6 reasons why you should start saving for a house today

Key takeaways

• Small steps add up: Saving just £5 a day grows into roughly £11,000 in six years.
• Free government cash: A Lifetime ISA (LISA) gives you a 25% bonus, up to £1,000 of free money every single tax year.
• Stop funding your landlord: Buying lets you build equity, making you £64,000 better off in five years than if you were renting.
• Beat the timeline: It takes 6 years on average to save a deposit. Starting today gets you there much sooner.
• The target: Aim for a 10% deposit for better mortgage rates, though 5% deposits and buying schemes could fast-track the process.

1. Start small

Even if it's only a small amount right now, it all adds up. For example, setting aside £5 a day for six years could grow into roughly £11,000.

One of the effective ways to make this happen? Automating deposits. Setting up a standing order to move money into a savings account on payday, before it gets spent, takes the willpower out of the equation. It doesn't have to be a large amount; what matters is building the habit early.

Read more: How much should I save each month

2. Get a free top-up to your savings

With a Lifetime ISA, you can get up to £1,000 towards your home deposit every tax year for free from the UK government. The longer you use your Lifetime ISA, the more free money you get. Starting today instead of next year could result in thousands more in savings.

Beyond the government bonus, many savings accounts also offer competitive interest rates to help your deposit grow faster. Fixed-rate ISAs, for example, lock in a guaranteed interest rate for a set period (typically 1-5 years), which could be attractive if rates are high. However, they don't offer the 25% government bonus that makes Lifetime ISAs so powerful for first-time buyers. Some regular savings accounts also offer introductory bonus rates or cashback incentives, though these are often time-limited and may come with restrictions on withdrawals.

When considering opening a LISA, remember that withdrawals for any purpose other than buying a first home or for retirement will incur a 25% government penalty, meaning you may get back less than you paid in.

3. Spend less on rent

Here's a figure most renters would rather not think about: how much they've spent on rent over the years. On average, renters pay £1,424 per month, with costs expected to continue to rise.

Not only is renting costly, but it also leaves you with less money at the end of every month in comparison to owning your own home. On average, rent takes up more than 39% of income, but this varies depending on location - in London, for example, rent takes up over half of income.

The sooner you start building your house deposit, the sooner you’ll be paying for your own home (instead of your landlord's) and the less risk you’ll have of money-munching rent hikes, as well as having more money to spend on other things each month.

4. Build your own property wealth

When renting, tenants are effectively paying someone else's mortgage. When you own your own home, you build your own equity each month. So even if your mortgage costs are expensive, you'll still be building up your own property wealth with each payment. This is why owning a home makes you £64,000 better off over five years vs renting.

5. House prices are rising

House prices fluctuate, and the headlines around them can be confusing. The good news is, there's one thing anyone can control: their deposit.

A smart first step is to research home prices in the target area. Browsing property portals like Rightmove or Zoopla gives a realistic picture of what homes actually cost in the locations that matter most. This helps set a clear savings target, rather than aiming for a vague number.

Starting to build a house deposit now means being more prepared to buy at the right time, rather than scrambling to catch up if prices climb further.

6. Get your own space

Living with your parents or flatmates has its pros and cons. The upside? You could often save more money with lower living costs. The downside? Less privacy and independence than you'd have in your own place.

By starting the deposit train today, you’ll make the most of those reduced outgoings to put more towards your own space. You'll have your own space where you can make decisions about your home without needing anyone's permission, from decorating the walls to choosing your own furniture.

How do I start saving for a house?

The best way to start saving for a house is to create a savings plan that works alongside existing financial commitments. That means understanding what's coming in, what's going out, and setting a realistic monthly savings target, even a small one.

Once that's in place, the smartest account to save into is a Lifetime ISA. This is a special savings account designed to help first-time buyers save up for their first home more quickly or save for retirement. You can put up to £4,000 each tax year into a Lifetime ISA, and the government will top up your savings by up to £1,000. Plus, the 25% bonus applies to any amount saved, so there's no need to put in the full £4,000 to get a boost to the deposit pot.

While other savings options exist, such as fixed-rate ISAs that lock in interest rates, or regular savings accounts with introductory bonuses, none offer the unique combination of competitive interest and a 25% government bonus that Lifetime ISAs provide for first-time buyers. Fixed ISAs can be useful if you have savings beyond your £4,000 annual Lifetime ISA allowance, but they won't accelerate your deposit savings in quite the same way.

How long does it take to save up for a house?

It actually takes you longer to build a house deposit than you might think; on average, it takes 6 years to save one up. However, prospective buyers who haven't started saving a deposit yet should not be discouraged.

Time machines haven't been invented yet (as far as we know), so there is nothing anyone can do about the past. All that counts is what can be done today. Plus, the average age of a first-time buyer is 34, so most prospective buyers probably aren't as behind as it may feel!

Whether you're at square one or have already put some money aside, using a Lifetime ISA to save for your first house is a great way to boost your savings; for every £4 saved, savers receive an extra £1 from the government. That means if you max out the account each tax year, you'll get up to £1,000 for free!

How much money should I save per month?

A common rule of thumb is to aim for 20% of income going into savings each month. But honestly, the right amount depends entirely on individual circumstances.

Before setting a number, it's worth looking at the full picture: existing expenses, debt repayments, long-term goals, and how much is left over after essentials. With the cost of living crisis and rising rents, putting away 20% isn't always realistic, and that's absolutely fine. The important thing is to start with whatever is manageable and build on it later as circumstances change. Plus, by starting earlier, savings have more time to grow, especially when held in a savings account with a competitive interest rate.

With the Tembo Lifetime ISA, you can make it easy to put money aside each month by setting up a direct debit. That way, you’ll be topping up your house fund without even thinking about it. Plus, our innovative app will show you personalised tips on how you could save faster.

Need more inspo? Find ideas on the best ways to save for a house with these 17 tips

How quickly can I save for a house?

On average, it takes 6 years to save one up, but there are ways to shorten that timeline.

• Use a Lifetime ISA: A Lifetime ISA gives savers a 25% government bonus, worth up to £1,000 a year for free.
• Automate saving: Setting up a standing order on payday helps remove the temptation to spend the money elsewhere.
• Buy with someone else: Pair up with a partner, family member or friend to help boost your savings pot
• Get family support: If family can help, contributing to a house deposit can help buyers save up sooner.
• Explore low-deposit options: Options like shared ownership and 5% deposit mortgages can help buyers get there sooner.

On the Tembo app, we’ll show you how long it’ll take you to save for a house, and how you can whittle down that time to get a place of your own sooner. With Tembo’s Gift Links feature, it’s easy for loved ones to add in contributions straight to your savings - putting birthday and Christmas money to good use!

How much do I need to save for a house?

It’s a good idea to aim to have 10% of the cost of a home saved up as the deposit, although 5% deposit mortgages are available too. The more deposit saved up, the better interest rates you’ll have access to, which will make your monthly mortgage payments more affordable. House prices vary depending on where you want to buy, so saving 10% could mean putting away anywhere between £5,000 to £50,000.

• Solicitor / conveyancing fees: £1,000–£3,000
• Survey costs: £500–£1,500
• Stamp Duty (SDLT): 0% on the first £300,000 for first-time buyers; 5% on £300,001–£500,000
• Mortgage arrangement fees: vary by lender
• Moving costs: a few hundred to several thousand pounds

You should budget an additional 2–5% of the property price on top of the deposit to cover these upfront costs.

How much do most people save before buying a house?

The average first-time buyer puts down a 20% deposit on a house, which, based on the average house cost (£263,600) means putting down almost £53,000. This is a daunting figure! If you might struggle to save this amount on your own, there are solutions out there to help you.

At Tembo, we specialise in helping first-time buyers get on the ladder sooner, whether that's helping them save faster or overcome mortgage affordability hurdles. On average, our customers boost their buying budgets by £82,000!

This can be achieved through various affordability-boosting schemes:

• Family help: Such as Guarantor Mortgages.
• 5.5x Income Mortgages: To increase borrowing power.
• Shared ownership: Buying a portion of the property.
• 5% deposit mortgages: Low-deposit lending options.

What other costs do first-time buyers need to save for beyond the deposit?

Beyond the deposit, first-time buyers should also save for a range of upfront costs:

• Conveyancing / solicitor fees: £1,000–£3,000
• Property survey: £500–£1,500
• Stamp Duty Land Tax: 0% on the first £300,000 for first-time buyers, then 5% on £300,001–£500,000
• Mortgage arrangement fees: vary by lender
• Moving costs: a few hundred to several thousand pounds
• Buildings insurance: an extra cost to budget for before moving in

For a £263,600 home, these additional costs could total roughly £5,300–£13,000 on top of the deposit.