The best way to save for a house is to be goal-focused and strict with your money management. There are several things you can put in place to ensure that you are.

These include:

Setting a savings goal

First, you need to determine the type of property you want to buy. You might be looking to save for your first home, or for a bigger house for your growing family. Once you’ve decided on your goal, research to find out the average deposit and determine how much you need to save. It’s helpful to use an online mortgage calculator for this.

Keep this savings goal in mind when you’re setting aside funds for the house and do your best to stay on track. You can reassess your goals at any time if your circumstances change.

Setting up a Lifetime ISA

If you’re a first-time buyer, a Lifetime ISA is one of the best ways to save for a house. This style of ISA provides a very high savings potential but also has incredibly tight restrictions on retrieving your money: you can only withdraw funds when you buy your first home, when you reach the age of 60, or if you become terminally ill. They may also have set fees for early withdrawal.

Lifetime ISAs require the government to make a contribution equal to 25% of the amount you’ve deposited over the course of the year, although it should be said that there is a government contribution limit of £1000 per year.

If you’re looking to save for your first home and think a Lifetime ISA could be for you, review the terms and conditions of the account. You may want to also discuss it with both your bank and an independent financial advisor.

Using multiple accounts

Separating your finances across multiple accounts can help you to assess your expenditure and avoid dipping into your savings by mistake. Keeping your monthly budget in one account, and your savings pot in another is also a wonderful way to safeguard your funds from scams and theft, since your money won’t be completely drained if a single account is compromised.

Many families set up a joint account for bill payments and the household fund, but you can also set up savings accounts for individual goals such as homebuying, university funds and weddings.

Shop around for the best interest rates across multiple banks, especially when setting up a savings account. This can help you to save passively by accruing interest on your untouched funds.

Setting a monthly budget

A monthly budget is a good idea for financial security, even if you have a comfortable salary. Without one, you can end up spending far more than planned and falling short when it comes to making important payments. It’s also good practice in preparation for having a mortgage.

If you don’t already have a budget, sit down and go through your monthly costs, separating important items from luxuries. You can then allocate a certain amount to save every month, to build up your house deposit. One example might be to allocate 50% for items you need, 30% for those you want and 20% designated for your savings pot, but these percentages can be adjusted to your personal circumstances.

If you’d like professional advice for this step, you should speak to an independent financial advisor.

Cutting down on spending

Once you’ve created your budget, you’ll be able to identify and cut down on unnecessary expenses.

For example, one way you might choose to cut down your costs is to make more dinners at home, rather than eating out or ordering takeaways. You might also find there are other “luxuries” you can cut down on, such as the number of streaming platforms you’re subscribed to.

Cutting down on luxuries can be difficult, especially if you’re managing the budget for a whole family. Try to split the sacrifices evenly, particularly between yourself and your spouse, to keep the budget fair.

When it comes to cutting down, it’s important not to overdo it. If you don’t leave enough leeway for emergencies, food and other necessities, you may need to dip into your savings to cover the cost.

Make sure that you can live comfortably on the spending money you’ve set aside and, where possible, keep your savings safe from impulse purchases by keeping them in a locked account or a building society.

Improving your credit score

Improving your credit score will give your mortgage provider more confidence in you and you may be able to reduce the amount you’ll need to save. There are many ways to boost your credit score, including:

• Registering to vote
• Limiting credit applications
• Using no more than 30% of your available credit
• Paying your rent and bills on time
• Setting up regular direct debits

If you have minimal debt, a good history of repayments and a track record of responsible money management, a bank may be able to offer you a better mortgage rate. Depending on your priorities, it may also be possible to reduce the cost of your deposit or the time it’ll take for you to pay off your mortgage.

Combining your funds

If you’re purchasing a house with your significant other, you may want to combine your funds. Banks often feel more confident lending when there are multiple adults responsible for covering mortgage payments, and you’re likely to get a more favourable rate as a result. You’ll also have better financial security if your home and expenses aren’t dependent on a single income.

Speak to a mortgage advisor

Getting professional advice early on will help you identify the best rates, navigate complex credit situations, and speed up your application.

How much should you save before you buy a house?

The amount you’ll need for a deposit varies depending on the price of the house and the mortgage repayment terms. It’s recommended to put down a deposit of at least 15% of the house’s value, although you may be able to reduce it to as little as 5% if you accept a high interest rate and a lengthy repayment period.

The higher the deposit, the better your mortgage terms will be; if you manage to save enough for a 20% deposit, you’ll find that mortgage offers become increasingly favourable towards you.

Saving up for a new build home?

Buying a new home doesn’t have to be as daunting as it feels. With forward-planning, smart saving and programs designed to help you save for your first home, you could become a homeowner sooner than you think.

Whether you’re a first-time buyer or you’re climbing the property ladder, you can achieve your goals by buying with Bloor.