The Most Common Ways People Have Funded Deposits – and What Actually Works and Why it’s Unlikely to do With Your Morning Coffee!
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It’s become something of a tired joke: “If only you stopped buying avocado on toast and takeaway coffees, you’d be able to afford a house.” The implication being that millennials and Gen Z buyers may be unwilling to sacrifice their lifestyle to save for a deposit, rather than property prices have massively outpaced wage growth for over two decades.
Of course, giving up your flat white won’t magically get you £60,000 for a house deposit. But it does raise a bigger question: how do people actually manage to raise the funds for a deposit in today’s market?
Working with homebuyers over the years, we’ve seen all sorts of deposit strategies, some straightforward, some surprising, and some downright unconventional. Here’s a roundup of the more unusual (but entirely real) ways people have managed to pull together their deposit, plus a more grounded view on what really works.
1. Cryptocurrency Cash-ins
A few years ago, one client came to us with a deposit made almost entirely from selling their Cryptocurrency holdings. They’d bought in during the early boom, held through the volatility, and cashed out. Purely speculation, not a detailed financial plan.
While this certainly isn’t a typical strategy, it’s increasingly common for buyers in their 20s and 30s to use crypto gains towards a deposit. That said, lenders are cautious about the source of the funds. If you’re considering using crypto profits, you’ll need to provide a clear audit trail: transaction histories, exchange accounts, and proof of funds converting into a bank account.
Verdict: Risky, unpredictable, but can work – with the right paper trail.
2. Early Inheritances
We’re seeing more instances of parents choosing to pass on wealth earlier, particularly as property becomes harder to reach. In some cases, grandparents are also stepping in, either by releasing equity from their own home or passing on gifts from savings.
The benefit of an early inheritance is obvious: it can significantly accelerate your path to home ownership. But there’s a balance. Parents often still need to secure their own retirement before giving large gifts, and gifting needs to be formally documented for both tax and lender compliance.
It’s also worth noting that gifts aren’t limited to deposits. Some families help cover legal fees or provide ‘living inheritance’ by covering rent while the buyer saves.
Verdict: A major accelerator for many buyers but needs careful planning and open family discussions.
3. Divorce Settlements
Another deposit source that’s more common than you’d think though often not spoken about is wealth received following a divorce.
In one case, a client who had rented for most of her adult life suddenly had the ability to buy after reaching a clean break settlement from her ex-partner. She hadn’t expected it to happen but used the opportunity to purchase a home close to her adult children.
For some, divorce can mark a fresh start, and that includes stepping back onto the property ladder. The lump sum received is often used as a full deposit or to secure a smaller mortgage for a more manageable lifestyle post-separation.
Verdict: Life happens and divorce settlements are a realistic route for some to re-enter the housing market.
4. Compensation Payouts
Less frequently discussed, but still valid, are compensation settlements from accident claims or employment tribunals. In rare cases, these windfalls have been used as deposit funds.
One client, for instance, used an employment dispute settlement to finally get the keys to their own place after years in shared accommodation. These funds are usually scrutinised by lenders, who will want to understand the origin and legitimacy of the lump sum.
Verdict: Legitimate but uncommon – and needs careful documentation.
5. Joint Purchases with Friends or Siblings
Buying with a friend or sibling can double the deposit saving power. While this isn’t necessarily a “weird” approach, the creative agreements people come up with certainly can be.
One pair of buyers signed a private legal agreement that they’d sell the property after five years, split the proceeds, and use it as a stepping stone for their individual purchases. Another sibling duo lived together in the property for a few years, then one bought the other out using a remortgage.
Joint purchases come with complexities, especially if things go wrong, but for those priced out on a solo income, it can be a foot in the door.
Verdict: Increasingly common – but needs clarity, legal advice, and a clear exit plan.
So, What Actually Works?
Ultimately, most buyers build their deposit from a combination of strategies. The most dependable methods include:
· Lifetime Cash ISAs: A £4,000 yearly contribution gets you a £1,000 bonus. But be aware of the potential penalties from early withdrawals and the rules surrounding property value
· Regular saving and budgeting: Not glamorous, but still the backbone of most deposits.
· Family gifts: Still the most common route for many first-time buyers.
· Earning more, not just saving more: For some, increasing income (through promotions, side work, or switching jobs) makes a bigger difference than cutting spending.
Giving up your coffee habit might help you build discipline, but it’s not going to solve structural affordability issues. Today’s average first-time buyer deposit can range from £30,000 to £80,000 depending on where you live, far beyond what small lifestyle cuts can bridge.
But with the right mix of savings discipline, support, planning, and sometimes a bit of luck, it is possible.
Thinking of your own route to buying a home?
Whether your deposit is built from steady savings or an unusual windfall, getting the mortgage part right is key. Speak to an adviser to explore your options and avoid the pitfalls, especially if your deposit isn’t coming from the traditional route.
Let us help you make your first step the right one.