How to set up a regular savings plan for a house deposit

Setting up a regular savings plan involves breaking down the specific budget for a home you wish to pursue and how much of that budget you’d like to build as a house deposit (lenders usually accept anywhere between 5 and 25%). Saving 5 to 10% of your monthly take-home pay in a regular system, perhaps aided by an automatic standing order, can help consistently build towards your savings goals.

How much should you save each month?

Many people note it can be helpful to try and save anywhere between 5 to 10% of your monthly take-home pay to specifically put towards a housing deposit. Some people may find they can afford to push beyond this, however, setting this achievably low figure can help maintain savings consistently and ultimately lead towards a steadier route to achieving your goals, instead of intermittently putting away inconsistent lump sums when you can.

Set a deposit target and timeframe

Many lenders in the UK will look for a deposit level anywhere between 5 to 25% of the overall purchase price, with higher deposits generally affording access to the most attractive mortgage rates. Over the course of a few months, you can observe how much money you’re consistently able to save at an achievable level and compare this with the level of deposit you ultimately aim to save in order to calculate how long it will take you to build up to that figure.

Choose where to keep the deposit

Many people find that the ability to make regular deposits at their convenience makes an easy access savings account a good place to keep their deposit savings, as they allow for a flexibility that notice or fixed-rate bond accounts don’t offer. That said, savers with a longer-term timeline before they reach their deposit goal may want to explore fixed-rate bonds, as they can offer competitive compounding potential across longer time spans and grow their money at an effective rate for saving towards a housing deposit.

Check whether a Lifetime ISA could help with your house deposit savings plan

The UK Government offers the unique LISA scheme, also known as a Lifetime ISA. This is a unique savings account which can be used to help first-time home buyers purchase a property up to the value of £450,000. An account owner can deposit up to £4,000 annually and receives a yearly bonus of 25% (up to £1,000) onto this deposit, subsidised by the government. In this way, a LISA can be an effective way of building up tax-free* savings through The Government’s incentive bonus cash year after year. These accounts are open to UK residents aged 18 to 39, so making the most of them as soon as possible can help.

Make regular saving easier

One way many savers make their savings habit easier is by setting up a standing order each month, routed to their savings account of choice, to automate the process and remove the manual management needed when budgeting every month. Setting a low starting amount makes it very achievable to keep this standing order running every month, and indeed it can be tweaked higher or lower depending on how much excess funds or additional expenses you may have upcoming in the future.

How to set up a regular savings plan for a house deposit

To summarise:

• It can be beneficial to try and save between 5 and 10% of your monthly take-home pay to put directly towards your housing deposit.
• Deciding your housing budget and the percentage of deposit you wish to build up to can then be a useful next step.
• UK lenders will usually lend on anywhere between a 5 and 25% deposit on a home’s overall purchase price, with the better mortgage rates usually reserved for higher deposit ratios.
• Easy access savings accounts can suit accounts receiving regular small payments, whereas long-term savings may be better suited in lump sums with fixed-term bonds.
• The government LISA scheme can prove beneficial to young savers wishing to build up bonus cash on their tax-free* savings.

Frequently asked questions

How long does it take to save for a home?

This depends on the amount you set aside each month and your earnings relative to the house budget you’re looking at. Making a house deposit savings plan to see how much you want to build up to and how much you can afford to save each month can be a solid way of determining this timescale.

Does the highest savings rate always mean the best account?

Factors like accessibility, minimum opening amounts, maximum deposit limits, special conditions or account fees can also prove helpful when choosing a savings account which best suits your needs. The highest savings rate is just another one of these factors which is worth considering before making a decision.

Are savings protected by the FSCS?

The FSCS protects eligible savings up to £120,000 per banking licence. This means that if two banks share the same licence, they’ll also share the same overall £120,000 protection total.

Can savings rates change?

Many savings accounts will be subject to variable interest rates and are so subject to change. These changes are generally guided by the key rate set by the Bank of England to control inflation, so keeping informed on the key rate can be helpful.

What is a Lifetime ISA?

A LISA is a government-backed savings scheme which can help savers build up towards their first house purchase. They offer a cash bonus of 25% of an annual account deposit (up to £1,000) and can go towards buying a first home up to £450,000 in value.

How often should I review my savings?

Reviewing your savings every 3 to 6 months can be a good way to ensure you’re still receiving competitive interest rates, as well as to revisit your personal savings goals to make sure your plans align with your financial future.

Next steps

If you’re looking for further information on regular savings, click below:

Regular Savings Account

Savings Products

Saving Little and Often: How Small Savings Add Up

Saving for short-term vs long-term goals: which accounts could suit you

^*Tax treatment depends on an individual’s circumstances and may be subject to change in the future.

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