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How much do you need to save for a house deposit

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Moving house is said to be one of the most stressful experiences in anyone’s life, but saving up for the deposit isn’t far off. When buying a house, you’ll not just need to get a mortgage, but you will also need a deposit, so how much do you need to save for a house deposit?  All mortgages require a deposit – this can determine whether you’re approved and the amount of interest you pay on the loan.Whether you are moving for the first, second, third or even fourth time; it can be difficult knowing exactly how much you should save.

Understanding the deposit

The main thing to learn about the deposit is that the more you pay, the better off you will be in the long run. This is because not only will you be paying off a lump sum of the mortgage, but you’ll also receive a more competitive mortgage deal.

A large deposit means you’ll own a portion of your home right from the start. This gives the lender some confidence that you are going to meet the rest of your repayments. As such, they’re likely reward you by offering you a competitive deal, meaning you could save hundreds of pounds a month simply by paying a large deposit amount.

How much should you be saving?

Generally speaking if you want a good deal you will need to pay around 25% of the value of the home. However, there are some lenders who won’t give you the best deals unless you pay a deposit worth 30%-40% of the home value.With low interest rates on savings and house prices on the rise, this sum of money is out of the question for most people, with even 25% being a struggle for many people to save up.

house deposit

If you want to know exactly what type of deals you can expect, it’s advisable to use a mortgage deposit calculator. You’ll need to input the house value, the deposit percentage you want to pay and how much you currently have saved. You can then say when the deposit will be needed by and the calculator will tell you how much you’ll need to save in order to achieve your goal.

Don’t forget that these calculators are only there are a general guideline – the actual amount you will need may vary depending upon your circumstances.

90% mortgages

The most popular type of mortgages for first time buyers are 90% ones, as they only require a 10% deposit. The only downside to this type of mortgage is that they are hard to acquire and tend to have much higher interest rates.

However, despite the cons, a 90% mortgage can be one of the best ways to get onto the property ladder if you don’t have much chance to save. Just remember, you will be paying the price in the long term.

In general, you should be aiming for at least a 25% if you want to get a market-leading deal, but the more you can save towards your deposit, the better off you will be.



About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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