Setting a realistic savings target
Start with the property prices where you actually want to buy. If a typical home there runs to £250,000, your 5% deposit is £12,500. Factor in solicitor fees, a survey and the cost of moving, and you have a real figure to aim at.
Splitting that figure into a monthly amount makes it feel less daunting. Say you need £15,000 within two years: that works out at roughly £625 a month. If the numbers do not add up, stretch the timeline or look at a slightly cheaper area. Our mortgage deposit guide goes deeper on how much you really need.
Using a Lifetime ISA
A Lifetime ISA lets you put away up to £4,000 a year towards your first home, and the government tops it up with a 25% bonus, so that is up to £1,000 added for free each year. You have to be aged 18 to 39 to open one, and the home you buy cannot cost more than £450,000.
The bonus lands monthly, so the pot builds steadily. One thing to watch: take the money out for anything other than a first home or retirement and you pay a 25% withdrawal penalty, which leaves you a little worse off than if you had never opened the account.
Gifted deposits and family help
A lot of first-time buyers get a hand from family towards the deposit. Lenders accept a gifted deposit as long as the person handing over the money signs a declaration to confirm it is a gift and not a loan they expect back.
Families sometimes go a different route, such as a family offset mortgage, where a relative’s savings are used to bring down the interest you pay, or a joint borrower sole proprietor mortgage, where a family member goes on the mortgage but not on the property’s title deeds. Your adviser can talk you through which of these fits your situation.