How to save for a house deposit

Published: 01 February 2024

Find out how you can make your money work harder for you, grow your savings and save for your house deposit in no time.

Shop smarter to save more

With the cost of food still increasing with inflation, reviewing your shopping habits could help you to save money each week. Which? data revealed that Aldi was the cheapest supermarket of 2023, with Waitrose coming out as the most expensive. When comparing the cost of a basket of 43 groceries between the two supermarkets, shoppers paid an average £74.83 at Aldi – around £20 less than Waitrose, which came in at £94.94 for the same goods.

Using this data, swapping to a cheaper supermarket could save you up to £80.48 per month, or £965.76 over a year. You can then invest your savings into a high-interest ISA or savings account (aim for an account with an interest rate of at least 4.5%) to help that initial cash investment to grow even further.

No matter where you shop, make sure to use a loyalty card to take advantage of members’ savings. If you’re a super savvy spender and looking to cut back even further, why not try a ‘eat what you have’ week and shop the kitchen cupboards at home for meals – or even take advantage of discounted groceries via food sharing apps such as Too Good to Go or Olio.


Earn cashback for switching bank accounts

It’s a well-known tip that businesses will offer an incentive to switch to their services, but did you know that banks do this too? Switching your current bank account to a new provider can earn you hundreds of pounds over the course of the year, in exchange for just a few minutes of your time. Your new bank may require you to follow a few rules, such as setting up a direct debit or paying in a certain amount of money within the first few months before you can collect the sign-up bonus. The best deals on the market* include:

These deals are changing all the time, so keep an eye out to discover the latest cashback offers.

*Incentives correct as of 19th January 2024.


Earn up to £1,000 per year with a Lifetime ISA

An invaluable tool for first time buyers, opening a Lifetime ISA (LISA) will allow you to earn an extra 25% on your savings (up to £1,000 per year) to go towards your first home. By putting in £4,000 each year – approx. £333 each month – you can build on your savings with little to no effort at all. Simply cash the funds in when you’re buying your first home to be able to use them.

To be eligible to use your LISA, you must:

  • Be a first time buyer
  • Take out a mortgage
  • Be buying new home valued at £450,000 or less
  • You cannot withdraw money from a Help to Buy ISA at the same time

Pro tip: It can take 14 days for the funds to be withdrawn from your account, so make sure to factor this in when you’re ready to complete on your first home.


Stoozing for the win

If you’re very disciplined with your spending and are already debt free, you could consider a spending technique called ‘stoozing’. Stoozing works by using a 0% credit card for your everyday spending, all the while putting the money you’d normally spend into a high-interest savings account. At the end of the month, you pay the balance on the credit card, and keep the interest earned on the money you put in the savings account. This will help you to earn small amount of cash each month, and build up your credit score.

Disclaimer: this method only works if you are eligible for a 0% credit card, debt free and spend responsibly. Missing payments will affect your credit score and borrowing eligibility, so proceed with caution.


Use cashback and round up tools

Lots of banks offer an automatic ‘round up’ savings tool. Once activated, this service will round up any purchases you make to the nearest pound, and move the excess into a separate savings account. For example, if you spend £1.75, your bank will round up the purchase to £2 and move the extra 25p into a separate account. The beauty of this service is that the more you spend, the more you save.

Many mainstream banks offer this service, including but not limited to:

  • Barclays
  • First Direct
  • Halifax
  • Lloyds
  • HSBC
  • Nationwide
  • Natwest
  • Monzo

Plenty of banks and businesses also offer cashback and voucher incentives, turning your everyday spending into even more cash. Both Asda and Waitrose offer discount vouchers in return for spending, and dedicated websites such as Quidco offer cashback for spending at high street retailers.


Undertake a spending audit

Losing track of your direct debits is the quickest way to waste money. Doing a monthly or quarterly review of your bills will reveal exactly where money is being spent, and help you to cut back on the services you don’t use. Data reveals that the average brit spends £500 a year on subscriptions. Therefore, reducing unnecessary subscriptions such as Amazon Prime, Netflix, and Sky to just one preferred service (or getting rid of them altogether) will put this money back in your pocket. Cheap TV and streaming packages are always on offer, so if you can’t quite give up on your Netflix addiction, try creating a new account to take advantage of a better offer.

Likewise, shopping around for cheaper broadband deals, switching to a SIM only phone contract and swapping your luxury gym membership for PureGym can help bring down your monthly costs without you losing out.


Keep down the cost of running a car

Getting stuck in an expensive car lease can cost hundreds of pounds each month – the equivalent of a mortgage for some car owners. While a monthly lease appears to be a good deal compared to purchasing a car outright, spreading the cost often leads to paying more overall. Plus, if you can’t afford the payment at the end of the agreement, you can end up without a car or stuck with another expensive lease.

If you do need a car, speak to your bank about taking out a loan. The interest rates are often lower, meaning that your monthly repayments are cheaper than leasing the car from a dealer. Otherwise, consider buying a car second hand to avoid the new car premium. Make sure to shop around for the best deal when insuring the car too.

Another trick is to remember that not all petrol stations charge the same prices. Avoid getting caught out by shopping at the cheapest outlet. Asda, Tesco and Sainsbury’s often offer the lowest petrol prices, and Cosco members pay between 5p-10p less at the pump, depending on where you live. If you’re an electric car owner, try switching to an overnight energy tariff such as Economy 7 and charge the car at home for the lowest electricity prices.

The best savings are made by getting rid of the car altogether, and relying on public transport, a bike or walking to get where you need to go. Lots of councils offer car sharing schemes, meaning that you can access a car when you need it – often a cheaper alternative than buying a car outright.


Bringing it all together

No matter where you are on your savings journey, the best thing you can do is to set a realistic target and stick to it. Building a deposit for your first house is a huge ambition, and whether you have £1 or £1,000 saved, you are on your way to achieving your goal.

SO Resi can help you to afford your first home purchase. Our homes are available to buy using a Government scheme called Shared Ownership, which allows you to buy a percentage share of a home with a low deposit.

Here’s how the numbers would look if you bought a 25% share of a home worth £300,000 using Shared Ownership.

  • 25% share is worth £75,000.
  • Deposit as low as 5% of the share you are buying – in this case, it would be £3,750.
  • You can secure a mortgage for your share, and pay affordable rent on the remainder.
  • You can buy more shares over time until you own 100% of your home.

If you want to find out if Shared Ownership is the right option for you, get in touch with our friendly sales team who will be more than happy to help you.

Disclaimer: SO Resi is not a financial advisor and this article does not constitute financial advice. All financial decisions should be carefully considered and you should seek the help of a qualified, independent professional where necessary.

Any mention of specific brands, retailers or banks should not be taken as an endorsement of said entity and does not constitute any form of partnership with said entities.

All figures, interest rates and offers are valid at the time of publishing.



Whilst you're here, take a look at our other blogs for the latest interior trends and our favourite first-time buyer hotspots. You can also stay tuned by following us on InstagramFacebook, and Twitter.


Written by the SO Resi In-House Team


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