For today’s younger generations, it’s increasingly difficult to take that first step onto the property ladder. For many already burdened by the high cost of rental accommodation, appealing to the “Bank of Mum and Dad” is pretty much their best hope of affording a place of their own. This is where long-term planning and saving via a Junior ISA can be an invaluable way of building up a meaningful nest egg, such as a deposit for a first home.
A steadily rising house market may be great news for homeowners, but for young people in their 20s and 30s it has become increasingly difficult over the past 20 years or so to make that initial jump onto the first rungs of the property ladder.
Of course, UK house prices vary considerably from region to region, but the national average is now above £298,000, according to the Halifax House Price Index¹. That’s a daunting mortgage undertaking for first time buyers in their 30s, especially given that the average UK income for this cohort is around £40,000².
But a generous deposit can make a massive difference. Not only does that upfront equity reduce the value of the loan needed, but it also means more affordable mortgage deals become available because there’s less risk involved for the lender.
It’s unsurprising, then, that the average deposit in England has recently been calculated as a meaty £68,000³ (23% of the total average price), though it’s markedly lower in Northern Ireland, Wales and Scotland.
Such a sum might be manageable for those in very well-paid jobs, or who have inherited a handy nest-egg or struck lucky on the lottery. Otherwise, it is likely to represent years of scrimping and saving.
In reality, for many first-time buyers already hamstrung financially by the high cost of rental accommodation – which makes serious saving for a deposit even more of a challenge – appealing to the Bank of Mum and Dad is pretty much their best hope of affording a place of their own.
According to TSB, around 30% of first-time buyers relied on a financial gift from family or friends in the first quarter of 2025⁴.
So, what are the options for families who can see such a request coming down the line in the years and decades ahead?
One is to take a laissez-faire attitude and face that hurdle when the time comes. The difficulty is that most families don’t have tens of thousands of pounds to spare at short notice.
There might be investments that can be liquidated to provide the cash; but if the market is in a slump when the money is needed, it could mean taking a painful hit. Anyway, those investments might well be earmarked for other uses - whether towards a specific big-ticket item or as part of a broader retirement pot.
Prepare for the future with a Junior ISA
A much less stressful alternative is to take action well in advance, set up a stocks and shares Junior ISA (JISA) in your child’s name as early as possible (it must be done before they reach age 18), and save regularly over the years. Once a JISA is up and running, friends and family as well as parents can contribute to it, up to the annual limit of £9,000⁵.
The beauty of saving in this way is that the money grows free of all tax within the tax wrapper. In the meantime, it can be invested into the stock market where, over the longer term (at least five years), it is likely to grow in value faster than it would in a savings account.
A child can have both a cash and a stocks and shares JISA at the same time, in which case the annual limit applies to the total contribution across both accounts in a tax year.
It’s important to note that no withdrawal of funds is normally possible until the child reaches 18 and takes ownership and therefore parents are unable to withdraw any funds which they invest.
JISAs in action
Let’s take a hypothetical example to see how this might work. As with all investments, it’s important to remember that your money is at risk and you may get back less than invested.
If you opened a JISA when baby Frank was born and (perhaps with the help of grandparents to start with) paid £100 a month into it for, say, 30 years, you would have tucked away £36,000 of capital in total.
If we take a hypothetical average rate of return of 5% a year (note that in practice it could be more or less than this), those monthly contributions would be worth more than £83,000 after 30 years⁶ (disregarding inflation) - enough to provide Frank with a 25% deposit on a property worth £330,000.
Even if you left it till later and Frank was, say, 15 when you set up the investment account and based on the hypothetical 5% rate of return again, monthly savings of £100 would compound to produce a fund worth almost £27,000⁷ by the time he reached age 30: a smaller sum, but still a useful start towards a deposit.
Ultimately, though, no matter when you start investing, advance preparation should help to make bank-rolling your child’s first property a much less fraught or financially painful experience.
JPMorgan’s highly regarded range of investment trusts includes some great choices for a suitable long-term fund to build your child’s future deposit. In every case the focus is on robust, well-managed companies acquired at a sensible price. Examples include The Mercantile Investment Trust, JPMorgan Global Growth & Income and JPMorgan American Investment Trust.