How to Budget and Save for Your First Home

Buying your first home is one of life’s biggest milestones — but saving enough for a deposit can feel daunting.

Between rising rents and daily expenses, it’s easy to think homeownership is out of reach.

The truth is, with the right budget, structure, and small lifestyle tweaks, saving for your first property is more achievable than you might think.

Here’s a clear plan to help you stay motivated, grow your deposit faster, and take confident steps toward your first home.

Know Your Target — What You’re Saving For

Start by understanding how much you’ll need.

Most lenders ask for at least a 5% deposit, although 10%–15% can unlock better rates.

Example:

Property price: £250,000
10% deposit: £25,000

Add to that around £2,000–£3,000 for extras like legal fees, valuation costs, and moving expenses.

Tip: Get a free affordability check from Mortgage Knight to estimate your target deposit and potential monthly payments.

Review Your Current Spending

Before you can save more, you need to know where your money’s going.

Check the last three months of statements and group spending into categories:

Essentials (rent, utilities, travel)
Flexible (food, entertainment, subscriptions)
Savings/debt repayments

You’ll quickly spot where small cuts can make a big difference — for example, £100 less in takeaways per month equals £1,200 saved a year.

Set Up a Separate “House Fund” Account

Keep your deposit savings separate from everyday spending.

Opening a dedicated savings account helps you:

Track progress easily
Avoid the temptation to dip into it
Earn higher interest on your balance

Consider high-interest savings or Lifetime ISAs, which add a 25% government bonus on up to £4,000 saved per year (great for first-time buyers).

Automate Your Savings

Treat saving like a bill.
Set up a monthly standing order to transfer money to your house fund as soon as you get paid.
It removes the need for discipline — and turns saving into a habit.
Even £300 a month adds up to £3,600 a year, plus potential interest or ISA bonuses.

Cut Costs Without Feeling the Pain

It’s not about cutting everything out — just being smart with where money goes:

Switch energy, broadband, or insurance providers.
Cancel unused subscriptions.
Use cashback and voucher sites for essentials.
Cook more at home and plan weekly meals.

These small swaps can free up hundreds of pounds a month without major lifestyle changes.

Build (or Repair) Your Credit

While saving your deposit, work on your credit score too.
Lenders prefer borrowers who show consistent financial behaviour.
Register to vote, pay bills on time, and keep credit card balances low — these steps make a big difference when you’re ready to apply.

Don’t Forget Other Costs

Many first-time buyers forget about the extras beyond the deposit, like:

Solicitor fees: £800–£1,500
Mortgage fees: £0–£1,000 depending on lender
Survey/valuation: £250–£600
Stamp Duty: Often £0 for first-time buyers under £425,000

Knowing these costs early helps you plan your total budget realistically.

Get Pre-Approval Early

Once your deposit is on track, a Decision in Principle (DIP) shows what you can afford and strengthens your buying position.

Mortgage Knight can arrange this quickly — giving you confidence when you start viewing properties.

Case Studies

Case Study 1: Jack – Saving with Structure

Jack used a Lifetime ISA and automatic transfers of £250 a month. With Mortgage Knight’s help, he had a £15,000 deposit in two years and bought his first home in Nottingham.

Case Study 2: Sarah & Lee – Cutting Smart, Not Deep

They switched utility providers, cancelled unused subscriptions, and meal-planned weekly. The £300 they saved monthly went into their deposit fund, reaching £20,000 within 18 months.

Case Study 3: Priya – Credit Rebuild + Saving Plan

Priya improved her credit score while saving £200 a month. When she applied through Mortgage Knight, her stronger profile helped her access a high-street rate at 5% deposit.