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The ultimate guide to saving for a deposit

Lets face it, saving the money for a deposit is a huge challenge, but it is not impossible. How do I know?  Because my wife and I have saved to buy our own home and I want to show you how you can too.

This website will take you through all the steps in the home buying journey; from paying off debts and building up your savings, through to improving your credit rating and finding the best mortgage deals.

Whether you are a first time buyer or an existing home owner looking to move up the ladder, having a deposit is vital and the bigger your deposit the better.

So lets not waste any more time – here are the steps that will take you from home dreaming to home owning…

It all starts with a goal

Saving without a goal is like wandering aimlessly around a city without an end destination.  To plan your journey, you need to have a tangible and specific idea of where you want to end up and the same applies when saving for a house.

To define your goal, think about the following questions:

  • What sort of home do you want?
  • Where will it be located?
  • How much will it cost?
  • How much deposit (and other buying costs ) do you need for the mortgage?
  • How long will it realistically take to save the money?

BOOM! – there’s your savings goal.

Having a very specific, realistic and timely savings goal is really important, as it not only allows you to prioritise what you do with your money, but also motivates you to find ways of getting more money so that you can reach your goal quicker.

To help you create your goal, you can download this free Deposit Saving Action Plan (PDF).

Take control of your money

Setting a goal is a great achievement, but to ensure you achieve it the next step is to learn the basics of personal finance and take control of your money.

To begin with, can you answer the following questions:

How much do you earn each month (after tax)?

How much do you spend each month?

How much money do you owe in debts?

How much do you own in savings / investments?

The answers to these questions form a basic budget, which you can use to formulate a plan for achieving your property-owning goal.  The more detailed your budget, the better your plan will be.  For example knowing the breakdown of all your debts split between credit cards, unsecured loans, overdrafts, student loans, etc helps you to determine your getting-out-of-debt strategy. a key step in the deposit saving journey.

Once you are nicely organised and set up with a budget, it starts to become much easier to manage your money, find ways to clear your debts and grow your savings.

For more detailed reading on the principles of personal finance, take some time to read these articles:

Repay all your debts

Before you even put a penny into a savings account, you should carefully consider using the money to pay off your debts first.


Well there are two reasons:

Reason 1 – Interest paid out on a credit card or other debt is significantly higher than interest earned on savings, so it makes sense to clear debts before saving (and if you have both debts and savings, consider using the savings to repay a large chunk of the debt).

Reason 2 – Mortgage lenders prefer to lend to people without other debts, as they are perceived to be a safer risk. This means better interest

rates and lower monthly repayments on the mortgage.

So even if you have got a 0% interest credit card, you would still need to repay the debt before buying the house to be get a better mortgage deal – why not make it a priority before the 0% deal expires?

There is also a psychological effect gained from being debt free. It gives you a sense of satisfaction knowing you don’t owe money to anyone and that every penny you save going forward will help buy you a home.

This page provides a mini-index of debt repayment articles .

Save each month

Breaking the big challenge of saving for a deposit down into smaller, manageable chunks makes it easier to achieve.  The simplest way to do this is break your total savings target down into achievable monthly targets and then work hard each month to beat your target.

Another way to motivate yourself (especially if you are living with your parents whilst saving) is to create a phantom mortgage .  Here you live as if you are paying a mortgage and all the on-going home-ownership costs, but instead of the money going onto your bills, it goes into your savings or investment account.  Knowing the money is ring-fenced helps to stop you splurging on other things.

You also need to decide where to put your money whilst saving for your home .  Should you keep it in a savings account or would it be better in a stocks and shares ISA ?

Grow your personal profitability

Remember, personal profitability is the difference between what you earn and what you spend. Whether you are getting out of debt, saving for a property or saving for some other future goal, the higher your personal profitability, the faster you will get there.

A great way to cut your spending and boost the amount you are saving each month is to move back in with your parents (with their permission!), but if that is a bit too much for you all, then there are plenty of other cost-cutting money saving ideas and ways to avoid lifestyle bling .

Remember though that cost-cutting will always be limited by the amount you spend and some essential costs just cannot be avoided.  The secret is to also look at ways of growing your income through career progression, getting a new job or generating some sort of sideline income.

This page provides a mini-index of income-boosting articles .

Getting a mortgage

For almost all of us, this is what it all comes down to – getting a mortgage deal that enables you to buy the home you want and doesn’t cripple you financially.

Generally speaking the bigger your deposit in relation to the amount you want to borrow, the better the mortgage deal you will receive.  That’s the purpose of this site, to help you save as big a deposit as possible.  However there are other factors to consider; such as your credit rating, your employment status and even the type of property that you want to buy, which will all impact your ability to get a mortgage .

The first port of call is to view this slideshow explaining the different types of mortgage available .  Also when you are applying for a mortgage these commonly asked questions are bound to be asked, so it is good to have all your answers and paperwork prepared in advance.

First time buyers guide

The house buying process is never straightforward and can be very daunting for first-time buyers.  This guide takes you through all the steps in the process, from selecting a home to buy through to making an offer and completing the deal.

Category: Bank

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