Let’s Talk Deposits – A Guide for First-Time Buyers (and Their Parents)
- Cruze Finance
- Jun 7
- 4 min read
With the average deposit now sitting at 138% of the average annual income, and taking around 10 years to save, homeownership can feel out of reach for many first-time buyers.
More than ever, people are turning to family for support—yet for those without that option, it can feel like the dream of owning a home is slipping away. Add the cost-of-living crisis and record-low savings rates, and it becomes even harder to save while also paying rent. To make matters worse, government schemes like Help to Buy have now ended, leaving limited support for first-time buyers.
So, what can you do?
Below are some realistic and practical options available to first-time buyers in the current market—as well as ways parents can help if they’re able to.
🏡 First Homes Scheme
Available on new-builds or resale properties originally bought through the scheme.
Must be a first-time buyer earning less than £80k (£90k in London)—single or combined income.
Local councils may apply additional criteria (e.g. key workers, local residents). Always check locally.
Property price capped at £250k (£420k in London).
Buyers receive at least a 30% discount off market value.
Your deposit is based on the discounted price, not full value.
Some restrictions apply around selling or subletting the home.
💰 Lifetime ISA (LISA)
Open to individuals aged 18–40.
You can save up to £4,000/year, and the government adds a 25% bonus (max £1,000/year).
Funds can be used to buy your first home or withdrawn after age 60.
Counts toward your total annual ISA allowance of £20,000.
Can be held in cash or stocks & shares to grow your savings.
Over 4 years, you could save £16k, gain a £4k bonus, plus interest—making it one of the fastest-growing ways to save for a deposit.
🏘 Shared Ownership
Buy a share of 25%–75% of the property; a housing association owns the rest.
Pay reduced rent on the portion you don’t own.
Option to “staircase” and buy more shares over time.
Your deposit is based on the share you buy, not the full property value.
Watch out for service charges, which can be significant.
These homes are often in high demand; key workers are frequently prioritised.
👪 Family Springboard Mortgage
You own 100% of the home, and a family member provides a 10% deposit—without gifting it.
The deposit is held in a savings account for 5 years and earns interest.
If all mortgage payments are made on time, the helper gets their money back with interest.
No financial risk to your helper, provided payments are made consistently.
📊 Track Record Mortgage
Designed for those who’ve paid rent for 12 consecutive months in the last 18.
Up to 4 applicants can apply—whether renting together or separately.
No deposit required.
Lenders use your rent payment history to determine affordability and lending.
💸 5% Deposit Mortgage
Available from select lenders, but typically requires excellent credit.
Higher interest rates than standard mortgages.
Suitable for buyers expecting bonuses or future income increases, who plan to remortgage in 2–3 years.
💷 £5,000 Deposit Option
Some lenders will accept a £5,000 deposit, provided it’s at least 1% of the property value.
Applies only to non-new-build properties.
At least one applicant must be a first-time buyer.
Deposit can be gifted, and properties may be bought from family or landlords.
A good credit score is typically required.
💡 How Parents Can Help
If you’re in a position to help your children get on the property ladder, here are some safe and effective ways to do it:
🎁 Gifting Money
You can gift cash for a deposit, which can also reduce your estate for inheritance tax purposes.
Note: There is still a potential IHT liability if you pass away within 7 years of the gift.
Consider taking insurance to cover potential tax if you’re gifting a significant amount.
🛡 Protecting the Gift
Worried about relationship breakdowns or poor financial decisions?
Use a deed of trust, cohabitation agreement, or place a legal charge on the property to safeguard the gift.
🏠 Equity Release
If you’re over 55, you can release equity from your own home, either through:
Standard remortgage (with monthly payments), or
Equity release/lifetime mortgage (repaid from your estate upon death).
This can allow you to help now, without affecting your lifestyle.
Final Thoughts
Saving for a deposit can feel overwhelming—but you’re not alone, and you have more options than you might think.
If you’d like to discuss any of the above schemes, or get personalised advice based on your situation, I’d love to help.
I can also assist with:
Wills & Estate Planning
Life Insurance & Critical Illness Cover
Equity Release
Lasting Power of Attorney
Building & Contents Insurance
Residential, Buy-to-Let & Commercial Mortgages
Sarah Drakard DipFA DipMAP CeMAP CeRER MLIBF
Independent Financial Adviser | Mortgage & Equity Release Broker | Insurance Broker | Will Writer
📞 0330 33 22 615 | 📱 07931 702 681
Comments