With the average UK property price now at £298,806, saving for a first home can seem like an insurmountable challenge for first-time buyers. However, there are several strategies to help put money aside and get onto the property ladder, including specific savings accounts, smaller deposit options, and boosting your credit score.
Research by David Wilson Homes reveals that thousands of aspiring homeowners could be basing their plans on outdated or incorrect information. Terry Higgins, Group MD at TNHG Mortgage Services, was consulted to address common misconceptions and provide guidance for buyers in 2026.
Set a Target
Having a goal in mind can go a long way to keeping you on track as you save. Start by determining how much you will need for a deposit. Many first-time buyers aim for at least 5–10% of the property's purchase price, although a larger deposit can help you access better mortgage rates.
For example:
£250,000 home – 5% deposit = £12,500
£250,000 home – 10% deposit = £25,000
Do not forget to budget for additional costs such as solicitor fees, surveys, moving expenses, and any furnishings you may need. According to the research, 15% of respondents believe they need at least a 20% deposit, while 11% were unsure of how much they would need. Only 22% correctly identified that 5–9% deposits are achievable, and 36% answered that at least a 10–14% deposit is required.
Mr Higgins said: "Although 100% mortgages are available, a minimum deposit of 5% is typically needed to secure a mortgage. On a £300,000 property, that is £15,000 instead of £60,000 for a 20% deposit. Equity loan schemes can allow first-time buyers to purchase with a 5% deposit. The equity loan covers a percentage of the property's value, reducing the mortgage needed and helping to make homeownership more accessible."
Open a Lifetime ISA (LISA)
A Lifetime ISA can be one of the most powerful savings tools available and is open to anyone between the ages of 18 and 39. You can save up to £4,000 per tax year and receive a 25% government bonus. For every £4,000 you save, the government adds £1,000, making it a valuable option for building a deposit. However, Martin Lewis has pointed out a flaw: if you try to use LISA savings to buy a home above the £450,000 threshold (which has not moved since LISAs launched in 2017), you are effectively fined 6.25% of your money (so £625 per £10,000 saved) to withdraw it. This is unfair, especially for many young people who have already been priced out by inflation.
Automate Savings
Treat savings like a regular bill. Set up an automatic transfer into a dedicated savings account as soon as you are paid each month. Even modest amounts can add up: £250 per month equals £3,000 per year, and £500 per month equals £6,000 per year. Automation helps maintain consistency and reduces the temptation to spend the money elsewhere.
Are 0% Deposits Worth It?
The average UK adult has £13,200 in savings – just over a fifth of the average first-time buyer deposit of £61,900, according to UK Finance. Only 15% of people are saving more than £500 a month. It is little wonder that 49% of Gen Zs who have bought a home reported receiving help from the 'bank of mum and dad'. Despite financial pressures, the study suggests a healthy flow of first-time buyers over the coming years. Data indicates that 1.2 million UK adults expect to be in a financial position to buy their first home within the next 12 months, with an additional 1.5 million in 1–2 years, 1.8 million in 2–3 years, and a further 2.2 million in 3–5 years.
Most lenders' lowest deposit option is around 5%, resulting in a 95% loan-to-value ratio. While this is available, lenders generally favour borrowers with deposits of 10% or more, often offering better interest rates. The higher your deposit, the lower the risk you represent to the lender, giving you access to a wider range of cheaper mortgage products with more favourable terms.
A 0% deposit, or "no deposit", mortgage allows buyers to take a loan for the full value of the property. These products aim to provide first-time buyers access to the housing market, particularly when high rental costs and the cost of living make saving a deposit challenging. Eligibility typically requires a good credit score, regular income, and low levels of debt, and lenders will need evidence that you can afford the monthly repayments.
Paul Adams, Sales Director at Pepper Money, comments: "Zero-deposit mortgages can seem like a quick way onto the property ladder, especially for first-time buyers struggling to save. But the reality is these products come with higher interest rates, fewer lender options, and a far greater risk of financial strain if the market fluctuates. In contrast, a 10–25% deposit reduces monthly repayments, gives access to better mortgage deals, and provides a buffer against negative equity. Buyers need to carefully weigh the immediate benefit of getting a home now against the long-term financial stability and flexibility that a traditional deposit offers. For many, patience in saving a deposit can be a safer, more sustainable path to homeownership."
Whether opting for a 0% deposit mortgage or a more traditional product, it is crucial to remember that a mortgage is a legally binding contract. Failure to repay can result in the lender repossessing the property, so careful consideration is encouraged ahead of committing. First-time buyers should research thoroughly and seek advice from a mortgage broker or independent financial advisor who can help them navigate the mortgage process to best suit their needs.
