How to save for your house deposit

By Pippa Thompson

First time buyers have to save an average of nearly £9,000 today for a 5% house deposit – or around £17,700 for a 10% deposit. That’s around 30% – 60% of the average income. It sounds like a hard task, but there are ways to get the savings ball rolling – you just need to pick the right savings plan for you.

How much deposit do you need?
The average house price in England and Wales at the end of 2014 was £176,581, according to official data published in 2014. To buy a property worth that sum, you’d need to save at least £8,830 which would give you the minimum 5% required by some lenders.

Putting down 10% would give you access to more deals, but you would need to save £17,700. Look carefully at the area where you hope to buy – more expensive areas will have a higher than average house price and will require a larger deposit for example the average price of a house in London is £461,453 – requiring a 5% deposit of £23,000 – or a 10% deposit of nearly £50,000!

Start early
It’s never too early to start saving, as soon as you know you want to buy a house you should start saving to achieve your goal. The bigger the deposit you can save, the more mortgages and potentially better rates will be available to you.

Where to Save:
There are a range of saving options available, but to assess which one is best for you, you need to ask yourself a few questions. For example, would you like to be able to access the money easily or would you be happy to have the money tied up for 2 or 3 years? 

  • Easy Access Savings Account:

Easy access accounts are popular because of their flexibility. The key is in the name – you can easily access your funds and you can deposit money when you can afford to do so.

Rates are variable and tend to follow the Bank of England Base rate so it’s advisable to keep an eye on the interest rate as well as checking the number of withdrawals you can make annually – some have unlimited withdrawals while others are limited to a few a year.

  • Fixed Rate Bonds:

If you are happy to lock away your money for a set period of time, you may look at fixed rate bonds.

These often pay a higher rate of interest than easy access accounts. They offer a fixed amount of interest for a set period – often ranging from six months to five years. You cannot normally access your money during the fixed term so they are only suitable if you don’t need access to your savings.

With the base rate so low, fixed rate bonds have been a popular option with savers seeking to maximise returns – but remember that if you lock your money away for several years and the base rate increases, your fixed bond rate will remain the same.

  • ISAS:

The tax year for ISAs ends on 5th April every year and you can invest up to £15,000 per year in total, this can be split between Cash ISA’s and Stocks and Shares ISA’s – as the interest is tax-free, it’s a great way to save your money without paying any tax on the interest.

You can keep your money invested in an ISA for as long as you like and obviously the longer it is invested, the more tax-free interest you will receive.

There are different types of cash ISA account – easy access, fixed rate and regular saver – so as with other saving accounts, you need to decide which type of ISA will work best for you and you should check interest rates and withdrawal restrictions.



About the author

Teachers Building Society was founded in 1966 and specialises in providing mortgages for teachers in England and Wales as well residents of Dorset, Hampshire and Wiltshire. Teachers Building Society also provides savings accounts, fixed rate bonds and ISAs for anyone in the UK. Visit for more information.

Teachers Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registration Number 156580. Allenview House, Hanham Road, Wimborne, Dorset, BH21 1AG.

* Data from the National Office of Statistics and Land Registry House Price Index


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