6 reasons why you should start saving for a house today

1. You can start small

Even if you can only put a small amount away at the moment, it all adds up. Let’s say from right now, you start putting just £5 aside every day for the next six years. By the end of it, you’ll have £10,950 for your deposit (£10,955 if you count a leap year). And that’s with a fiver.

Start saving towards your first home today by opening a Lifetime ISA with just £1.

2. You can 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. So if you start today instead of next year, you could have literally thousands more.

3. Stop spending money on rent

There are two questions in life that are better left unanswered: Where does artificial vanilla flavouring come from and how much you’ve spent on rent all these years? On average, renters pay an eye-watering £1,220 per month, having risen by 8.3% in the last year. If rent goes up a similar amount every year, by 2026 it could cost an extra £200 per month! 

Not only is renting costly, 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 a third of renters' incomes, but this varies depending on location - in the capital for example, rents take up 55% of people’s incomes. While mortgage holders spend 9% of their incomes on mortgage repayments! 

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 you’re renting, you’re effectively paying someone else’s mortgage for them. When you own your own home, you’ll be building 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 £200,000 richer over your lifetime vs renting. 

5. Houses are getting more expensive

House prices are ~ flaky ~ and the headlines around them are just the same. The good news is, amongst the chaos, there’s one thing you can control: Your deposit.

If you start working on building a house deposit now, you can be more prepared to buy a home at the best time — whether that’s before house prices go up again, or when they finally take a dip (🤞).

6. Get your own space

Living with your parents (or flatmates) has its pros and cons. Being able to save more money? Good. The person you took home last night bumping into your mum in the hallway? Baaaad.

By starting the deposit train today, you’ll make the most of those reduced outgoings to put more towards your own space. (A space where you don't have to ask for permission to hang stuff on walls).

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 quicker, 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 saving 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.

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 10 years to save one up. But don’t worry if you haven’t starting saving a deposit yet - there’s no point in beating yourself up for not starting 5 years ago, or if you have to press pause on your savings for a bit. 

Time machines haven’t been invented yet (as far as we know), so there’s nothing you can do about the past. All that counts is what you can do today. Plus, the average age of a first-time buyer is 34, so you probably aren’t as behind as it may feel!

Whether you’re at square one, or you’ve 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, you’ll get an extra £1 off 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 Lifetime ISA 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 £82,000 on average! This can be through family help, or through affordability-boosting schemes like 5.5x Income Mortgages, shared ownership or 5% deposit mortgages.

*Market-leading is defined as Tembo having the best Lifetime ISA interest rate excluding introductory offer periods. Rates are accurate as of 19th March 2024, but are subject to change.