How to Save Money to Buy a House in the UK

Buying your first home in the UK is one of the biggest financial goals you'll ever set,  but with average house prices sitting at around £285,000 nationally (and over £510,000 in London), it can feel overwhelming. Thankfully, with the right strategy, savings accounts, and government schemes, buying your first home in the UK is achievable.

How much do you actually need to save?

Before you start saving, you need a target. Most UK lenders require a minimum deposit of 5–10% of the property's purchase price.

On a £250,000 property, a 5% deposit is £12,500, a 10% deposit is £25,000, a 15% deposit is £37,500, and a 20% deposit is £50,000.

Usually, a larger deposit unlocks better mortgage interest rates and lower monthly repayments. The difference between a 5% and a 25% deposit can save you as much as £52,900 in interest over the life of your mortgage.

Beyond the deposit itself, budget an additional £2,000–£5,000 for legal fees, surveys, and stamp duty.

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How much time do you need?

It depends on how aggressively you save. For a £25,000 deposit, saving £500 per month takes around 50 months (just over 4 years), while saving £1,000 per month cuts that down to 25 months (just over 2 years).

The key is to set a clear monthly savings target and stick to it consistently.

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1. Open the right savings account

Where you keep your money matters enormously. Not all savings accounts are equal, and parking your deposit fund in a basic current account is a costly mistake.

Lifetime ISA (LISA)

The Lifetime ISA is arguably the best savings vehicle available to first-time buyers in the UK. A Lifetime ISA is a tax-free savings account where you can pay in up to £4,000 per tax year, and the government adds a 25% bonus on top,  up to £1,000 per year.

Funds in a LISA can be used towards the purchase of a first home, subject to certain conditions including price limits and the property being in the UK.

If you save £4,000 per year for 5 years, you will have £20,000 saved plus £5,000 in government bonuses,  giving you a £25,000 deposit. That is essentially free money you would be leaving on the table if you didn't use one.

You must be between 18 and 39 to open a LISA, and the property must cost no more than £450,000.

High-interest savings accounts and cash ISAs

One approach is to keep part of your deposit in an easy-access savings account for flexibility, while placing the rest in accounts that may offer higher returns such as ISAs. This way, you earn more interest while still having access to funds in an emergency.

2. Budget intentionally

Saving for a house requires treating your finances like a business. That means knowing exactly where your money goes each month.

Using banking apps, budgeting tools, or simple spreadsheets can provide a clearer picture of everyday spending. Categorising transactions might highlight areas where small adjustments could free up extra money for a deposit, and ongoing tracking makes it easier to see whether spending aligns with your chosen budget.

Even saving an extra £200–£300 per month makes a significant difference over two to three years.

3. Take advantage of government schemes

The UK government offers several schemes specifically designed to help people buy their first home. Many first-time buyers are unaware these exist or think they won't qualify — but it is worth checking every one.

Shared ownership

Shared Ownership allows buyers to purchase a share of a home, typically between 10% and 75%,  and pay rent on the remaining share. This significantly reduces the deposit needed, since you are only buying a portion of the property. Over time, you can buy additional shares (known as "staircasing") until you own the property outright.

First homes scheme

The First Homes Scheme is available in England and allows first-time buyers — including some key workers — to purchase certain new-build homes at a discount of at least 30% below market value. Local authorities can require even higher discounts than the national minimum. This directly reduces the deposit you need to save, since you are paying less for the property.

Mortgage guarantee scheme

The Mortgage Guarantee Scheme supports lenders who offer 95% LTV mortgages, which means you only need a 5% deposit to qualify. A permanent version of the scheme has been announced for 2026, with availability dependent on specific lenders.

Right to buy

If you are a council or housing association tenant, the Right to Buy scheme may allow you to purchase your home at a substantial discount. Some lenders will even allow you to use your Right to Buy discount as your deposit.

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4. Understand stamp duty

Stamp Duty Land Tax (SDLT) is a cost many first-time buyers underestimate. It is important to factor it into your total savings target.

First-time buyers pay no Stamp Duty on the first £300,000 of a property's purchase price, provided the property costs £500,000 or less.

Since April 2025, the temporary stamp duty relief that allowed first-time buyers to pay no stamp duty on properties up to £425,000 has ended. The threshold has reverted to £300,000, and first-time buyers across the UK have already paid an estimated £307 million more in stamp duty as a result.

This means if you are buying a property above £300,000, you need to budget for stamp duty on top of your deposit. There are no further changes to stamp duty rates expected in 2026.

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5. Increase your income 

Saving faster is not just about spending less,  it is also about earning more and reducing the financial drag of existing debt.

Consider:

• Taking on freelance, contract, or part-time work alongside your main job
• Selling items you no longer need on eBay, Vinted, or Facebook Marketplace
• Asking for a pay rise or pursuing a higher-paying role;  even a £3,000 salary increase can meaningfully accelerate your savings timeline
• Paying off high-interest debts such as credit cards first, since the interest charges eat into your saving potential

6. Consider your location 

Location is one of the most powerful levers in your home-buying journey. The average UK house price in early 2026 is approximately £285,000, with England at £305,000 and London at £510,000,  but prices vary dramatically by region.

Buying in a more affordable region,  or even a commuter town rather than a city centre,  can cut the deposit you need by tens of thousands of pounds. Many buyers find that adjusting their target location by even 10–20 miles opens up vastly more affordable options.

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7. Protect your credit score

Your mortgage rate,  and whether you get approved at all,  depends heavily on your credit score. Start building yours now, well before you apply.

Key steps include registering on the electoral roll, paying all bills on time, keeping credit card utilisation low, and avoiding multiple credit applications in a short period. The Bank of England base rate currently sits at 3.75%, the lowest since spring 2023, with further cuts anticipated in 2026, meaning competitive mortgage products are becoming more accessible to first-time buyers.

A great action plan will look like:

• Opening a Lifetime ISA immediately and max out your £4,000 annual contribution.
• Setting a monthly savings target and automate it on payday
• Tracking your spending and identify areas to cut back
• Researching  Shared Ownership, First Homes, and the Mortgage Guarantee Scheme
• Budgeting for stamp duty, legal fees, and surveys on top of your deposit
• Considering more affordable locations if London or major cities are stretching your budget
• Building  your credit score well in advance of applying for a mortgage