How long it takes to save up a deposit for a house is influenced by a number of factors including your income versus your outgoings, how much the type of property you want costs and whether you’re saving up alone or if you’ll have help.
According to data released last year by building society Nationwide, the average prospective home owner aims to save around 15% of their take-home salary to put towards a deposit. Therefore, if their goal was a 20% deposit, it would take an average of eight years to save up enough money.
Of course, that is not a one-size-fits all figure and there are plenty of ways to save up a deposit and get onto the property ladder sooner.
More often than not, the smallest deposit you can save is 5% of the property’s value, meaning you would need a mortgage loan for the remaining 95% of the property’s price. The relationship between the loan you would need to buy a place and the actual value of the property is called the loan-to-value ratio, or LTV.
Taking the UK’s average property price of £231,000 as an example, your 5% deposit would be £11,550. If you are able to put £500 aside every month, this would take you a couple of years to save.
Aside from closely reviewing your total income versus your outgoings and potentially implementing a budget, there are a number of key things you can do to help you save up a deposit more quickly:
Probably your biggest monthly expense, reducing your rent by moving somewhere more affordable could help you save up a deposit more quickly.
Alternatively, if your parents live close enough to where you work, could you move back in with them? Doing this could dramatically speed up the savings process.
With the Lifetime ISA (LISA), you can save up to £4,000 per tax year. The government then adds an annual 25% bonus on top. To get the bonus, you need to have saved for a minimum of one year, so do bear that in mind if you think you’ll need your funds sooner.
The Help to Buy ISA only allows you to save £2,400 per tax year (though you can save £3,400 in the first year you open the account). The government only pays you the 25% bonus when you withdraw the money to buy your first property.
The savings are all tax-free but there is a cap on how much of a bonus you can get.
If you can save up a 5% deposit, you might be able to use the Help to Buy Equity Loan scheme, where the government lends you up to 20% of the property’s value. The loan is interest-free for five years.
With Shared Ownership, you can purchase just 25% of a property (or a maximum of 75%) with a minimum 5% deposit. You’ll then pay the mortgage on the part you bought and pay rent on the rest.
There are a lot of caveats with these schemes, so be sure to do your research first.
Buying alone could hugely decelerate the saving process. If you can (and want to) buy with someone else, you can combine your savings and income and apply for a joint mortgage.
With larger funds at your disposal, you could get a cheaper mortgage deal (because of the bigger deposit) and even buy a more expensive property.
If you do not have anyone to buy a property with, would rather not owe money to the state as well as your mortgage lender, or do not want to live in a new build (one of the limitations of the aforementioned government schemes), you could ask a close family member if they could help you instead.
Perhaps they could contribute to your deposit – the average contribution currently stands at around £15,400 – or act as guarantors.
Any way you can boost your own income and savings will help you save a bigger deposit faster.
Although technically you may only need a 5% deposit, be wary of immediately opting for a 95% LTV mortgage just to get onto the property ladder, because you’ll likely pay a very high interest rate.
Interest rates on mortgages tend to drop significantly at the 85% LTV point (i.e. if you provide a deposit of 15%).
Bigger still, a report published by the Post Office last year showed the average first-time buyer has a 24% deposit (or £51,5000), though the amount this actually equates to varies wildly depending on where you buy: from £21,571 in Blackpool to £173,431 in London.
A 24% deposit – or rather 25% (LTVs change in 5% increments) – means you’ll only require a loan of 75% the property’s value, which in turn will lower your interest rate and make your monthly repayments more affordable.
Use an online calculator to work out how much you can borrow based on your income (and therefore how big a deposit you’d need), then speak to a mortgage broker to help you find a suitable mortgage.
You can technically buy a property without a deposit, but that does not mean that you should.
Rates on 100% LTV mortgages are high, meaning that a huge portion of your mortgage repayments will go towards paying off the interest rather than reducing the principal debt. Your monthly repayments will be higher which could make your day-to-day living a lot more difficult.
For example: when we looked in February 2019 for mortgages on a £200,000 property, the only two-year fixed-rate mortgage with a 100% LTV available was 4.19%, making the monthly payments £1,077. The same type of mortgage with a 75% LTV (requiring a £50,000 deposit) was just 1.55%, with monthly repayments of £805.
Over the course of the two years (and not counting set-up fees), the difference would be £11,376, though of course there’s the £50,000 difference between deposit amounts to consider!
Having no deposit at all could be another reason to opt for a guarantor or perhaps a family offset mortgage.
The Post Office research found that of all UK properties sold in 2017, 57% were in areas considered to be affordable for first-time-buyers.
It found 63% of people planning to buy needed to adjust their expectations about the location of their first home because of affordability issues. On average, new buyers can expect to move 5.2 miles from where they originally planned.
| County | City | Average house price | 1-year change | 20-year change | Average FTB income | Affordability ratio |
| London | London | £535,732 | +0% | +406% | £79,712 | 6.72 |
| Cambridgeshire | Cambridge | £430,000 | +2% | +409% | £52,643 | 8.17 |
| Surrey | Guildford | £430,000 | +2% | +339% | £56,429 | 7.62 |
| Oxfordshire | Oxford | £400,000 | +7% | +371% | £56,429 | 7.09 |
| Hertfordshire | Watford | £367,000 | +7% | +432% | £52,643 | 6.97 |
| Somerset | Bath | £320,000 | +5% | +357% | £45,004 | 7.11 |
| Kent | Maidstone | £295,000 | +8% | +296% | £56,429 | 5.23 |
| Warwickshire | Warwick | £289,950 | +4% | +303% | £41,024 | 7.07 |
| West Sussex | Worthing | £280,000 | +6% | +367% | £56,429 | 4.96 |
| Essex | Southend | £267,000 | +10% | +385% | £52,643 | 5.07 |
| Manchester | Trafford | £250,000 | +5% | +291% | £39,611 | 6.31 |
| Dorset | Bournemouth | £241,800 | +6% | +303% | £45,004 | 5.37 |
| North Yorkshire | York | £229,950 | +5% | +295% | £37,840 | 6.08 |
| Northants | Northampton | £195,000 | +8% | +275% | £39,834 | 4.90 |
| Norfolk | Norwich | £188,500 | +7% | +341% | £52,643 | 3.58 |
| Glamorgan | Cardiff | £185,000 | +3% | +230% | £36,963 | 5.01 |
| Cheshire | Warrington | £177,500 | +5% | +211% | £39,611 | 4.48 |
| Cambridgeshire | Peterborough | £172,500 | +5% | +283% | £52,643 | 3.28 |
| West Yorkshire | Leeds | £170,000 | +3% | +227% | £37,840 | 4.49 |
| Tyne & Wear | North Tyneside | £168,000 | +7% | +233% | £36,382 | 4.62 |
| West Midlands | Birmingham | £164,000 | +7% | +238% | £41,024 | 4.00 |
| Merseyside | Sefton | £164,000 | +3% | +201% | £39,611 | 4.14 |
| Shropshire | Telford | £162,000 | +1% | +224% | £41,024 | 3.95 |
| Leicestershire | Leicester | £157,000 | +9% | +293% | £39,834 | 3.94 |
| South Yorkshire | Sheffield | £150,000 | +5% | +228% | £37,840 | 3.96 |
| Derbyshire | Derby | £147,500 | +3% | +243% | £39,834 | 3.70 |
| Clwyd | Wrexham | £146,000 | +2% | +206% | £36,963 | 3.95 |
| County Durham | Stockton | £142,500 | +4% | +188% | £36,382 | 3.92 |
| Cumbria | Carlisle | £138,000 | +4% | +201% | £39,611 | 3.48 |
| East Yorkshire | Hull | £110,000 | +2% | +219% | £37,840 | 2.91 |
Source: Post Office Money research September 2018
If you are remortgaging your current property, chances are you will already have equity in it. In addition to the deposit you put down from when you initially bought the property, you’ll now own more because of your monthly payments (unless you’re on an interest-only mortgage). Plus, if your property has gone up in value, you’ll be able to add that amount to the deposit too when you come to remortgage.
All that means you should not have to wait to get your deposit, though much like when you first bought, you may encounter delays of the bureaucratic kind!
Edited by: Sarah Guershon
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Last updated: 8 August, 2019