How much money sits in your savings account right now? For many people hoping to purchase their first home, that figure feels painfully small. If homeownership is your goal, then accumulating the funds needed to reach it often feels like running a marathon rather than a sprint.
The government's "Your First Home" scheme, unveiled on Saturday, is designed to support first-time buyers in England in taking their initial step onto the property ladder by requiring only a modest deposit.
According to financial information service Moneyfacts, a 5% deposit on the current average UK house price of £272,000, combined with moving costs and legal fees, totals approximately £16,850. While this figure may seem intimidating, experts have identified several practical approaches that can help you begin building towards this target.
How can you treat saving like a regular expense?
Treating your savings contribution as though it were another monthly bill is one of the most effective starting points, according to Anna Bowes, a savings expert at financial advisers The Private Office. By depositing an affordable amount into a regular savers account immediately after receiving your salary, you establish a consistent habit that benefits your future.
"It becomes like another bill, but one that you can benefit from in the future,"Bowes explains.
The right account type depends on your personal situation. Some of the highest-interest accounts require you to maintain a current account with the same provider. You should also consider whether you can commit to locking your money away for a longer period in exchange for a better interest rate.
If you lack a financial cushion of other savings, experts recommend choosing an easy-access account. This flexibility allows you to withdraw funds if an unexpected expense arises, preventing you from derailing your savings plan entirely.
What government bonus can boost your savings?
A Lifetime Individual Savings Account (LISA) allows you to save up to £4,000 annually, and the government adds a 25% bonus on top. This means that if you contribute the maximum amount each year, the government will automatically add £1,000 to your account.
However, this scheme comes with significant restrictions that have caught some savers off guard. Money held in a LISA can only be withdrawn to purchase a first home valued at no more than £450,000—a cap that has remained unchanged since 2017. According to government guidance, the first payment must be made before age 40, and contributions can continue until age 50.
The only other circumstances permitting withdrawal are reaching age 60 or being diagnosed as terminally ill with fewer than 12 months to live. Any other withdrawal triggers a penalty that can cost you significantly. A report from June 2026 found that the withdrawal penalty costs savers 6.25% of their savings if they need to access funds for other reasons, potentially leaving you with less than you originally deposited.
According to MoneyHelper, the scheme is only available to first-time buyers, and the property must be one you intend to live in, not a rental or holiday home. Additionally, the property must be purchased at least 12 months after your first Lifetime ISA payment and with a mortgage, using a conveyancer or solicitor.
The government is planning to replace the LISA with a new First-Time Buyer ISA, though detailed information about how the replacement will operate has not yet been released. Government guidance was updated to confirm that the Lifetime ISA can still be opened until the new replacement product becomes available, and existing Lifetime ISA accounts can continue under current rules indefinitely.
Why does starting early make such a difference?
Beginning your savings journey at a younger age allows you to accumulate substantially more money through the power of compound interest. In essence, as your savings pot grows, the interest earned on that larger amount also increases, creating an accelerating effect over time.
Bowes illustrates this principle with a concrete example: saving £50 monthly from age 20 would result in approximately £41,000 by age 50, assuming an annual interest rate of 5%. However, if you delay your start by a decade and begin at age 30, you would need to save more than double that amount—£101 per month—to reach the same £41,000 target by age 50.
Investing in stocks and shares represents an alternative approach, though it carries additional risk. Unlike savings accounts, the value of stock and share investments can decline as well as increase, meaning your capital is not guaranteed.
What if you reduce the deposit amount?
A growing number of mortgage lenders are now offering deals that require little to no deposit from borrowers. David Hollingworth from L&C points to mortgages with deposits starting from as little as £5,000, allowing borrowers to finance up to 98% or 99% of the property purchase price.
These low-deposit mortgages are not necessarily the optimal choice for every buyer, and eligibility criteria may exclude some applicants. However, they do represent an alternative pathway for those unable to accumulate a traditional 5% deposit.
Many first-time buyers also receive financial assistance from their parents. While this option is not universally available, research by the Nationwide Building Society reveals that more than half of parents who charge their adult children rent are directing some or all of that rental income towards helping their child save for a home purchase.
What new schemes are being introduced?
Beyond the existing Lifetime ISA, the government is developing additional support mechanisms for first-time buyers. A new homes scheme announced in September 2026 offers first-time buyers a 20% equity loan, a minimum 2.5% deposit, and an initial interest-free period. Officials indicated this scheme would be formally announced in the budget and open for registration by the end of 2026.
The First Homes scheme remains an England-only programme focused on new-build properties, offering discounts of at least 30% below market value, with some cases providing reductions of 30% to 50%. The discount is preserved if the property is resold, providing ongoing benefit to subsequent first-time buyers.
When will the new First-Time Buyer ISA launch?
The replacement First-Time Buyer ISA is reported to be due around April 2027, following its announcement in the budget. This new product is expected to address some of the limitations that have frustrated savers under the current Lifetime ISA system, though the government has not yet released comprehensive details about its structure or terms.
In the meantime, prospective buyers can continue opening new Lifetime ISA accounts and building their deposit savings through the existing schemes and strategies outlined above.
