- Published
If buying your own home is the finishing line, then saving up the money to get there is a marathon.
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saving → publish → money
The "Your First Home" scheme, announced on Saturday, aims to help first-time buyers in England get on the housing ladder with a small deposit.
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buyers → announce → deposit
Currently a 5% deposit on the current average UK house price of £272,000 plus moving costs and legal fees - will set you back about £16,850, according to financial information service Moneyfacts.
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That's daunting, but here are four ways that experts say you can at least make a start on saving for a deposit.
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1. Make saving like a bill
Depositing an amount you can afford into a regular savers account the day after you are paid is a good way to start, suggests Anna Bowes, savings expert at financial advisers The Private Office.
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"It becomes like another bill, but one that you can benefit from in the future," she says.
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The type of account that's suitable depends on your circumstances.
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Some of the ones which pay the highest interest are only accessible if you hold a current account with the provider, she says.
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Other considerations are whether you can lock the money away for longer, to receive a better savings rate.
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If you don't have a buffer of other savings, then experts say an easy access account gives you the chance to dip into the money to pay an unexpected bill.
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You could get £1,000 a year
You can save up to £4,000 a year in a Lifetime Individual Savings Account (LISA) and the government guarantees a 25% bonus.
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So, if you put the full amount in then the government will add £1,000 a year.
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But there is a catch, that has left some people out of pocket.
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Money saved in a LISA can only be used to buy a first home up to the value of £450,000 - a threshold that has not changed since 2017.
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The only other time you can withdraw the money is after the age of 60 or in the exceptional case that you are terminally ill with less than 12 months to live.
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Withdrawal under any other circumstances means you get hit with a penalty - so you could get back less than you put in.
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Ministers are planning to replace the LISA with a new First Time Buyer ISA, but there are no clear details yet about how it will work.
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Start early
The earlier you start saving the more you can build up thanks to the magic of compound interest.
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In short, interest is added on a larger and larger pot as time goes by.
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Bowes says that saving £50 a month from the age of 20 would give you about £41,000 in 30 years' time when you hit 50, assuming interest of 5% is paid a year.
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Start 10 years later, and you'd need to save more than double - £101 a month - to have the same amount at the age of 50.
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you → start → 50
Investing in stocks and shares is another option, but the value of investments can go down as well as up.
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An increasing number of lenders are offering mortgage deals with little or no deposit required.
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David Hollingworth, from L&C, points to mortgages that have deposits starting from £5,000 and allow people to borrow up to 98% or 99% of the property purchase price.
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And, of course, some first-time buyers turn to their parents for help.
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Again that's not available to all, but a survey by the Nationwide Building Society suggests that more than half of parents who charge their adult children rent are putting some or all of the money towards helping their child save to buy their own home.
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The Aporia
