The UK government has announced the 'Your First Home' scheme, aiming to help first-time buyers in England get on the housing ladder with a small deposit. According to financial information service Moneyfacts, a 5% deposit on the current average UK house price of £272,000, plus moving costs and legal fees, totals approximately £16,850. This figure is presented as a significant barrier for many aspiring homeowners.

Experts have outlined four strategies to help individuals start saving for a deposit. One approach is to treat saving like a regular bill, as suggested by Anna Bowes, a savings expert at financial advisers The Private Office. She recommends depositing an amount you can afford into a regular savers account immediately after receiving your paycheck. The type of account suitable depends on individual circumstances, with some high-interest accounts requiring a current account with the provider.

Another method involves the Lifetime Individual Savings Account (LISA), which allows saving up to £4,000 annually with a government 25% bonus, effectively adding £1,000 per year. However, the LISA has limitations, as funds can only be used for a first home up to £450,000, a threshold unchanged since 2017. Withdrawals are restricted to age 60 or in exceptional cases of terminal illness, with penalties for other withdrawals.

Starting early is emphasized as a key factor in building savings through compound interest. Bowes notes that saving £50 a month from age 20 could yield £41,000 by age 50 at a 5% annual interest rate. Delaying by a decade would require saving over double that amount. Investing in stocks and shares is another option, though it carries the risk of market fluctuations.

Lenders are increasingly offering mortgages with little or no deposit required, with some starting from £5,000. David Hollingworth from L&C highlights these options, though they may not be suitable for everyone. Additionally, some first-time buyers seek help from parents, with a survey by Nationwide Building Society indicating that over half of parents charging rent to their adult children contribute to their children's home savings.

The government's plan to replace the LISA with a new First Time Buyer ISA remains unclear, with no detailed information available. The challenge of saving for a first home remains significant, with the £17,000 deposit threshold posing a substantial hurdle for many potential buyers.