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 you can only put a small amount away right now, it all adds up. For example, setting aside £5 a day for six years could grow into roughly £11,000.

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.

3. Spend less on rent

Two questions in life are better left unanswered: Where does artificial vanilla flavouring come from, and how much renters have 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 41% 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 you could control: your deposit.

Starting to work on building a house deposit now could help you be more prepared to buy a home at the time that works best for you, whether that's before house prices rise again.

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 to start saving for a house?

The best way to start saving for a house is to open 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 is on any money you save - so you don’t have to put in the full £4,000 to get a boost to your 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?

As a rule of thumb, it’s a good idea to aim to put 20% of your income into savings. However, with the cost of living crisis and rising rents, it can be difficult to put this much away each month. The important thing is to put away as much as you can, as you can always build on this later down the line if your circumstances change. Plus, by starting earlier your savings could grow if you put them into a savings account with a high 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?

How quickly you can save for a house all depends on how much you can save each month, and how much houses cost in the area you want to buy. Although on average it takes 10 years to save up a house deposit, this varies depending on who you’re buying with. For a single person buying on their own, it can take as long as 14 years! While for a couple, it can take 3.5 years. There are also ways to get there sooner. For example, if you have family who can help, contributing to your house deposit will help you save up 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 our Gift Links feature, we’ve made it easy for your 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 you want to buy saved up as the deposit - although you can get 5% deposit mortgages too. The more deposit you have 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. 

When you sign up on the Tembo app, we’ll help you set a savings goal based on house prices in the area you want to buy in, and how much you can put away each month. So you know how much you need to save for a house, and how long it will take to get there.

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 help them overcome mortgage affordability hurdles. With our help, our users boost their buying budgets by £88,000 on average! This can be through family help, or through affordability-boosting schemes like 5.5x Income Mortgages, shared ownership or 5% deposit mortgages.