Saving the cash required for a first‑home deposit in the United Kingdom now amounts to roughly £16,850, based on a 5 % deposit of the average house price of £272,000 plus moving and legal costs, according to Moneyfacts. While the figure can feel daunting, financial advisers outline four concrete approaches that can help prospective buyers begin to bridge the gap.
Make saving feel like a regular bill
Anna Bowes, a savings specialist at The Private Office, recommends treating a monthly deposit as if it were another bill that must be paid the day after payday. By moving a fixed amount into a savings account automatically, the habit becomes routine and the money grows without requiring constant attention. The choice of account should match the saver’s circumstances. Some high‑interest products are only available to customers who also hold a current account with the same provider, while others offer better rates in exchange for locking the funds for a longer term. If a saver does not yet have an emergency buffer, an easy‑access account may be preferable, allowing occasional withdrawals for unexpected expenses.
Take advantage of the Lifetime ISA bonus
The Lifetime Individual Savings Account (LISA) permits contributions of up to £4,000 per year, with the government adding a 25 % bonus – effectively £1,000 for a full‑year contribution. Funds held in a LISA can be used only for purchasing a first home priced at £450,000 or less, a ceiling that has remained unchanged since 2017. Withdrawals before age 60 for any other purpose trigger a penalty that can return less than the original contribution. The only exceptions are withdrawals after age 60 or in the event of a terminal illness with less than 12 months to live. While ministers have signalled plans to replace the LISA with a new First‑Time Buyer ISA, details of the replacement scheme have not yet been released.
Start early to harness compound interest
Compounding can dramatically increase the value of modest, regular contributions over time. Bowes illustrates that saving £50 each month from age 20, assuming an annual interest rate of 5 %, would accumulate to about £41,000 by age 50 – more than enough for a typical deposit. Delaying the start by a decade would require saving £101 per month to reach the same target, highlighting the cost of postponement.
Explore low‑deposit mortgage products
Some lenders now offer mortgages that require little or no upfront cash. David Hollingworth of L&C points to products that accept deposits as low as £5,000 and allow borrowers to finance up to 98 % or 99 % of the purchase price. In addition, many first‑time buyers receive assistance from parents. A Nationwide Building Society survey found that more than half of parents who charge rent to adult children also contribute some or all of that rent toward their child’s home‑buying savings.
Combining these strategies – automating regular savings, leveraging government‑backed ISA incentives, beginning early, and considering high‑loan‑to‑value mortgage options – can make the £17,000 target more attainable for many aspiring homeowners.
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
