You need £17,000 for a first home - here's how to do it

A new “Your First Home” scheme announced on Saturday aims to ease the burden for first‑time buyers in England by lowering the deposit needed to purchase a property. With the average UK house now priced at £272,000, a 5 % down‑payment plus moving and legal costs totals roughly £16,850, according to Moneyfacts, a figure that many prospective owners find daunting. The government‑backed initiative is designed to help savers reach that target, while experts outline four practical ways to start building a deposit: regular contributions to a savings account, using a Lifetime ISA (LISA) that adds a 25 % bonus up to £1,000 a year, exploring high‑loan‑to‑value mortgages that require as little as £5,000 up‑front, and seeking parental assistance.

The most impactful tool highlighted is the LISA, which permits individuals to save up to £4,000 annually and receive a 25 % government top‑up, effectively turning a £4,000 contribution into £5,000. However, the scheme is restricted to homes priced at £450,000 or less and funds can only be withdrawn for a first‑home purchase, after age 60, or in the event of terminal illness; any other withdrawal incurs a penalty that can erode the original savings. Ministers have signalled plans to replace the LISA with a new First‑Time‑Buyer ISA, though details remain unsettled. Savings experts also stress the power of compound interest: depositing £50 a month from age 20 could grow to about £41,000 by age 50 at a 5 % annual rate, whereas starting a decade later would require more than double the monthly contribution to achieve the same outcome.

Beyond savings accounts, the article notes that some lenders now offer mortgages with deposits as low as £5,000, allowing borrowers to finance up to 98‑99 % of a property’s price, though eligibility varies and such deals may not suit everyone. A growing trend sees parents supporting their adult children, either by charging rent that is redirected toward a deposit or by providing direct financial help; a Nationwide Building Society survey found that over half of parents who rent to their children also contribute to their home‑buying fund. Together, these options illustrate a shifting landscape where, despite high house prices, a combination of government incentives, disciplined saving, high‑LTV mortgages, and family support can make the first‑time purchase more attainable.

⚡ Effects Interpreter