Latest news with #LISAs
Yahoo
20-05-2025
- Business
- Yahoo
Pros and cons of lifetime ISAs
Lifetimes ISAs, or LISAs as they're more commonly known, were introduced in 2017 to give UK residents between the ages of 18 and 39 the chance to save for their first home or retirement. According to HMRC, more than 1 million LISA accounts had been opened by 2023, with the total amount saved about £6.5bn. While COVID and the post-pandemic housing boom fuelled their use, more recently, there's been a decline in take-up, with higher interest rates and the cost-of-living crisis making home ownership difficult and saving for the long term even harder. 'According to data from HMRC, LISAs only accounted for 4% of total ISA subscriptions between 2022 and 2023,' says Amelia Murray, money expert at Be Clever With Your Cash. As a consequence, the government is currently debating their validity and looking into potential improvements. Read more: Martin Lewis issues lifetime ISA warning to MPs Brian Byrnes, head of personal finance at Moneybox, explains: 'The Treasury select committee launched a call for evidence on the lifetime ISA, looking to understand if the product's original design continues to meet the needs of young savers now and into the future. 'Despite being introduced in 2017, the LISA's core rules have remained unchanged, prompting the committee to examine whether it continues to effectively support first-time buyers and long-term savers.' With this in mind, we spoke to four financial experts to see whether investing in a LISA is still a good idea. What is a LISA? A LISA is a type of tax-free ISA that allows savers to deposit a maximum of £4,000 per tax year, on top of which the government will add a bonus of 25%, equating to an annual maximum of £1,000. After a minimum of one year, a LISA can then be used to purchase a first home, up to the value of £450,000, or, after the age of 60, be taken out as a pension. A LISA can only be opened between the ages of 18 and 39 but you can continue paying into it until the age of 50. Read more: What is the lifetime ISA? 'Importantly, if you opened a Lifetime ISA aged 18 and contributed the maximum £4,000 every tax year until you turned 50, you could earn up to £32,000 in government bonuses over time,' flags Byrnes. You can choose between a cash or a stocks & shares LISA but, whichever you go for, counts towards your £20,000-a-year ISA allowance. If you plan to use your LISA to buy a first home, you need to live there rather than use it as a buy-to-let investment. Who are they best suited for? As there are several restrictions on use, you need to carefully assess whether a LISA is the right product for you. Anna Yen, CFA at Moneylion, says they work for 'first-time buyers confident of purchasing their home (sub £450,000), basic-rate taxpayers, and young savers who can lock their money away long-term'. She flags that higher earners might prefer pension tax relief to LISA, as this can be up to 45%. In general, LISAs make a good choice for disciplined savers who are confident that they can afford to lock their savings away for the long term. What are the advantages? The main advantage of a LISA is that the government bumps up your savings by 25%, one of the highest savings rate currently available. '[Our] data shows that first-time buyers who use a lifetime ISA buy on average four years sooner than those who don't,' says Richard Dana, founder and CEO of savings and mortgage platform, Tembo Money. 'LISA's bonus and tax-free growth outperform pensions for basic-rate taxpayers. For example, there is no tax on withdrawals, whereas pensions attract income tax,' says Yen. '[They also] fall outside the purview of your estate.' It's also relatively simple to transfer lifetime ISAs between providers if you want to take advantage of a better rate. 'The 12-month time-limit starts from when the first LISA is initially opened, not from when it is transferred,' says Dana. What are the disadvantages? A major issue – and the one central to the current debate – is the withdrawal penalty. 'Savings made into a LISA can only be withdrawn without penalty when used to purchase a first home or accessed after age 60 for retirement,' says Byrnes. 'Withdrawals made for any other reason are considered unauthorised and subject to a 25% penalty, meaning savers not only lose the government bonus but also some of their own contributions.' This works out as the full government bonus, plus 6.25% of their own savings. While some sort of penalty will inevitably be retained, the present high level is dissuading savers who can't predict what the future holds: 'The current early withdrawal charge is harsh on those experiencing unexpected life events and means you could end up with less money than you put in,' adds Murray. Read more: What is an annuity? Everything to know before taking one out Another issue is the house price cap placed on buying a first home. In April 2025, the average London home cost £671,000, according to Rightmove, well above the £450,000 limit. And it's not just London. 'Data suggests that, unless the threshold changes, first time buyers (FTBs) will be priced out of buying a terrace house in 54 regions across the UK by the end of this parliament,' flags Murray. 'We recently surveyed more than 4,000 aspiring FTBs across the country, and 24% want to see the LISA price cap increased in line with house price growth; 23% want to see the LISA's penalty either removed or reduced,' says Byrnes. Another disadvantage is that the age limits are restrictive and exclude older first-time buyers; a trend that, with higher property prices, is only set to increase. Furthermore, it's important to understand the difference between a stocks & shares LISA and a cash one. 'Investment LISAs have higher charges than cash LISAs,' says Yen and these will also go down as well as up, in line with how your investments are faring on the stock market. What's the future of LISAs? The Treasury select committee is expected to announce its findings in the next few weeks and any suggested changes will be brought to parliament ahead of the autumn budget. 'The evidence and recommendations delivered so far range from simplifying the LISA's structure, to expanding its eligibility and increasing limits,' says Byrnes. 'There was much consensus on how the product could be future proofed for the next generation of young savers, including reducing the unauthorised withdrawal penalty and reviewing the property price cap so it reflects changing market conditions.' While LISAs have enabled hundreds of thousands of first-time buyers to purchase their own home, their impact on boosting people's retirement savings is less obvious and this is where the product may require a further re-think. Read more: How rising house prices can impact your finances 10 home upgrades that don't need planning permission What are green mortgages and are they the future?Sign in to access your portfolio
Yahoo
20-05-2025
- Business
- Yahoo
Pros and cons of lifetime ISAs
Lifetimes ISAs, or LISAs as they're more commonly known, were introduced in 2017 to give UK residents between the ages of 18 and 39 the chance to save for their first home or retirement. According to HMRC, more than 1 million LISA accounts had been opened by 2023, with the total amount saved about £6.5bn. While COVID and the post-pandemic housing boom fuelled their use, more recently, there's been a decline in take-up, with higher interest rates and the cost-of-living crisis making home ownership difficult and saving for the long term even harder. 'According to data from HMRC, LISAs only accounted for 4% of total ISA subscriptions between 2022 and 2023,' says Amelia Murray, money expert at Be Clever With Your Cash. As a consequence, the government is currently debating their validity and looking into potential improvements. Read more: Martin Lewis issues lifetime ISA warning to MPs Brian Byrnes, head of personal finance at Moneybox, explains: 'The Treasury select committee launched a call for evidence on the lifetime ISA, looking to understand if the product's original design continues to meet the needs of young savers now and into the future. 'Despite being introduced in 2017, the LISA's core rules have remained unchanged, prompting the committee to examine whether it continues to effectively support first-time buyers and long-term savers.' With this in mind, we spoke to four financial experts to see whether investing in a LISA is still a good idea. What is a LISA? A LISA is a type of tax-free ISA that allows savers to deposit a maximum of £4,000 per tax year, on top of which the government will add a bonus of 25%, equating to an annual maximum of £1,000. After a minimum of one year, a LISA can then be used to purchase a first home, up to the value of £450,000, or, after the age of 60, be taken out as a pension. A LISA can only be opened between the ages of 18 and 39 but you can continue paying into it until the age of 50. Read more: What is the lifetime ISA? 'Importantly, if you opened a Lifetime ISA aged 18 and contributed the maximum £4,000 every tax year until you turned 50, you could earn up to £32,000 in government bonuses over time,' flags Byrnes. You can choose between a cash or a stocks & shares LISA but, whichever you go for, counts towards your £20,000-a-year ISA allowance. If you plan to use your LISA to buy a first home, you need to live there rather than use it as a buy-to-let investment. Who are they best suited for? As there are several restrictions on use, you need to carefully assess whether a LISA is the right product for you. Anna Yen, CFA at Moneylion, says they work for 'first-time buyers confident of purchasing their home (sub £450,000), basic-rate taxpayers, and young savers who can lock their money away long-term'. She flags that higher earners might prefer pension tax relief to LISA, as this can be up to 45%. In general, LISAs make a good choice for disciplined savers who are confident that they can afford to lock their savings away for the long term. What are the advantages? The main advantage of a LISA is that the government bumps up your savings by 25%, one of the highest savings rate currently available. '[Our] data shows that first-time buyers who use a lifetime ISA buy on average four years sooner than those who don't,' says Richard Dana, founder and CEO of savings and mortgage platform, Tembo Money. 'LISA's bonus and tax-free growth outperform pensions for basic-rate taxpayers. For example, there is no tax on withdrawals, whereas pensions attract income tax,' says Yen. '[They also] fall outside the purview of your estate.' It's also relatively simple to transfer lifetime ISAs between providers if you want to take advantage of a better rate. 'The 12-month time-limit starts from when the first LISA is initially opened, not from when it is transferred,' says Dana. What are the disadvantages? A major issue – and the one central to the current debate – is the withdrawal penalty. 'Savings made into a LISA can only be withdrawn without penalty when used to purchase a first home or accessed after age 60 for retirement,' says Byrnes. 'Withdrawals made for any other reason are considered unauthorised and subject to a 25% penalty, meaning savers not only lose the government bonus but also some of their own contributions.' This works out as the full government bonus, plus 6.25% of their own savings. While some sort of penalty will inevitably be retained, the present high level is dissuading savers who can't predict what the future holds: 'The current early withdrawal charge is harsh on those experiencing unexpected life events and means you could end up with less money than you put in,' adds Murray. Read more: What is an annuity? Everything to know before taking one out Another issue is the house price cap placed on buying a first home. In April 2025, the average London home cost £671,000, according to Rightmove, well above the £450,000 limit. And it's not just London. 'Data suggests that, unless the threshold changes, first time buyers (FTBs) will be priced out of buying a terrace house in 54 regions across the UK by the end of this parliament,' flags Murray. 'We recently surveyed more than 4,000 aspiring FTBs across the country, and 24% want to see the LISA price cap increased in line with house price growth; 23% want to see the LISA's penalty either removed or reduced,' says Byrnes. Another disadvantage is that the age limits are restrictive and exclude older first-time buyers; a trend that, with higher property prices, is only set to increase. Furthermore, it's important to understand the difference between a stocks & shares LISA and a cash one. 'Investment LISAs have higher charges than cash LISAs,' says Yen and these will also go down as well as up, in line with how your investments are faring on the stock market. What's the future of LISAs? The Treasury select committee is expected to announce its findings in the next few weeks and any suggested changes will be brought to parliament ahead of the autumn budget. 'The evidence and recommendations delivered so far range from simplifying the LISA's structure, to expanding its eligibility and increasing limits,' says Byrnes. 'There was much consensus on how the product could be future proofed for the next generation of young savers, including reducing the unauthorised withdrawal penalty and reviewing the property price cap so it reflects changing market conditions.' While LISAs have enabled hundreds of thousands of first-time buyers to purchase their own home, their impact on boosting people's retirement savings is less obvious and this is where the product may require a further re-think. Read more: How rising house prices can impact your finances 10 home upgrades that don't need planning permission What are green mortgages and are they the future?Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-05-2025
- Business
- Yahoo
Rachel Reeves U-turns on plan to cut ISA limit to £4,000
Rachel Reeves has confirmed she will not reduce the £20,000 annual limit for Individual Savings Accounts (ISAs) in a move set to benefit savers across the country. The chancellor had faced pressure from banks not press ahead with plans to cut the limit in a bid to kickstart growth, which is one of the government's key objectives. Earlier this year Emma Reynolds, the economic secretary, pointed out 'hundreds of billions of pounds in cash ISAs' were preventing money from being invested in the London Stock Exchange, fuelling speculation the annual limit could be cut. But Ms Reeves told the BBC: 'I'm not going to reduce the limit of what people can put into an ISA, but I do want people to get better returns on their savings, whether that's in a pension or in their day-to-day savings. 'And at the moment, a lot of money is put into cash or bonds when it could be invested in equities, in stock markets, and earn a better return for people. But I absolutely want to preserve that £20,000 tax-free investment that people can make every year.' Cash ISAs, which are held by 18m people and have a combined total of almost £50bn in them, allow households to save without paying income tax on the interest. But there are also Lifetime Isas (LISAs) for property, innovative finance ISAs and stocks and shares ISAs for investing - and it is the latter which Ms Reeves hopes to encourage more people to use. Any money saved, generated, earned or created within any ISA is tax-free. Over longer periods of time, investing in equities outperforms holding cash, as interest rates can remain low for prolonged periods of time, while stock markets have historically grown. However, shares, funds and other types of investing offers no guaranteed return and losing money is possible - while cash kept in bank accounts offers a fixed and familiar number and will not go down in number unless spent. Building societies have also pointed out how they utilise some of the money saved in cash ISAs to back the mortgages they hold, and removing a portion of that cash could limit how much they can lend in future. Changes to the cash ISA or the overall ISA model could still be forthcoming later this year. Simplification of the ecosystem has been pushed for over the years, including combining the cash and investing ISAs into a single product. 'One of the reasons why we're looking at advice and guidance that financial firms can give to their customers is to make sure that people are making informed decisions about how to invest their money, whether that's their pension savings or their ISA savings,' Ms Reeves added. Sign in to access your portfolio
Business Mayor
10-05-2025
- Business
- Business Mayor
Tips from first-time buyers: 'We bought a £320,000 home aged 26'
Lucy Acheson Business reporter Cameron Smith Georgia and Cameron saved for nearly three years for their deposit The Bank of England has cut interest rates for the second time this year – welcome news for first-time buyers after years of rising mortgage costs and spiralling house prices. But it's still tough. More than half of first-time buyers still rely on the so-called bank of mum and dad to get on the property ladder, with an average of £55,572 given in loans and gifts last year, according to estate agents Savills. We've spoken to people on a range of incomes who have managed to make it on to the ladder or are on the brink of buying. They shared with us the tactics they used to buy. 'We used a Lifetime ISA' Cameron Smith and Georgia Pickford, both 27, each opened a Lifetime ISA (LISA) in order to buy a three-bedroom flat in Hertfordshire together for £320,000 last year. The scheme allows 18 to 39-year-olds to save up to £4,000 a year, with a 25% government bonus, as long as it's used to buy a home under £450,000. Cameron earns £40,000 and Georgia £37,000 and they each set up a direct debit to their respective LISA accounts. 'Every month, £200 came out of my paycheque – no excuses, no distractions,' says Cameron. In just under three years, the couple saved £27,740, including the government bonus from their LISAs. To reach the full deposit amount, they topped this up with an extra £4,260 from their personal savings. But Cameron says the scheme hasn't kept pace with rising prices. 'The £450,000 cap was set back in 2017 – it hasn't moved. If your property is even £1 over that, you lose the bonus and get hit with a 25% penalty.' Following calls from campaigners for the terms to be updated, the Treasury Committee is reviewing whether Lifetime ISAs are still fit for purpose. Brian Byrnes, head of personal finance at Moneybox, a digital savings and investment platform, still thinks the scheme is a great option for first-time buyers. 'The Lifetime ISA works fantastically well for the vast majority of customers. Less than 1% are impacted by the £450,000 cap,' he says. 'I used an income booster mortgage' Abas Rai, 26, used a type of joint mortgage known as an 'income booster mortgage' to buy his first home – a £207,000 two-bedroom house in Suffolk. Read More Tesla stock downgraded again. Here's how to trade it now It's a product offered by some lenders that lets a family member's income be added to yours, even if they're not living in the property, to increase how much you can borrow. Even with a £30,000 deposit and a £33,000 salary, Abas struggled to get the loan he needed. To boost his affordability, he added his father, who earns £24,000, to the mortgage. By combining their incomes, the bank was able to offer a bigger loan, though it meant his dad would also be liable if he defaults. 'The bank added our incomes together and then multiplied it by 4.5 – that's how they worked out the affordability.' But involving a parent comes with some challenges. 'Because the person added on to the mortgage is also added on to the property, one of the risks was my dad's age – he's 55 and coming to retirement soon, so I won't be able to rely on his salary if I default on a payment.' Abas plans to re-mortgage and remove his dad once his income increases, but says the scheme was worth it. 'If you're not earning above, say £45,000, and you've got someone in the family, I would recommend you go for it.' 'We moved 150 miles to a cheaper area' After years of renting in Oxfordshire, Alex Bonfield, 34, has relocated to Manchester to buy her first home. 'My wife is a teacher and she had to find an entirely new job up here. She really loved her old school, but this was more important,' she says. 'It wasn't an easy decision. We don't know anyone here.' The couple were priced out of buying near family and friends in Oxfordshire, where average house prices are £479,000, compared with £251,000 in Manchester. They began saving five years ago, and are now house-hunting in the £300,000-325,000 range with a deposit of £50,000. 'We're not at the very top of our affordability, but we are quite high up.' They're far from alone. According to Santander UK, 67% of first-time buyers over the past two years have relocated to get on the property ladder. 'I went for shared ownership and a lodger' 'We were tired of doing that dance every year with the landlord trying to hike up rent by stupid amounts,' Oliver says. 'Now we're saving around £1,000 a month compared to our old flat.' Shared ownership schemes let buyers purchase a portion of a property and pay rent on the rest. They're often more accessible but come with complexities, like service charges and limited resale flexibility. Oliver's total monthly costs come to around £1,550, including £500 for the mortgage, £800 in rent on the 75% share he doesn't own, and a £250 service charge. While he and his lodger informally split costs, Oliver covers all the housing payments. 'My mortgage rate is 5.4%, but the rent on the unowned portion is only about 2% of the property value. 'It's cheaper to just own part of the property and pay rent than to buy the whole thing with a big mortgage.' 'The Help to Buy ISA worked for me' Daniel Price, 27, bought a three-bedroom home in the South Wales Valleys earlier this year, not far from where he grew up. He started saving four and a half years ago using a Help to Buy ISA – a government scheme that topped up savings by 25%, up to a £3,000 maximum bonus. It has since been replaced by the Lifetime ISA scheme. 'Originally, my mum told me about it, so I just put a pound in to open the account,' he says. 'I paid in £200 a month and eventually saved £11,000, which got me a £2,500 government bonus.' House prices in the South Wales Valleys tend to be lower than in many other parts of the UK, which can make home ownership there more achievable for first-time buyers. Daniel bought his house for £95,000, below the asking price of £110,000, due to some minor renovations the property needed. 'A lot of houses were out of my price range as a single person, so I started looking further afield.' 'My dad found the house on Rightmove and showed me it. Everything was a bit outdated, but still liveable. It just needs a bit of work to modernise it.' When he first applied for a mortgage in October 2024, Daniel was earning £18,000 a year while doing a software development apprenticeship. By the time the sale went through in January this year, his salary had risen to £24,000. 'I started saving when I was working in a factory as a warehouse manager. I then took up a tech apprenticeship and have just finished it. That helped with my affordability.' 'I bought a fixer-upper' Camilla De Cesare, 32, is a strategy consultant. She managed to buy her first home in London alone, but says it took seven years of living with her parents and being open to buying a property that needed some work. 'My family helped me with the deposit, and I had a stable job, so I was starting from a fortunate position,' she says. Camilla saved and invested a total of £80,000 into the S&P 500, which tracks the performance of 500 leading companies listed on the US stock market. By steadily contributing over time and benefiting from market growth, her investment pot eventually grew to £150,000. 'I was really lucky that the S&P 500, was growing really well over the years that I was investing in it, so it provided me with a really healthy cushion.' She spent £50,000 on her deposit, and the remaining £100,000 will go towards renovations on the property over the coming years, like a new kitchen and bathroom. She says saving for a deposit felt more manageable knowing she could tackle renovations gradually, as and when she could afford them. 'I think when you first get the keys you just want to do it all at once. But there's something satisfying about looking around and knowing you did some of it yourself.' Tom Francis, head of digital advice at financial advisers Octopus Money, says most people would benefit more from 'slow, steady saving'. He encourages prospective buyers to break their spending into three buckets: essentials, desirables and indulgences. 'Think of your dream home as the destination – you can't get there if you don't know where you're starting.' Sarah Tucker, CEO of the financial advice firm The Mortgage Mum, urges younger people not to wait until they've saved for a deposit before seeking financial advice from mortgage brokers. 'There's nothing better than speaking to a professional, even if you're years away from buying.' READ SOURCE businessmayor May 10, 2025
Yahoo
10-05-2025
- Business
- Yahoo
Tips from first-time buyers: 'We bought a £320,000 home aged 26'
The Bank of England has cut interest rates for the second time this year - welcome news for first-time buyers after years of rising mortgage costs and spiralling house prices. But it's still tough. More than half of first-time buyers still rely on the so-called bank of mum and dad to get on the property ladder, with an average of £55,572 given in loans and gifts last year, according to estate agents Savills. We've spoken to people on a range of incomes who have managed to make it on to the ladder or are on the brink of buying. They shared with us the tactics they used to buy. Cameron Smith and Georgia Pickford, both 27, each opened a Lifetime ISA (LISA) in order to buy a three-bedroom flat in Hertfordshire together for £320,000 last year. The scheme allows 18 to 39-year-olds to save up to £4,000 a year, with a 25% government bonus, as long as it's used to buy a home under £450,000. Cameron earns £40,000 and Georgia £37,000 and they each set up a direct debit to their respective LISA accounts. "Every month, £200 came out of my paycheque – no excuses, no distractions," says Cameron. In just under three years, the couple saved £27,740, including the government bonus from their LISAs. To reach the full deposit amount, they topped this up with an extra £4,260 from their personal savings. But Cameron says the scheme hasn't kept pace with rising prices. "The £450,000 cap was set back in 2017 - it hasn't moved. If your property is even £1 over that, you lose the bonus and get hit with a 25% penalty." Following calls from campaigners for the terms to be updated, the Treasury Committee is reviewing whether Lifetime ISAs are still fit for purpose. Brian Byrnes, head of personal finance at Moneybox, a digital savings and investment platform, still thinks the scheme is a great option for first-time buyers. "The Lifetime ISA works fantastically well for the vast majority of customers. Less than 1% are impacted by the £450,000 cap," he says. LISTEN: How first-time buyers are getting on the ladder in 2025 Abas Rai, 26, used a type of joint mortgage known as an "income booster mortgage" to buy his first home - a £207,000 two-bedroom house in Suffolk. It's a product offered by some lenders that lets a family member's income be added to yours, even if they're not living in the property, to increase how much you can borrow. Even with a £30,000 deposit and a £33,000 salary, Abas struggled to get the loan he needed. To boost his affordability, he added his father, who earns £24,000, to the mortgage. By combining their incomes, the bank was able to offer a bigger loan, though it meant his dad would also be liable if he defaults. "The bank added our incomes together and then multiplied it by 4.5 - that's how they worked out the affordability." But involving a parent comes with some challenges. "Because the person added on to the mortgage is also added on to the property, one of the risks was my dad's age - he's 55 and coming to retirement soon, so I won't be able to rely on his salary if I default on a payment." Abas plans to re-mortgage and remove his dad once his income increases, but says the scheme was worth it. "If you're not earning above, say £45,000, and you've got someone in the family, I would recommend you go for it." Five ways for first-time buyers to get on the housing ladder After years of renting in Oxfordshire, Alex Bonfield, 34, has relocated to Manchester to buy her first home. "My wife is a teacher and she had to find an entirely new job up here. She really loved her old school, but this was more important," she says. "It wasn't an easy decision. We don't know anyone here." The couple were priced out of buying near family and friends in Oxfordshire, where average house prices are £479,000, compared with £251,000 in Manchester. They began saving five years ago, and are now house-hunting in the £300,000-325,000 range with a deposit of £50,000. "We're not at the very top of our affordability, but we are quite high up." They're far from alone. According to Santander UK, 67% of first-time buyers over the past two years have relocated to get on the property ladder. Oliver Jones, 27, lives in London and used a shared ownership scheme to buy his first home - a two-bedroom flat worth £500,000. He bought a 25% share with a £40,000 deposit and sub-lets to a long-time friend whom he used to rent with. "We were tired of doing that dance every year with the landlord trying to hike up rent by stupid amounts," Oliver says. "Now we're saving around £1,000 a month compared to our old flat." Shared ownership schemes let buyers purchase a portion of a property and pay rent on the rest. They're often more accessible but come with complexities, like service charges and limited resale flexibility. Oliver's total monthly costs come to around £1,550, including £500 for the mortgage, £800 in rent on the 75% share he doesn't own, and a £250 service charge. While he and his lodger informally split costs, Oliver covers all the housing payments. "My mortgage rate is 5.4%, but the rent on the unowned portion is only about 2% of the property value. "It's cheaper to just own part of the property and pay rent than to buy the whole thing with a big mortgage." Daniel Price, 27, bought a three-bedroom home in the South Wales Valleys earlier this year, not far from where he grew up. He started saving four and a half years ago using a Help to Buy ISA - a government scheme that topped up savings by 25%, up to a £3,000 maximum bonus. It has since been replaced by the Lifetime ISA scheme. "Originally, my mum told me about it, so I just put a pound in to open the account," he says. "I paid in £200 a month and eventually saved £11,000, which got me a £2,500 government bonus." House prices in the South Wales Valleys tend to be lower than in many other parts of the UK, which can make home ownership there more achievable for first-time buyers. Daniel bought his house for £95,000, below the asking price of £110,000, due to some minor renovations the property needed. "A lot of houses were out of my price range as a single person, so I started looking further afield." "My dad found the house on Rightmove and showed me it. Everything was a bit outdated, but still liveable. It just needs a bit of work to modernise it." When he first applied for a mortgage in October 2024, Daniel was earning £18,000 a year while doing a software development apprenticeship. By the time the sale went through in January this year, his salary had risen to £24,000. "I started saving when I was working in a factory as a warehouse manager. I then took up a tech apprenticeship and have just finished it. That helped with my affordability." Camilla De Cesare, 32, is a strategy consultant. She managed to buy her first home in London alone, but says it took seven years of living with her parents and being open to buying a property that needed some work. "My family helped me with the deposit, and I had a stable job, so I was starting from a fortunate position," she says. Camilla saved and invested a total of £80,000 into the S&P 500, which tracks the performance of 500 leading companies listed on the US stock market. By steadily contributing over time and benefiting from market growth, her investment pot eventually grew to £150,000. "I was really lucky that the S&P 500, was growing really well over the years that I was investing in it, so it provided me with a really healthy cushion." She spent £50,000 on her deposit, and the remaining £100,000 will go towards renovations on the property over the coming years, like a new kitchen and bathroom. She says saving for a deposit felt more manageable knowing she could tackle renovations gradually, as and when she could afford them. "I think when you first get the keys you just want to do it all at once. But there's something satisfying about looking around and knowing you did some of it yourself." Tom Francis, head of digital advice at financial advisers Octopus Money, says most people would benefit more from "slow, steady saving". He encourages prospective buyers to break their spending into three buckets: essentials, desirables and indulgences. "Think of your dream home as the destination - you can't get there if you don't know where you're starting." Sarah Tucker, CEO of the financial advice firm The Mortgage Mum, urges younger people not to wait until they've saved for a deposit before seeking financial advice from mortgage brokers. "There's nothing better than speaking to a professional, even if you're years away from buying." 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