When you combine rising living costs with high house prices and mortgage rates, things aren’t exactly looking up for first-time buyers.
Given this outlook, it would be easy to despair. But instead, many are turning to tech-savvy savings tools to help them achieve that seemingly impossible feat: getting on the housing ladder.
One common approach is to use smart apps to help save money for a deposit and track spending to identify any outgoings that can be trimmed back.
First-time buyers are also using these apps to access higher interest rates than those offered by some high street banks*, helping them reach their target faster and more efficiently.
One of the most popular is Plum, which is available to download for free via the App Store or Google Play.
Here’s how it could help you buy your dream home…
First-time buyers are using smart savings apps to put money aside for a deposit
Savings apps: The modern-day piggy bank
More and more people are making the most of the powerful tech offered by smart apps.
In Plum’s case, it connects to your bank account and uses clever algorithms to figure out what you can afford to save before setting it aside on your behalf every so often.
This might only be a few pounds at a time, but done regularly, even small amounts mount up.
And because the app doesn’t take too much and leave you short, you shouldn’t need to raid your house fund to pay a bill that drops a week before payday.
Plum helps you maximise your savings with a series of ‘Auto Saver’ features, some of which are free and others available on a paid subscription.
These include Pay Days, which save a predetermined amount each time you receive your salary.
Automating your saving with Plum helps you save little and often in the background, so you’re constantly progressing towards your goal even when you’re not thinking about it
While many of us will still want a payday treat, sending a chunk of cash straight to your savings reduces the chance of any regrets.
And if there’s a particular retailer that you often turn to at these times of temptation, why not enable the Naughty Rule?
This lets you automatically save a sum of money when you buy from somewhere you deem a guilty pleasure, adding a silver lining to any impulse purchases.
Whatever Auto Savers you choose, you’re always in control – with the option to increase or decrease the size of your deposits at any time.
Turning micro-savings into a mortgage
The ability to automate saving has proved attractive to people working towards big money goals, like getting on the housing ladder.
And as they’ve grown, apps like Plum have now become even more useful to first-time buyers by offering popular tax-free savings products at highly competitive rates of interest.
Tax treatment depends on your individual circumstances and may be subject to change in the future.
With time, even small amounts set aside on a regular basis can grow over time to something big – like a house deposit
Tax-free savings… and then some!
One product many use to get on the housing ladder is the Lifetime ISA, which allows you to save £4,000 towards a first home (worth up to £450,000) or retirement.
The government then adds a 25 per cent bonus to whatever you save, up to £1,000. So, if you put away £4,000 – which counts towards your annual £20,000 ISA allowance – you end up with £5,000!
This money grows further thanks to a great 4.75% AER (variable) interest rate for the first 12 months, including a 1.14% AER (variable) bonus, with any interest payments free from tax.
If you’re buying your first home, you can access any money in your Lifetime ISA once it has been open for at least 12 months.
Accessing your savings for other reasons before the age of 60 could incur a 25 per cent penalty, so take a moment to make sure you won’t have to.
But if you do decide to opt for one, opening a Plum Lifetime ISA couldn’t be easier.
Simply head to the app and answer a few quick questions (including one checking that you’re aged between 18 and 39).
Note that you may not be a good fit for LISA. With the exception of eligible withdrawals, a 25% withdrawal fee applies and by this you could receive a lower return than what you initially paid for. LISA rules may change. Tax treatment is subject to your personal situation.
A Lifetime ISA can help first-time buyers save for a home worth up to £450,000
And now protect the rest
UK taxpayers can save a total of £20,000 in ISAs every year, so if you’ve used up £4,000 on a Lifetime ISA, you’ll still have £16,000 of your allowance left.
Cash ISAs let you set aside this money without paying tax on your interest.
The personal allowance is £1,000 for basic rate taxpayers and £500 for those on the higher 40 per cent rate, so if you’re acing the savings game, you might already be liable.
A major bonus of the Plum Cash ISA is its competitive rate of up to 4.95% AER (variable), which includes a bonus rate of 1.66% AER (variable) for the first 12 months. The interest rate for ISA transfers is 3.29 per cent AER (variable).
You can open a Cash ISA with Plum without paying a subscription fee. And you can withdraw in one business day, with no additional charges. Nice!
Plum Cash ISAs offer a competitive rate of up to 4.95% AER (variable)
Support on your home-buying journey
Let’s be honest: technology is never going to be a silver bullet that makes it easier to save towards a home.
But by combining automatic saving with competitive rates on ISA products, apps like Plum could help a priced-out generation finally make their first step on the housing ladder.
So go on – see what you could achieve when you start small…
Try Plum TODAY by downloading it for free from App Store or Google Play.
Plum is the trading name of Plum Fintech Limited and Saveable Limited. Plum Fintech Limited is registered and regulated by the Financial Conduct Authority (FRN 836158). Saveable Limited is authorised and regulated by the FCA (FRN: 739214)
*Best Lifetime ISAs – Moneyfactscompare.co.uk, 21 May. 2025.
