Saving for a house deposit might seem daunting, but with proper planning, discipline, and the right strategies, you can reach your goal within 2 years. Whether you’re a first-time buyer or planning for your next property, following these tips will help you achieve your target faster and save for a house deposit in 2 years.

Set a Clear Savings Goal

Before you begin saving, you need to know how much you should save for a house deposit. Most buyers require between 5-20% of the property’s value for a deposit. For example, if you’re aiming to buy a £200,000 property, you’ll need a deposit between £10,000 and £40,000. Breaking this down into monthly targets will help you understand how much you need to save to reach your deposit goal in two years. It’s worth knowing that the average property price for the UK in October 2024 is £293,000, although there is significant regional variation. You’d need a deposit between £14,650 and £58,600 based on the average house price above.

Create a Detailed Budget

One of the best ways to save efficiently is by creating a budget that tracks your income and expenses. Budgeting Apps like Monzo, YNAB, or Emma can help you see exactly where your money goes and identify areas where you can cut back. A well-structured budget will ensure that you stay on track toward your savings target. Budgeting for a house deposit is essential, as it allows you to prioritize savings over unnecessary spending.

Open a Dedicated Savings Account

To maximize your savings, consider opening a high-interest savings account or a Lifetime ISA (LISA) if you’re a first-time buyer. A LISA offers a 25% government bonus (up to £1,000 annually), which can significantly boost your deposit savings. You can put in up to £4,000 each year until you’re 50. You must make your first payment into your ISA before you’re 40; otherwise, you’ll miss out.
Keeping your savings in a dedicated account will reduce the temptation to dip into it for other expenses. Obviously, there are conditions attached to a LISA, such as it must be used to buy your first house, and the £4000 does count towards your annual ISA allowance of £20000.

Cut Unnecessary Expenses

Cutting down on unnecessary expenses is crucial to hit your savings goal. Consider reducing discretionary spending on things like dining out, entertainment, gym memberships or subscriptions you rarely use, and never go to a supermarket without a shopping list. If you have Netflix, Prime, Apple TV and Disney +, do you need them all? Redirect the money saved into your house deposit savings fund. Even small sacrifices like cutting back on daily Starbucks can accumulate over time; ditching a fancy coffee a day can save approximately £1600 per year!

Boost Your Income

If cutting expenses alone doesn’t get you where you need to be, consider ways to boost your income. Picking up a side hustle like freelance work, tutoring, or driving for Uber can help you save faster. Alternatively, asking for a raise at your current job or exploring a new job opportunity can significantly accelerate your progress toward your deposit goal.

Explore Government Schemes

First-time buyers can benefit from government support, for example, in England, the First Homes Scheme, which, if you’re a first-time buyer, you may be able to buy a home for 30% to 50% less than its market value. Obviously, there are conditions such as the home must be your only or main residence, and you do need a mortgage offer for at least half the price of the home – tap into the bank of Mum and Dad, perhaps? Although you can no longer apply for a Help to Buy Equity Loan for properties in England, you can still apply for a similar scheme in Wales. This scheme offers equity Mortgages to buyers of new-build homes.

Automate Your Savings

Setting up automatic transfers to your savings account is a great way to stay consistent. Automating your savings allows you to transfer a set amount of money every month without thinking about it. This ensures that your deposit grows steadily, and you are more likely to stay on track with your savings goals. Many digital banking apps, such as Revolut and Monzo, also offer the facility to put your spare change from purchases directly into a savings account. This is a great way of building up a pot of cash without even thinking about it.

Avoid Debt and Build Credit

While you’re saving for a deposit, it’s important to avoid taking on new debt that could affect your mortgage application. Focus on building your credit score by paying off existing debts and making sure all bills are paid on time. A strong credit score will help you secure better mortgage rates when you’re ready to buy. Another thing to consider is that mortgage lenders will carry out affordability checks when you apply for a mortgage, so if you are spending £500 a month on a shiny new car, they will consider that when deciding how much you can afford to pay each month.

Track Progress and Stay Motivated – Avoid temptation

Saving for a house deposit can feel like a long journey, but by regularly tracking your progress, you’ll stay motivated. Break your total savings goal into smaller milestones, and celebrate when you achieve them - frugally! Keeping your eye on the bigger goal of homeownership can help you stay focused throughout the process. While you may not want to live like monks and never go out, you may want to think about giving your high-spending friends a bit of a wide birth if they are constantly eating out – the peer pressure could prove too much and before you know it you’ve spent £100 on a meal. According to the ONS ( Office for National Statistics), the average household spends around £1278 per year eating out – not including alcohol.

Bonus Tip: Stay Updated with Property Market Trends

As you save, keep an eye on UK property market trends and mortgage interest rates. Also, sites like Zoopla provide a lot of information on market trends. Being aware of market shifts and interest rate changes will help you make informed decisions when the time comes to buy.