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Saving for a mortgage deposit

Your home may be repossessed if you do not keep up repayments on your mortgage

Tips to help you find the money required

Start saving early

Your home is usually the most expensive purchase you'll ever make, so it probably won't come as a surprise that you need to think about saving for a house as early as possible. We offer a range of savings accounts to help make it easier for you.

Save as much as possible

According to the Money Advice Service (opens in a new window), the minimum deposit needed for a mortgage is usually 5% of the price of your house, so saving for a deposit may take some time. Offering to pay a larger deposit might lower the interest rate of your mortgage. The more you save, the better.

How large a deposit you will need

Some mortgages will have a maximum loan to value, or LTV. The LTV is how much of the value of the house is paid for by the mortgage. If you pay a 10% deposit, the loan to value would be 90%. On a house costing £150,000 you'd need a £15,000 deposit to get a mortgage with a maximum 90% loan to value. You can use our online mortgage calculator to see how your deposit will affect the total repayments on your mortgage.

Choosing the right account

Once you've decided how much you can afford to save towards your deposit you should decide on which savings account will best suit your circumstances. The right account can help you to plan how to save for a mortgage. Some offer unlimited withdrawals but should you choose to choose a fixed term deposit with no withdrawals you may receive a better rate of interest.

Instant access or fixed term

Instant Access accounts accounts allow you to deposit and withdraw money as often as you like without any penalty. Since saving for a deposit for a home is usually a longer term effort Fixed Term accounts may be helpful. These will offer a better rate of interest but might require notice for you to make a withdrawal, have a minimum deposit amount or limit the number of withdrawals you can make in a year. At Yorkshire Bank withdrawals or early closure of the term deposit are not permitted under any circumstances during the fixed term. When saving for a deposit a notice period may be a useful feature, as limiting access to the money might help you leave it in the account for longer. Check the terms and conditions of our Savings accounts if you’d like to find out more.

Tax efficient savings

A Cash ISA may be another option. These accounts offer some tax benefits, which could allow your savings to grow faster than they would in a regular savings account. There is a limit to how much you can pay in to an ISA in any given year.

The value of any tax benefits to you depends on your individual circumstances, the Law and Her Majesty's Revenue and Customs (HMRC) practice which are subject to change. The proceeds of an ISA are currently free from UK Income Tax and Capital Gains Tax,provided all ISA conditions are met

The costs of buying a house

Remember when planning your purchase that you're likely to need more than just the purchase price of the house.

Perseverance and planning

Saving a deposit for a new home probably won't happen overnight but with perseverance, careful planning and the right savings account it may happen sooner than you think.

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Interested in a mortgage?

Your next steps

Give us a call

  • If you've got any questions, get in touch.

    New Mortgage customers

    0800 023 2201

    Mon-Fri 8am-8pm, Sat 9am-5pm and Sun 10am-4pm

    Existing mortgage customers

    0800 121 4203

    Mon-Fri 8am-5pm