How much do I really need to save for my first home?

According to HM Land Registry, as of January 2023, the average house price in the UK was around £290,000 meaning that to purchase a property of this value you'd need to save £29k for a 10% deposit. Of course, the price of a first home will vary depending on where you live, what type of home you want and how much you can borrow.

There are also other costs to think about, like stamp duty. Although, if you’re a first-time buyer buying in England or Northern Ireland. If the property is valued at less than £425,000 you don’t currently have to pay stamp duty. If buying with someone else, you must all be first time buyers to not have to pay stamp duty. Scotland and Wales have different rules. If you use a broker to help find a mortgage you might have to pay up to £500 as a fee for their service. To have a basic survey carried out on your property it could cost up to £300, and your legal costs could amount to between £1,000 and £1,500. On top of that, there are also moving costs, etc. to consider.

Be realistic, be optimistic

Let’s face it, it can be hard to save to buy a property, but not impossible. If you’ve just started saving for your first place, you might already have picked the area or even have your eye on a particular property. It’s good to understand what you want from your first home and save for it. It’s also worth considering the things that might affect your savings between now and the time you’ll be buying such as new cars, holidays, or weddings, especially if you have a few years to go.

Top Tip

Try our affordability calculator to see how much you might be able to borrow based on your incomings and outgoings. This could be useful for helping you work out how much deposit you might need.

House prices may change in the long-term

The house you’re saving for in 2023 probably won’t cost the same in 2033. Between October 2012 and October 2022, on average house prices rose by 59.34%. So let's imagine there's a similar rise in the next 10 years from October 2022, then you're looking at an average house price of £429,297. It’s frustrating, but if the price of the place you’ve set heart on goes up, the amount of the deposit required for a mortgage would be likely to go up too.

Save hard

Let’s not get ahead of ourselves though – remember, it may be hard to make that first step, but not impossible. With a bit of careful planning and a proactive approach to saving, you could do it. Get into good savings habits early on. If you get a pay rise, don’t blow it and be sensible. If you’re aged 18-39 consider putting it away in something like a Lifetime ISA (LISA), which is designed to help first-time buyers save for a deposit or to help save towards your retirement.

The best thing about a LISA is that you get a 25% bonus on every penny you put away, and each year you can save up to your LISA allowance, which is £4,000 for this tax year, up to and including the day before your 50th birthday. It all adds up. Let's just say if you could save £4,000 a year for five years - with the government bonus added you'd have a deposit of £25,000.

However, it’s important to note that any withdrawals from your LISA within 12 months of your first payment in will include a 25% government withdrawal charge, which would mean you'd get back less than you'd paid in. After that, you can withdraw money to buy your first home, but for any other withdrawals before the age of 60, the government withdrawal charge will apply.

Find out more about the LISA withdrawal charges.

Get in touch

If you’d like to talk to us about mortgages from Skipton, call us, talk to us via web chat or visit one of our branches.

You could lose your home if you don’t keep up your mortgage repayments.