Buying a home is one of the biggest financial decisions you can make. For most people in the UK, it involves taking out a mortgage, choosing the right mortgage type, saving enough for a house deposit and preparing for several other costs.
If you are wondering, how much should I save before buying a house?, this guide will walk you through the main savings you should consider before stepping onto the property ladder.
We will cover:
- How much deposit you may need
- The additional costs of buying a house in the UK
- Mortgage arrangement and legal fees
- Fixed-rate and variable-rate mortgages
- Buy-to-let deposit requirements
- The importance of keeping an emergency fund
How Much Deposit Do You Need to Buy a House?
The most obvious saving requirement is your mortgage deposit. This is the upfront amount you put towards the price of the property, with the mortgage covering the remaining amount.
Most buyers will usually need a deposit of at least 5% to 10% of the property price. A larger house deposit may give you access to more mortgage products, lower interest rates and more affordable monthly repayments.
House Deposit Examples
| Property Price | 5% Deposit | 10% Deposit | 15% Deposit | 20% Deposit |
|---|---|---|---|---|
| £150,000 | £7,500 | £15,000 | £22,500 | £30,000 |
| £200,000 | £10,000 | £20,000 | £30,000 | £40,000 |
| £250,000 | £12,500 | £25,000 | £37,500 | £50,000 |
| £300,000 | £15,000 | £30,000 | £45,000 | £60,000 |
| £400,000 | £20,000 | £40,000 | £60,000 | £80,000 |
Minimum Mortgage Deposit
Most lenders require at least a 5% deposit for a residential mortgage. However, saving 10% or more may help you access a wider selection of mortgage deals.
For example, if you are buying a house priced at £250,000:
- A 5% deposit would be £12,500
- A 10% deposit would be £25,000
- A 15% deposit would be £37,500
- A 20% deposit would be £50,000
Putting down a larger deposit means borrowing less from the mortgage lender, which may reduce your monthly mortgage payments and the amount of interest you pay over the mortgage term.
Why Save More Than the Minimum House Deposit?
Although it may be possible to buy a house with a 5% mortgage deposit, saving more than the minimum can benefit you in several ways.
Better Mortgage Interest Rates
A larger deposit usually reduces your loan-to-value ratio, also known as LTV. Lenders may view a lower LTV mortgage as less risky, which could help you qualify for more competitive interest rates.
More Mortgage Options
Some mortgage deals are only available to buyers with deposits of 10%, 15%, 20% or more.
Your eligibility will still depend on factors such as:
- Your income
- Employment status
- Credit history
- Existing financial commitments
- Property type
- Mortgage affordability
- The lender’s individual criteria
Lower Monthly Mortgage Payments
A larger deposit means you need to borrow less overall. This may result in lower monthly repayments and reduced interest costs over the mortgage term.
Reduced Risk of Negative Equity
A bigger deposit may also reduce the risk of negative equity if property prices fall. Negative equity happens when the outstanding mortgage becomes higher than the property’s current value.
How Much Should You Save for the Costs of Buying a House?
Your mortgage deposit is not the only cost you need to prepare for.
Depending on the property, mortgage product and services you choose, home-buying fees can total several thousand pounds before Stamp Duty and your deposit are included.
Estimated Upfront Costs
| Buying Cost | Typical Amount to Consider |
|---|---|
| Mortgage deposit | Usually 5% to 20% of the property price |
| Stamp Duty | Depends on property value and buyer status |
| Mortgage valuation | Approximately £150 to £800, although some lenders offer this free |
| Property survey | Approximately £400 to £1,500 |
| Legal and conveyancing fees | Around £2,000, depending on the transaction |
| Local searches | Approximately £250 to £300 |
| Mortgage booking fee | Approximately £100 to £200 |
| Mortgage arrangement or product fee | Often £1,000 to £2,000 or more |
| Mortgage account fee | Approximately £100 to £300 |
| Removal costs | Approximately £400 to over £1,000 |
| Buildings insurance | Depends on the property and level of cover |
These amounts are estimates. Your actual costs will depend on the mortgage lender, property value, location, solicitor, survey type and complexity of the purchase.
1. Stamp Duty Land Tax
Stamp Duty Land Tax, commonly known as SDLT, is a tax that may apply when purchasing a property in England or Northern Ireland.
Scotland and Wales have their own property taxes:
- Scotland uses Land and Buildings Transaction Tax
- Wales uses Land Transaction Tax
Stamp Duty for First-Time Buyers
First-time buyers in England and Northern Ireland may qualify for SDLT relief when buying a property worth £500,000 or less.
Current first-time buyer rates are:
- 0% on the first £300,000
- 5% on the portion between £300,001 and £500,000
If the property costs more than £500,000, first-time buyer relief does not apply.
Standard Stamp Duty Rates
For someone buying their only residential property who does not qualify for first-time buyer relief, the standard rates include:
- 0% on the first £125,000
- 2% on the portion between £125,001 and £250,000
- 5% on the portion between £250,001 and £925,000
- 10% on the portion between £925,001 and £1.5 million
- 12% on the portion above £1.5 million
Additional property and non-UK resident surcharges may also apply.
Stamp Duty Example
If you are not a first-time buyer and purchase a £300,000 home as your only property, the calculation would be:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the remaining £50,000 = £2,500
Total SDLT: £5,000
Always use the latest official Stamp Duty calculator because rates and individual circumstances can affect the amount payable.
2. Mortgage Valuation and Survey Fees
Mortgage lenders usually require a property valuation before approving a mortgage. This helps the lender decide whether the property provides sufficient security for the loan.
A mortgage valuation is completed for the lender. It is not a detailed inspection of the property’s condition.
You may also choose to arrange a separate property survey. The available options can include:
- A basic condition survey
- A HomeBuyer Report
- A full building or structural survey
- A new-build snagging survey
Mortgage valuations may cost approximately £150 to £800, although some lenders include a free valuation with their mortgage deal.
Independent property surveys can cost around £400 to £1,500, depending on the property’s value, age, condition and the level of detail required.
3. Legal and Conveyancing Fees
You will need a solicitor or licensed conveyancer to manage the legal side of buying a house.
Their work may include:
- Reviewing the property title
- Carrying out local searches
- Checking contracts
- Communicating with the mortgage lender
- Managing the exchange of contracts
- Transferring the purchase funds
- Registering your ownership
Legal and conveyancing fees are often around £2,000, including VAT, although the final amount will depend on the property and the complexity of the transaction.
Local searches may cost an additional £250 to £300 if they are not included in the legal quotation.
4. Mortgage Arrangement Fees
Some mortgage deals come with arrangement, product or booking fees.
Possible mortgage fees include:
- Booking fees
- Arrangement or product fees
- Mortgage account fees
- Valuation fees
- Electronic transfer fees
Mortgage arrangement or product fees can sometimes cost £1,000 to £2,000 or more. Certain mortgages may have lower fees or no product fee, but they could come with a different interest rate.
Some lenders allow the arrangement fee to be added to the mortgage. However, doing this means you may pay mortgage interest on the fee.
It is important to compare the overall cost of the mortgage rather than looking at the interest rate alone.
Mortgage Types and How They Affect Your Savings
The kind of mortgage you choose can influence how much you should save before buying a house.
Residential Mortgages
For most people buying a home to live in, a residential mortgage is the standard option. Residential mortgage lenders normally require a deposit and proof that the monthly repayments are affordable.
Fixed-Rate Mortgages
A fixed-rate mortgage locks your interest rate for an agreed period.
This can provide:
- More predictable monthly payments
- Protection from immediate interest rate increases
- Greater certainty when planning your household budget
You should still consider what your monthly payments could become when the fixed-rate period ends.
Variable-Rate Mortgages
A variable mortgage rate may change during the mortgage term.
This means:
- Your monthly payment could increase
- Your monthly payment could decrease
- Your household budget may need more flexibility
If you choose a variable-rate mortgage, it may be sensible to save extra money each month to help cover potential payment increases.
Buy-to-Let Mortgages
If you are planning to buy a property to rent out, buy-to-let mortgages normally have different requirements from residential mortgages.
Buy-to-let buyers may need to consider:
- A larger mortgage deposit
- Rental income calculations
- Mortgage interest coverage requirements
- Property management costs
- Landlord insurance
- Maintenance expenses
- Letting agent fees
- Rental void periods
- Additional property Stamp Duty rates
A buy-to-let deposit is often around 25%, although requirements vary between mortgage lenders and products.
For example, a 25% deposit on a £200,000 buy-to-let property would be:
£200,000 × 25% = £50,000
This means you may need to save £50,000 for the deposit before considering Stamp Duty, legal costs, mortgage fees and other property expenses.
Ongoing Savings After Buying a House
Saving for a house deposit and upfront fees is crucial, but you should also think about the costs that continue after completion.
These may include:
- Monthly mortgage payments
- Council Tax
- Gas, electricity and water
- Buildings insurance
- Contents insurance
- Service charges
- Ground rent on some leasehold properties
- Estate management fees
- Maintenance and repairs
- Furniture and appliances
- Emergency household costs
Mortgage lenders will normally require buildings insurance to be in place from the appropriate point in the purchase.
It is also good practice to keep a financial buffer after buying a house. MoneyHelper suggests aiming for enough savings to cover approximately three months of expenses, including mortgage payments, where possible.
Do not use every pound of your savings for the deposit if doing so would leave you unable to manage repairs, moving costs or an unexpected reduction in income.
Real-Life House-Saving Strategy Example
Let us say Sarah wants to buy a home in Manchester priced at £180,000.
Her estimated savings could include:
| Cost | Estimated Amount |
|---|---|
| 10% mortgage deposit | £18,000 |
| SDLT with qualifying first-time buyer relief | £0 |
| Solicitor fees | £1,000 |
| Valuation fee | £300 |
| Mortgage arrangement fee | £300 |
| Total upfront saving goal | £19,600 |
Sarah aims to save £500 each month.
£19,600 ÷ £500 = 39.2 months
It would take Sarah approximately 39 months, or a little over three years, to reach that saving goal.
This is an illustrative example only. Actual mortgage fees, survey costs and legal charges may be higher or lower. Sarah should also consider keeping a separate emergency fund rather than using all her available savings for the purchase.
Final Tips Before You Start Saving for a House
Set a Realistic Property Budget
Decide what property price you could realistically afford before choosing your deposit target.
Consider:
- Your income
- Monthly commitments
- Credit agreements
- Childcare costs
- Regular household spending
- Expected mortgage payments
- Future plans
Check Your Credit Reports
Review your credit reports before applying for a mortgage.
This gives you time to:
- Correct inaccurate information
- Register on the electoral roll where appropriate
- Reduce outstanding debts
- Avoid unnecessary credit applications
- Address missed payments
- Build a stronger payment history
A lender will assess your complete financial circumstances rather than relying on a single credit score.
Get a Mortgage Agreement in Principle
A mortgage agreement in principle can give you an indication of how much a lender may be prepared to offer.
It is not a final mortgage offer, and the amount can change following full affordability checks, a property valuation and underwriting.
Explore Available Home-Buying Support
Depending on your eligibility and location, you may be able to explore:
- A Lifetime ISA
- Shared ownership
- First Homes
- Right to Buy
- Right to Acquire
- Rent to Buy
- Family-assisted mortgage options
The Help to Buy: Equity Loan scheme is closed to new applicants in England. A Lifetime ISA currently allows eligible savers to contribute up to £4,000 per tax year and receive a 25% government bonus, subject to the scheme’s rules. Shared ownership allows eligible buyers to purchase a share of a property and pay rent on the remaining share.
Consider Speaking to a Mortgage Broker
A mortgage broker can help you understand:
- How much deposit you may need
- How much you might be able to borrow
- Which mortgage types may suit your circumstances
- What documents you should prepare
- Which fees may apply
- Whether your income and credit history meet lender requirements
Ready to Start Your Property Journey?
Saving the right amount before buying a house can help create a smoother home-buying experience.
Your savings target should include more than your mortgage deposit. You may also need money for Stamp Duty, conveyancing, surveys, mortgage fees, moving costs and unexpected expenses after completion.
Knowing what is required upfront and planning realistically can help you avoid unnecessary surprises and make more informed decisions.
Whether you are considering a fixed-rate mortgage, variable-rate mortgage, residential purchase or buy-to-let property, understanding the costs of buying a house in the UK is an important first step.
If you are wondering how much you should save before buying a house or would like to explore mortgage options for your circumstances, the team at BSL Financials is here to help.
Contact BSL Financials today for mortgage guidance tailored to your property goals and financial circumstances.
BSL Financials – helping you make informed, confident mortgage decisions.
Your home may be repossessed if you do not keep up repayments on your mortgage. Mortgage availability is subject to eligibility, affordability, lender criteria and individual circumstances. Not all buy-to-let mortgages are regulated by the Financial Conduct Authority.
