Saving for a house deposit on £80,000 or more a year

6 min | 11 March 2024

The Chase team

We share practical steps to prepare and save for a home on a salary upwards of £80,000 a year.

As you start earning more, you’re usually able to start saving more. And with those savings can come an array of new possibilities, from travel to purchasing your first home.

For many Brits, home ownership is a top priority, and earning £80,000 a year can start to make that goal a real possibility.

In this article, we share our tips for getting your deposit together and starting the process of buying a home.

Understand what you can purchase

Whether your income is £80,000 a year by yourself or with a partner, you may be in a better position to purchase a home than you might think.

Your mortgage eligibility is usually calculated at 3 to 4.5 times your salary. At £80,000, you could qualify for a mortgage of £240,000 to £360,000, although the exact amount will depend on your income and expenses, and your lender may also look at your credit history. The average price of a property in the UK is £284,691. With the right deposit, this could be well within your reach.

Prepare for the next steps

It would be nice if you could simply get your deposit together, find your home and move in, but the process is more complex than that.

While your exact next steps may vary, in addition to arranging a mortgage, you’ll likely have to work with a conveyancer or a solicitor and secure buildings insurance and possibly life assurance coverage.

You may also have to arrange property surveys and pay the stamp duty (Opens in new window) (though stamp duty does not apply to first-time buyers purchasing properties below certain values).

Legal fees can be upwards of around £1,000, and the average annual premium for combined building and contents insurance is around £150, depending on where you live, the size of the property and the items you'd like insured.

It could be a good idea to put aside an additional £2,000 or £3,000 for any additional fees such a valuation fee, transfer fee or estate agent's fee. That way, you’ll be prepared – and possibly have some extra savings left over.

Maximise your savings

Individual savings accounts, or ISAs, can help you make the most of your growing deposit.

There are four main types of adult ISAs: cash, stocks and shares, innovative finance, and lifetime. You can save up to £20,000 a year tax-free across all the ISAs you may hold, and you may combine them as you see fit.

Lifetime ISAs (Opens in new window) allow you to save up to £4,000 a year, to which the government will add a 25% bonus (up to £1,000 a year). After five years, you could have paid in £20,000 and received an additional £5,000 – a total of £25,000 that you can withdraw for the purchase of your first home. To take out a Lifetime ISA, you have to be between 18 and 39 years old. If you need to withdraw the money before you’re 60, and it’s not for the purchase of a first home up to £450,000 or after a terminal illness diagnosis, you’ll pay a 25% government charge. So, you may get back less than you put in.

You may also want to look at the interest rates on the savings accounts you currently hold; it may make sense to switch to a cash ISA if you're likely to exceed your savings allowance. A cash ISA is much like a regular savings account, except you don't pay any tax on the interest you earn in a cash ISA.

Could a buy-to-let property be the answer?

If you’re set on a home in London, for example, where the average price of a home is £508,037, you may have to keep saving or reassess your priorities.

If your real interest is in investment, you may want to consider purchasing a buy-to-let property. Investing elsewhere in the country while you keep renting could potentially be a way to get on the property ladder.

You would have to act as landlord, which is certainly not a decision to be taken lightly, and purchasing buy-to-let properties often requires a higher deposit. It can be subject to higher interest rates and carry additional tax implications. You'll also have to comply with various legal requirements and be responsible for the maintenance of the property. Remember that investing in property is relatively illiquid, which means you can't get your money back quickly.

Getting a buy-to-let mortgage can also be more difficult as a first-time buyer, as you’re seen as a greater risk without a track record of home ownership, but it's still possible.

If you decide to go this route, it’s essential to do your own research and be honest with yourself about whether you could assume the personal and financial responsibilities.

Keep your eyes on the prize

It can feel like the more you learn about the home-buying process, the more daunting it becomes. But by putting in the time and research now, you’ll be better prepared when you’re ready to purchase.

Whether it’s a bigger garden, space for your future children or pets to play or your first property investment, let your real goals help you stay motivated.

Things might seem stressful now – but it could all be worth it when you get the keys to your new home.

Whether you’re saving for a modern home or a classic car, Chase's easy-access saver account lets you start saving with as little as you like.

18+, UK residents. A Chase current account is required to open a saver account.

Disclaimer: The Hub is intended as a knowledge portal to provide information on a range of topics, including financial products. Articles may reference products and services that Chase UK does not currently offer. This article is for information only and does not constitute financial or legal advice.

As with all investing, your capital is at risk. The value of your portfolio can go down as well as up, and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future. You must be 18–39 years old to open a Lifetime ISA. If you need to withdraw the money before you’re 60, and it’s not for the purchase of a first home up to £450,000 or a terminal illness, you’ll pay a 25% government charge. So, you may get back less than you put in.

Compared to a pension, the Lifetime ISA is treated differently for tax purposes. You may be better off contributing to a pension.

If you choose to opt out of your workplace pension to pay into a Lifetime ISA, you may lose the benefits of the employer-matched contributions. Your current and future entitlement to means-tested benefits may also be affected.

If you are unsure if a Lifetime ISA is the right choice for you, please seek financial advice.

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