Buying your first home in the UK is a major financial step, and first-time buyers have access to specific reliefs and schemes that can save thousands of pounds. This guide walks you through the key help available: stamp duty relief, the Lifetime ISA government bonus, and deposit assistance programmes.

What You Will Learn

By the end of this guide, you will understand how to claim first-time buyer stamp duty relief (saving up to £6,250), how to use a Lifetime ISA to build a deposit with a 25% government bonus, and what deposit help schemes are available in 2026. You will also learn the exact steps to take, common mistakes to avoid, and where to get further support.

Step 1: Understand Stamp Duty Land Tax Relief for First-Time Buyers

Stamp Duty Land Tax (SDLT) is a tax you pay when buying a property in England or Northern Ireland. According to HMRC, first-time buyers qualify for relief if the property costs £625,000 or less (HMRC, 2026).

The relief works as follows: you pay no SDLT on the first £425,000 of the purchase price, then 5% on the portion between £425,001 and £625,000. For properties over £625,000, you lose the relief entirely and pay the standard rates.

Example: on a £400,000 home, you pay zero SDLT. On a £500,000 home, you pay 5% on £75,000 (the amount above £425,000), which is £3,750. Without the relief, you would pay £10,000, so the saving is £6,250.

To qualify, you and anyone you are buying with must be first-time buyers (never owned property anywhere in the world), and the property must be your main residence. Your solicitor handles the claim when you complete the purchase.

Step 2: Save With a Lifetime ISA and Claim the 25% Bonus

The Lifetime ISA (LISA) is a tax-free savings account for those aged 18 to 39. You can contribute up to £4,000 per tax year, and the government adds a 25% bonus (up to £1,000 per year). As covered in Principles of Finance, tax-advantaged savings vehicles play an important role in helping individuals meet long-term financial goals such as home ownership.

You can use the LISA to buy your first home (property value up to £450,000) or for retirement after age 60. According to MoneyHelper, you must have held the LISA for at least 12 months before using it for a property purchase (MoneyHelper, 2026).

Example: save £4,000 per year for four years. You contribute £16,000, the government adds £4,000, giving you £20,000 towards your deposit.

Open your LISA as soon as possible. You can hold both a Cash LISA (fixed interest) and a Stocks and Shares LISA (invested in funds), but the £4,000 annual limit applies across all LISAs combined. If you withdraw funds for any reason other than buying a first home or reaching 60, you face a 25% penalty (which claws back the bonus plus a bit extra).

Step 3: Check Your Deposit Options and Mortgage Readiness

Most lenders require a deposit of 5% to 20% of the property price. A larger deposit typically secures a lower mortgage interest rate. Citizens Advice recommends checking your credit score, clearing outstanding debts, and getting a Mortgage in Principle (also called Decision in Principle) before making an offer (Citizens Advice, 2026).

Deposit sources: your Lifetime ISA (including the government bonus), personal savings in a Cash ISA or easy-access account, and potentially a gifted deposit from family (lenders require a signed letter confirming it is a gift, not a loan).

Some lenders offer 95% mortgages (5% deposit) under guarantee schemes. These can help you buy sooner, but the monthly repayments will be higher and the interest rate less competitive than with a 10% or 15% deposit.

Step 4: Budget for Additional Costs Beyond the Deposit

First-time buyers often underestimate the extra costs. Budget for: solicitor or conveyancer fees (£850 to £1,500), property survey (£300 to £1,000 depending on type), mortgage arrangement fee (£0 to £2,000, sometimes added to the loan), and removal costs. You will also need to set aside funds for immediate repairs, furniture, and a small emergency buffer once you move in.

Read also: Buying Your First Home in the UK: Stamp Duty, Lifetime ISA, and Deposit Help

If you are buying a leasehold property, factor in ground rent and service charges. If you are buying a new-build, check whether stamp duty applies (some developers cover it as an incentive, but this is not guaranteed).

Practical Tips

Start saving into a Lifetime ISA at least 12 months before you plan to buy. The earlier you open it, the sooner the government bonus starts accumulating, and the more flexibility you have with your purchase timeline.

Use online mortgage calculators to estimate monthly repayments at different deposit levels and interest rates. This helps you set a realistic budget and avoid overstretching.

Speak to an FCA-authorised mortgage adviser or broker. Independent advice can help you compare rates across lenders and find products suited to first-time buyers. Many brokers charge no fee to you (they earn commission from the lender), but check upfront.

Common Mistakes to Avoid

Withdrawing from your LISA for non-property reasons before age 60 triggers a 25% penalty, which eats into your capital. If you are unsure you will buy within the £450,000 price limit, consider saving in a Cash ISA instead (no bonus, but no penalty for early access).

Failing to account for Scotland and Wales: stamp duty relief rules differ. In Scotland, the equivalent tax is Land and Buildings Transaction Tax (LBTT), and in Wales it is Land Transaction Tax (LTT). The thresholds and rates vary, so check the devolved rules if you are buying outside England or Northern Ireland.

Not shopping around for a mortgage. Rates and terms differ significantly between lenders. A mortgage broker can access the whole market, including deals not advertised directly to consumers.

Frequently Asked Questions

Can I use a Lifetime ISA if I have owned property abroad? No. HMRC defines a first-time buyer as someone who has never owned a residential property anywhere in the world. If you owned a property abroad, you do not qualify for stamp duty relief or to use a LISA for a home purchase.

What happens to my LISA bonus if the property falls through? The bonus stays in your account. You can use it for a different property purchase later, as long as the new property also meets the criteria (under £450,000, your first home).

Can two first-time buyers both use a Lifetime ISA on the same property? Yes. Each buyer can contribute their own LISA funds (up to the account limits) towards the deposit, and both receive the 25% government bonus.

Conclusion

Buying your first home in the UK is more affordable with the right planning. Claim stamp duty relief to save up to £6,250, use a Lifetime ISA to earn a 25% government bonus on your deposit savings, and budget carefully for all the costs involved. Start by opening a Lifetime ISA today (if you are under 40), checking your credit score, and speaking to an FCA-authorised mortgage adviser to explore your options.

This article provides general educational guidance only. Nexzoe is not authorised by the Financial Conduct Authority. Tax rules, stamp duty rates, and mortgage products change. Verify current terms with HMRC, an FCA-authorised mortgage adviser, or a qualified financial adviser before making any property purchase decisions. Mortgage debt is secured against your home, and your home may be repossessed if you do not keep up repayments.