How to save for your first home

 “Buying your first home is a huge life milestone, but the idea of saving for one can be daunting” – writes Chris Henderson

“With the high cost of living and competing saving goals, like a holiday or new car, it can be hard to set aside money. But as we approach the New Year it’s the perfect time to think about your savings resolutions for 2025. Even small amounts of money accumulate over time, and the sooner you start the more you’ll see your savings grow.”

Chris shares his top tips for those looking to save for a house:

1. Set yourself a realistic savings goal

 
A house is one of the biggest financial commitments you can make. You’ll need to know what you’re aiming for in order to hit your goal, so it’s important you know what you can afford to buy and the size of deposit you need. From there you can set yourself a savings goal, though it’s important to be realistic on when you can achieve this. We know that in 2024 nearly 1 in 3 Brits (30%) have saved for a new home deposit this year, saving an average of £1,298 so far.

2. Set up regular payments

 
Standing Orders aren’t just for bills, they can also be used to save for your new home, by transferring funds from one account into a savings account. Setting up a regular Standing Order into your savings account, on the day you are paid, means that you are adding to your savings every month. If you are prone to temptation, moving the money to a separate account (and possibly even one you can’t access readily!) makes sure you aren’t tempted to dip into it.

3. Renting vs Mum and Dad

 
Moving back in with your parents isn’t for everyone, but it can be a short-term solution when you’re trying to save for a deposit, as renting can be really expensive. On average, renting in the UK is £1,301 a month, and jumps to over £2,000 in London. Taken over the year, that monthly payment could cover a big chunk of the deposit needed for your own home. This is not to say you’ll live rent-free with your parents, but sharing the costs could still result in building some significant savings for you.

4. Incorporate a daily ‘money minute’ into your schedule

 
Setting aside one minute each day to check your transactions online and balances is a really smart habit. You can get a handle on where you are with your spending, and where you can reduce spending to put money aside in your home fund. It’s also a great way to spot anything unusual with your accounts, like a long-forgotten subscription that you forgot to cancel.

5. Prioritise clearing your debt

 
It can be difficult to save if you have outstanding debt that needs to be cleared first. Make a plan to reduce it as fast as you can, but only at a rate you can afford over time. Try to minimise your sources of debt and pay it off monthly. This is also important to get a good credit score, which your future self will thank you for during the house-buying process.

Chris Henderson is Savings Director at Tesco Bank