How to raise a deposit for a house 

One of the challenges many people face when aiming to become a homeowner is saving up for a deposit. With the cost of living on the rise, rents going up, and property prices soaring, it can feel like quite a hurdle to overcome.

Saving for a deposit may require some discipline and effort, but the rewards of owning a home can be well worth it.

How much deposit do I need to save? 

In order to secure a mortgage, most lenders typically require a minimum deposit of 5% of the property value, although the total amount you’ll need to afford includes the remaining mortgage.

However, it’s important to note that the minimum deposit requirement may vary depending on factors such as the lender’s criteria, your credit score, and the specific property you’re interested in. For instance, certain properties may require larger deposits, and some customers, such as those with poor credit or residency-related considerations, may be asked for higher deposits as well.


On average, most lenders lend around 4.5 times the income. Therefore, for a property valued at £200,000, with a minimum deposit of 5% (£10,000), you would likely need an income of at least £42,222 in order to afford the 95% LTV mortgage.

Bigger deposit – Better rates 

Opting for a higher deposit can have its advantages when it comes to mortgage rates. While it’s possible to buy a property with as little as a 5% deposit, you may be eligible for better rates by putting down a larger deposit. Typically, mortgage rates tend to improve at certain loan-to-value (LTV) thresholds, such as 5%, 10%, 15%, and 25% deposits.

How to save for a deposit 

Saving for a deposit can seem like a daunting task, especially if you are a first time buyer, but having a plan in place and sticking to it is the key. One effective strategy is to create a budget planner that allows you to see how much you have left after paying your essential expenses each month. By tracking your income and expenses, you can identify areas where you can cut back on unnecessary spending habits.

Saving for a house deposit is an exciting goal, and there are several effective ways to save. Here are three popular options:

  • Lifetime ISA (LISA): A Lifetime ISA is a type of Individual Savings Account (ISA) available to first-time homebuyers in the UK. With a LISA, you can save up to £4,000 per year, and the government provides a 25% bonus on your contributions, up to a maximum of £1,000 per year. This means that if you save the maximum amount, you’ll receive an additional £1,000 from the government, which can significantly boost your savings. However, it’s worth noting that there are certain eligibility criteria and withdrawal rules associated with LISAs, so it’s important to carefully understand the terms and conditions before opening one.
  • Instant Access Savings Account: An instant access savings account is a traditional savings account that allows you to deposit and withdraw money whenever you want, without any penalties or restrictions. This type of account provides flexibility and easy access to your savings, which can be helpful if you need to use the funds for your deposit in the near future. Look for savings accounts that offer competitive interest rates to help your savings grow over time.
  • Regular Savings Account: A regular savings account is designed for savers who can commit to making regular monthly deposits. These accounts usually offer higher interest rates than standard savings accounts and can be a great way to save consistently over time. Some regular savings accounts may require you to maintain a certain minimum balance or have a linked current account with the same bank, so be sure to review the terms and conditions.

It’s important to consider your own financial situation and goals when choosing the best savings option for your house deposit. It’s also a good idea to compare interest rates, fees, and withdrawal restrictions across different accounts to ensure you’re getting the best possible savings plan for your needs.

Most common ways of saving for a deposit 

Here are the most common ways to save for a deposit.

  • Saving from salary: Setting aside a portion of your regular income each month into a dedicated savings account.
  • Second job: Taking on additional employment, such as freelancing or part-time jobs, to earn extra income specifically for your deposit savings.
  • Gift: Receiving a cash gift or direct contribution from a family member or friend towards your deposit savings.
  • Stocks and shares: Investing in stocks, shares, or other investment vehicles to potentially grow your savings faster.
  • Inheritance: Utilising an inheritance received from a family member or loved one to contribute towards your deposit savings.

It’s important to consider a combination of these methods that work best for your financial situation and always prioritize responsible saving and investment practices. Regularly reviewing and reassessing your progress towards your deposit savings goal can help you stay on track.

Speak to an Expert

Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.

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How to speed up the process of saving for a deposit 

Here are several strategies you can implement to accelerate your savings:

  • Move back with parents: If feasible, consider temporarily moving back in with your parents or family to reduce your living expenses. This can allow you to save a significant amount of money by cutting down on rent, utilities, and other living costs.
  • Get a lodger: If you have extra space in your current home, consider renting out a room to a lodger. This can provide you with additional rental income that can be directed towards your deposit savings.
  • Find a cheaper place to rent: Look for more affordable rental options that fit within your budget. This may involve downsizing to a smaller place, relocating to a less expensive area, or negotiating lower rent with your current landlord.
  • Cut down on discretionary expenses: Review your budget and identify areas where you can reduce discretionary spending, such as dining out, entertainment, or unnecessary subscriptions. Redirect those savings towards your deposit fund.
  • Increase your income: Consider taking on additional work, negotiating a pay rise or promotion, or pursuing side gigs to boost your income. The extra earnings can be allocated towards your deposit savings.
  • Set up an automatic savings plan: Automate your savings by setting up an automatic transfer from your checking account to your savings account each month. This can help you save consistently without having to rely solely on willpower.
  • Reduce debt: Pay off high-interest debts, such as credit card debts or personal loans, as they can eat into your savings. Redirect the funds you were using for debt payments towards your deposit savings once they are paid off.

Get some assistance with your deposit 

If you’re unable to save the traditional amounts required in your preferred time frames, there are some alternatives.

Here’s some information about various options related to deposit assistance for purchasing a home:

  • Gifted deposit: Some lenders may allow you to use a gifted deposit, where a family member or friend gifts you the money for your deposit. However, certain lenders may have specific requirements regarding the source and documentation of the gifted deposit.
  • Joint Borrower Sole Proprietor (JBSP) mortgage: This type of mortgage allows you to purchase a property with a co-borrower who is responsible for the mortgage repayments, but you become the sole owner of the property. This can be helpful if your co-borrower has a higher income or better credit history, which can increase your chances of securing a mortgage with a lower deposit.
  • Joint mortgage: You can also consider applying for a joint mortgage with a partner, family member, or friend. This allows you to combine your incomes and credit scores, potentially qualifying for a larger mortgage amount with a lower deposit requirement.
  • Personal loan for a deposit: While not as common, some lenders may allow you to use a personal loan as part of your deposit. However, it’s important to carefully consider the interest rates, repayment terms, and overall impact on your financial situation before opting for this option.
  • Shared Ownership: With shared ownership, you can purchase a percentage of a property (typically between 25% to 75%) and pay rent on the remaining share. This can require a lower deposit since you’re only putting down a deposit on the percentage of the property that you’re buying.
  • Concessionary purchase: In some cases, you may be able to purchase a property at a discounted price, known as a concessionary purchase. This can result in a lower deposit requirement, as the lender may base the deposit on the reduced purchase price.

A small amount can make a big difference 

When saving for a deposit, it’s important to remember that every pound you put in can have a significant impact on the property you can afford. 

For instance, if you’re aiming for a 5% deposit, each pound you save is effectively multiplied by 20. For example, with a £200,000 property, a £10,000 deposit would represent 5% of the total value. 

However, with a slightly higher deposit of £11,000, which is 5% of a £220,000 property, you could potentially afford a more expensive property. It’s crucial to consider the potential leverage of even small increases in your deposit amount. Of course, it’s also essential to ensure that you can comfortably afford the mortgage payments on the remaining balance. 

Do I need a deposit to remortgage?

When considering a remortgage, it’s important to note that you may not always need to contribute your own funds for a deposit. 

The equity in your property, which is the difference between the property’s value and the outstanding mortgage, can potentially be used as a deposit. 

This can be particularly beneficial if you have built up a significant amount of equity in your home over time. However, it’s worth noting that adding additional funds as a deposit can often result in more favorable deals and reduced monthly payments. 

Strive Mortgages ‘It’s never too early to reach out for advice’

It’s never too early to seek guidance from a mortgage broker, regardless of whether you’re a first-time buyer, a home mover, or an experienced investor looking to expand your portfolio. Our team of experts is here to assist you in developing a plan for the future and identifying the most effective ways to save for a deposit. We understand that everyone’s financial situation is unique, and we can provide tailored advice based on your specific needs and goals. 

For more info on raising a house deposit, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.