Saving for a house deposit is one of the biggest challenges for people planning to buy their first property. Before applying for a mortgage, it is important to understand how much money you may need, how your deposit affects borrowing and what additional expenses you should budget for.

The amount required depends on the property's purchase price, the mortgage product and the lender's criteria. In the UK, some mortgages are available with deposits starting at around 5% of the property value, although eligibility and terms vary. A larger deposit may also provide access to a wider choice of mortgage deals.

By planning your savings and understanding the costs involved, you can take practical steps towards purchasing your first home.

1. Understand How Much Deposit You May Need

Your deposit is the amount of money you contribute towards the property's purchase price. You borrow the remaining amount through a mortgage, subject to the lender's approval.

For example, if you are considering a property worth £200,000, your deposit could look like this:

• 5% deposit: £10,000

• 10% deposit: £20,000

• 15% deposit: £30,000

• 20% deposit: £40,000

These figures are illustrative examples. The deposit you need will depend on the mortgage available to you and your financial circumstances.

Before deciding how much to save, research properties within your budget and estimate the deposit required for different purchase prices. This will help you establish a realistic savings target.

2. Know How Your Deposit Affects Your Mortgage

The size of your deposit influences the amount you need to borrow. It also determines your loan-to-value ratio, commonly known as LTV.

LTV represents the mortgage amount as a percentage of the property's value. For example, if you purchase a £200,000 home with a £20,000 deposit, you would need a £180,000 mortgage. This represents a 90% LTV.

A lower LTV may help you access more competitive mortgage rates, depending on the lender and product. However, a larger deposit does not automatically guarantee mortgage approval or the lowest available interest rate. Your income, credit history and other financial commitments may also affect the decision.

Compare mortgage products carefully to understand how different deposit amounts could affect your monthly repayments and overall borrowing costs.

3. Create a Realistic Deposit Savings Plan

Saving for a deposit can take time, particularly when you are also paying rent, household bills and everyday expenses. Setting a clear savings target can make the process easier to manage.

Start by reviewing your income and monthly spending. Identify expenses you could reduce without affecting essential needs, then decide how much you can regularly set aside.

For example, if your target deposit is £15,000 and you have already saved £3,000, you need another £12,000. Saving £500 each month would take approximately 24 months to reach that target, excluding any interest earned or changes in your savings.

You can make progress by arranging a regular transfer into a dedicated savings account after payday. Review your progress every few months and adjust your target if your income, expenses or property plans change.

The important point is to choose a savings amount you can sustain rather than committing to an unrealistic target.

4. Consider Whether a Larger Deposit Is Worth Waiting For

A larger deposit may reduce the amount you need to borrow and could provide access to mortgage products with more favourable terms. However, saving a larger amount can also delay your purchase.

Consider both sides before deciding whether to continue saving or explore mortgages with a smaller deposit.

Calculate the potential monthly repayments under different scenarios and compare the total costs of the available mortgage products. Think about your current rental expenses, future plans and the amount of savings you would have left after buying the property.

Avoid using all your savings for the deposit if that would leave you unable to cover moving expenses, unexpected repairs or other essential costs.

A mortgage should fit your wider financial circumstances, not simply meet a deposit target.

5. Remember the Additional Costs of Buying a Home

Your deposit is not the only expense involved in purchasing a property. First-time buyers should also prepare for costs associated with completing the purchase and moving into their new home.

These may include:

• Solicitor or conveyancing fees.

• Property surveys and related inspections.

• Mortgage arrangement or valuation fees, where applicable.

• Moving expenses and initial household purchases.

• Buildings insurance and property maintenance.

• Stamp Duty Land Tax or another applicable property transaction tax.

The amount you pay will depend on your circumstances, the property and the services you require. Check the relevant tax rules for the country where you are buying, as the systems differ across the UK.

Include these expenses in your savings plan so you do not underestimate the total amount of money required to complete the purchase.

6. Explore Mortgage Options Before You Apply

Once you have a deposit target and a clearer understanding of your budget, start researching mortgage products that may suit your circumstances.

Compare interest rates, fees, repayment terms and eligibility requirements. Consider how much you could comfortably repay each month after accounting for household bills and other financial commitments.

If you are unsure about the next steps, researching Affordable Mortgages for First-Time Buyers can help you explore relevant mortgage information before deciding how to proceed.

You may also wish to speak to a qualified mortgage adviser who can explain the available options and how your circumstances may affect eligibility. Ask about any fees, the scope of the advice and the mortgage products they can consider.

Remember that saving the deposit is only one part of the process. Lenders will also assess your affordability and other application details before deciding whether to offer a mortgage.

Conclusion

Saving for your first home starts with understanding the deposit you may need, setting a realistic target and planning for the additional costs of buying a property. A larger deposit may offer advantages, but it is important to balance that goal against your timeline, monthly budget and emergency savings.

Research different mortgage options, understand your borrowing costs and avoid stretching your finances beyond what you can comfortably afford. With careful preparation, you can approach your first property purchase with a clearer understanding of the money required and the decisions ahead.