from the outset, you’re seen as less of a risk to your mortgage lender.
You’re also less likely to fall into negative equity, where you owe more on your home than it’s worth, if you put down a decent deposit at the outset.
Generally speaking, each additional 5% gives you access to better mortgage deals.
How to save for a mortgage deposit
Getting the money together for a decent deposit may seem like a mountain to climb, but with a clear and realistic figure in mind – and a few sacrifices here and there – it is achievable. Start saving as soon as you can.
Even if buying a home is not yet on the horizon, saving just a little over a few years can start to add up. And when you start saving for a deposit more seriously, even small changes can make a difference to your savings pot.
Here are a few tips on how to make saving for a mortgage deposit a little easier:
Cut the cost of your rent – if moving back in with your parents isn’t an option, consider flat-sharing, short-term house sitting or moving to a smaller, cheaper place.
Shop around – it’s worth comparing essentials such as broadband and mobile phone packages to see if you can find cheaper deals.
Pay for insurance upfront – paying for your car insurance monthly means you’ll be charged interest. It could add as much as 10% to your premiums compared to paying annually, so pay upfront if you can.
Cancel unused subscriptions – if you’re not using your gym membership or streaming services enough to justify the cost, cancel them.
Cut down on everyday spending – take advantage of supermarket offers and limit treats such as takeaways, nights out and clothes shopping sprees to every now and again.
Use a savings/budgeting app – these can be great for tracking your spending, setting a budget and piggy-banking your spare cash instead of spending it. You can then transfer what you’ve saved to a lifetime ISA or high-interest current account.
Make extra money – boost your income with a part-time job or ‘side hustle’ selling your stuff on platforms like eBay, Gumtree and Facebook Marketplace.
Keep an eye on your savings – some old savings accounts pay barely any interest. Have a look around and see if you can find a better interest rate and make your money work harder.
Are there any schemes that can help me save for a mortgage deposit?
Whether you’re aiming for a 5%, 10% or 20% deposit, it’s a lot of money to pull together. But there are government schemes designed to help you achieve your dream of home ownership. Look out for:
Lifetime ISA
A Lifetime ISA, also known as a LISA, is a tax-free way to save for a deposit that also gives you a bonus from the government. You can pay up to £4,000 per year into a LISA and the government will give you a 25% bonus (up to a maximum of £1,000 per year).
LISAs are designed to help people buy their first property – which currently must cost less than £450,000 – then continue saving towards a pension, if they want. If the money is used for something other than buying your first home or you withdraw it before you’re 60 (unless you’re terminally ill), you’ll pay a 25% penalty on the withdrawal.
You can only open a LISA if you’re aged between 18 and 39.
See more on using a Lifetime ISA to buy a home.
Right to Buy/right to acquire
This gives qualifying tenants who rent from their council or local housing association the right to buy their home.
Shared ownership
Allows you to jointly own a property with a landlord – usually a council or housing association. You’ll only need a mortgage for your share and you’ll pay rent at a discounted rate on the share owned by the landlord.
First Homes scheme
Designed to help first-time buyers and key workers onto the property ladder. Homes are offered at a discount of 30% to 50% off the market price. The property value, after discount, must be no more than £250,000 (£420,000 in London).
Affordable home ownership schemes in Scotland, Wales and Northern Ireland are slightly different to those in England.
How much is a property likely to cost me?
When we checked in July 2025, the average property price in the UK was around £265,000.
According to the Land Registry's UK House Price Index for April 2025, that splits down like so:
£286,000 in England
£210,000 in Wales
£191,000 in Scotland
£185,000 in Northern Ireland.
FAQs
What if I have money in a Help to Buy ISA?
The Government’s Help to Buy ISA scheme, which gave first-time buyers the chance to boost their mortgage savings by 25%, closed on 30 November 2019. If you opened and deposited money into a Help to Buy ISA before then, don’t panic – you have until 1 December 2030 to claim your Government bonus.
How long do I have to save money in a Lifetime ISA before I can use it towards my deposit?
You must buy the property at least 12 months after you make your first payment into the Lifetime ISA. This gives the government the chance to add the bonus to your account. So, if you’re planning on buying a home sooner than a year, a Lifetime ISA may not be the right kind of savings account for you.
I'm buying a property with my partner. Can we each use our Lifetime ISA for the deposit?
Yes, if the person you’re buying your first home with has a Lifetime ISA, they can use their savings and government bonus too.
I have a Help to Buy ISA and a Lifetime ISA. Can I use the bonus from both for my deposit?
No. If you have a Lifetime ISA and a Help to Buy ISA, you can only use the government bonus from one of them to buy your first home.
You can transfer money from a Help to Buy ISA to a Lifetime ISA. If you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay the 25% withdrawal charge. But don’t forget you can continue to use the Lifetime ISA to save towards your pension, if that makes sense for you financially.
Is a fixed rate bond a good way of saving for a mortgage?
If you’re happy to lock your money away for a set period, it might be worth considering a fixed rate bond (or term account). Fixed rate bonds are unsuitable for regular savings, but they can be used to invest a lump sum that you’ve already built up. Usually, the longer you’re willing to set your money aside, the higher rate of interest you’ll get. Be sure to check the terms and conditions for any minimum or maximum deposits.
Also be aware that if the Bank of England base rate rises, interest rates on savings accounts usually will too. If you have a fixed-rate bond, you won’t be able to move your funds to another account to take advantage of this. But you should be protected from any fall in the Bank of England base rate.
What about saving with an instant access savings account or a current account?
You could save for a mortgage deposit using an instant access savings account. While the interest rates won’t be as good as a fixed term account, you’ll have instant access to your money if you need it. Plus, minimum deposits are likely to be a lot lower (often just £1).
Some banks pay high rates of interest on current account balances (up to a set level), so you might want to consider saving via a current account.
Can I get a loan to cover my deposit?
Getting a personal loan to cover your deposit might seem like an easy option, but it’s not the best idea. Don’t forget, your mortgage is a type of loan, so paying for your deposit with another loan makes things very complicated.
When you apply for a mortgage your lender will look at your credit history, which will show if you have any outstanding loans. They’re unlikely to accept you if they think you’re unable to save for the deposit yourself.
Looking for something else?
With over 10 years’ experience writing, editing and managing content, Emma has written and edited for some of Australia’s leading financial comparison brands, including Savings.com.au, Your Investment Property Magazine, and Your Mortgage.
Ele Clark is an award-winning editor who has held leadership roles at Which? and news-stand publications in London and Dubai. She’s appeared across the press and media, including BBC’s Panorama. With almost 20 years’ experience in personal finance, insurance and consumer journalism, she leads a talented team at Compare the Market, creating insightful, accessible content to help people make informed financial decisions.
Sajni is passionate about finding money products to help you make great financial decisions. She keeps track of the latest trends and evolving markets to find new ways to help you save money.
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What our expert says...
“There aren’t any shortcuts when it comes to saving for a mortgage deposit. But being savvy about where you keep your money and taking advantage of government saving schemes can make your money work harder. It will all be worth it when you’re the proud owner of your first home.”