Nathan John
AUTHOR Nathan John| CREATED 18 Jan 2016

Your first property: raising the deposit

For many people, one of their first big financial ambitions is to buy a property, but it’s not as easy as it once was. So how can you go about raising that deposit?

UK house prices have risen steadily over the past few decades, so getting a toe on the first rung of the property ladder can seem less like a step and more like a mighty leap. But it’s not impossible – all it takes is some serious financial planning and a lot of determination.

The key is to get organised: sorting out your money matters now will boost your chances of getting a mortgage and enable you to work out exactly how much you can afford to spend. If you’re serious about building your wealth it might also be worth seeing a financial adviser who can help you ensure your money is working as hard as possible.

Start soon, save more

The more you can raise towards your deposit, the more options you'll give yourself when it comes to getting a mortgage and choosing a home.

You could consider buying a share of a property and renting the remainder, via a shared-ownership scheme.

If you can't use such a scheme – perhaps because you don't qualify or because they don't cover the regions or kinds of properties you're after – then you'll probably have to raise a large amount of money. The average first-time buyer in the UK needs to raise a deposit of £30,000 and borrow 3.4 times their annual income, according to research by the National Housing Federation, an umbrella body for social housing organisations1.

So start saving as early as possible. The bigger your savings pot, the more appealing you'll be to lenders – and the better the rate they'll offer you.

Pay off other debts first

Before you start saving for your deposit, it will probably make sense to pay off any debts you owe first. This will depend on the terms of your borrowing – if you've got a student loan or an interest-free deal then it may make sense to hold on to some debt. But the general point to bear in mind here is that the interest rates on savings accounts are usually lower than those on loans.

Paying down your debts will also prove to mortgage lenders that you are a responsible borrower. And even if you can't clear your other debts, make sure you always pay on time – missed payments will count against you when you apply for a mortgage.

How to save for a deposit

  • Do a spending spreadsheet – Make a spreadsheet of what you spend each month and get a snapshot of where your money goes.
  • Make a budget: Stick to a weekly or monthly budget to control your spending habits.
  • Spend less: It's not rocket science. Doing without some little luxuries can really boost your savings balance.
  • Download an app – There are plenty of online tools and apps that will help you keep a tight rein on your finances.
  • Cut back on rent – Would you be happy to live in a large shared house to cut your monthly bills? Could you move back in with your parents for the short-term?

The ISA is nicer when it comes to saving

If you’re a first-time buyer it’s well worth checking out the new ‘Help-to-buy ISA’. Not only is it a tax-efficient way of saving, it’s backed by the Government, who will give you a bonus after the sale is completed. Terms and conditions apply; visit to find out more. Even if you’re not eligible for the Help-to-buy ISA it’s still a good idea to use your standard tax-efficient ISA allowance (£15,240 in the year to 5 April 2017; £20,000 in the year to 5 April 2018) before considering other savings accounts.

Check your credit rating

Lenders are very reluctant to offer a mortgage to anyone with a less than perfect credit history. So get your hands on a copy of your report before applying for a mortgage to see if there are any ways in which you might be able to improve your rating. Remember that if you are not on the electoral roll you will find it difficult to get credit, so make sure you are registered.

Buy with a partner or friend

Buying with a partner or close friend is one option for those struggling to get on to the housing ladder. A joint mortgage is a big financial commitment though, so decide beforehand how you will split the ownership of the property.

Don't forget all the extras

It isn't just your deposit you will need to factor in when buying your first home. You will also need to budget for stamp duty, solicitor's bills, moving costs, and furnishing your home once you are in. Sit down and work out exactly how much each of these is going to cost you – that way you won't suddenly find yourself short when you do buy.

A mortgage adviser can help answer any questions you have on saving to purchase a house. If you don’t have an adviser and would like to find one in your area, check out our ‘Find an Adviser’ tool.

1 Source: "Broken Market, Broken Dreams", National Housing Federation, September 2014.


Nathan John

UK Investments Expert Old Mutual Wealth

Nathan has worked for Skandia and Old Mutual for over nine years focusing on both the UK and International markets. His current role covers the marketing and technical communications relating to funds and investment products, specifically focused on investment planning and portfolio construction including asset allocation, risk and diversification, and portfolio optimisation. 

Expert in Funds, Investment Planning, Portfolio Construction