How to save for a mortgage deposit while renting

Before changing your spending habits, take a look at your current finances. Work out your monthly take-home pay, then subtract your rent, household bills, travel costs, food and other essential spending.

What's left is your starting point. You might discover that you can comfortably save £150 a month, or you may only have £30 to spare right now. Both are useful starting points.

If you can save £150 each month, for example, you'll have put away £1,800 after a year, before any interest or additional contributions.

The aim is to choose a figure you can stick to without leaving yourself short. You can always increase it when your circumstances change.

A budget helps you see where your money goes and identify opportunities to save.

Try dividing your spending into three categories:

• Essentials: rent, bills, groceries, travel and other necessary costs.
• Lifestyle spending: eating out, subscriptions, hobbies and shopping.
• Savings: your house deposit and emergency fund.

Look through a couple of months of bank statements to spot spending patterns. You might find subscriptions you no longer use or realise that small purchases add up more quickly than you expected.

Set yourself a monthly savings target, but leave room for occasional treats. A realistic budget is much easier to maintain than one that feels restrictive.

You don't have to give up everything you enjoy to save for your first home. Instead, look for small changes that could free up money each month.

You could try:

• Comparing energy, broadband and mobile phone deals when your contracts allow.
• Planning meals and making a shopping list before heading to the supermarket.
• Taking your lunch to work a few days a week.
• Cancelling subscriptions you rarely use.
• Swapping some expensive outings for free activities or nights in with friends.

Even saving £10 a week adds up to £520 over a year. Combine a few small changes and you could make a noticeable difference to your deposit.

Rent is likely to be one of your biggest monthly expenses, so it's worth considering whether there's a realistic way to reduce it.

If you're comfortable doing so, you could explore sharing with a housemate, moving to a more affordable area or considering a smaller property when your tenancy allows.

If you live with a partner or friends, splitting certain household costs more evenly might also help.

Of course, moving comes with its own costs, including a rental deposit, removals and potentially overlapping rent payments. Compare the upfront expenses with the potential savings before making a decision.

There's no need to move somewhere that makes your commute, family commitments or quality of life harder just to save a little more.

It can be tempting to put every spare penny towards your deposit, but having some money set aside for unexpected expenses is important too.

A car repair, broken appliance or change in working hours could otherwise leave you relying on credit or dipping into your deposit savings.

Start with a manageable emergency fund and build it gradually. Over time, you could aim to cover several months of essential expenses, depending on what feels achievable for your circumstances.

Keep this money separate from your house deposit, so you know what you have available for unexpected costs.

Keeping your deposit in a separate account makes it easier to track your progress and avoid accidentally spending it.

Compare savings accounts to find one that suits your plans. Look at the interest rate, access restrictions and any minimum balance requirements before choosing.

If you're eligible, a Lifetime ISA could also be worth exploring. You can generally save up to £4,000 per tax year and receive a 25% government bonus, subject to the scheme's rules. For a qualifying first-home purchase, property price and other conditions apply, so check the current guidance before opening an account. Source: GOV.UK

One of the easiest ways to build a savings habit is to make it automatic.

Set up a standing order to transfer an affordable amount into your deposit account shortly after payday. Treat it like another regular bill, rather than waiting to see what's left at the end of the month.

If your income varies, you could set a smaller guaranteed amount and add extra when you have a better month.

You can also increase your standing order whenever your circumstances improve, such as after a pay rise or when a regular expense ends.

Reducing spending can only go so far, so think about whether there are realistic ways to bring in a little extra money.

Depending on your circumstances, this could mean taking on occasional overtime, selling items you no longer need or exploring freelance work that fits around your main job.

If you receive a pay rise, consider putting some of the additional income towards your deposit before adjusting your usual spending.

You don't need to take on extra work if it would affect your wellbeing or other commitments. Focus on options that feel manageable and worthwhile.

Paying rent on time doesn't automatically guarantee a better credit score, but rent reporting services may help make your payment history visible to credit reference agencies.

Check whether your rent can be reported through your letting agent, landlord or a suitable service, and find out which agencies receive the information.

It's also worth checking your credit reports for errors, paying other bills on time and keeping existing borrowing manageable.

Remember that a good credit history and a deposit are two different parts of preparing for a mortgage. Lenders will assess your wider financial circumstances when considering your application.

Our guide to mortgage and credit scores is a good starting point for finding out more about this.

Check whether your employer offers benefits that could help you save, such as a workplace savings scheme or salary-linked financial wellbeing support.

The options available will vary by employer, so ask your HR team what you can access and whether there are any costs or restrictions.

If you receive bonuses, commission or other additional payments, you could put an agreed percentage towards your deposit.

It's also worth checking whether you qualify for any relevant government support or savings products. Always review the eligibility criteria and terms before relying on a scheme as part of your plan.

Unexpected money can give your deposit a helpful boost without changing your usual monthly budget.

This could include birthday money, work bonuses, money from selling unwanted belongings or a tax refund you're entitled to.

Rather than spending the whole amount, consider putting some or all of it into your deposit account.

Even occasional top-ups can help you reach your target sooner. If you receive a particularly large payment, check that you've covered any immediate expenses before deciding how much you can safely save.

Saving isn't the only way to move closer to buying your first home. Depending on where you live and your circumstances, you may be eligible for a first-time buyer scheme or a housebuilder incentive that could help make buying more achievable.

Different schemes work in different ways. Some may help with your deposit, while others could reduce certain costs or support your monthly payments on eligible homes.

Check the eligibility criteria, availability and full terms carefully, and make sure you understand how any incentive affects your overall purchase and mortgage arrangements.

Saving for a home while paying rent is a big commitment, and progress won't always be straightforward.

Some months, you might save more than expected. Other months, an unexpected bill could mean putting less aside or taking a short break from saving.

That doesn't mean you've failed. Review your budget when you need to, celebrate the milestones you reach and adjust your target if your circumstances change.

The important thing is to keep moving towards a goal that works for you.