Principality Building Society has created the account to help address the difficulties faced by those who are desperate to become homeowners but are struggling with affordability.
First Home Steps will offer a tiered interest rate which starts at 1% gross per year for those with up to £2,500 in the account.
The rate increases to 1.5% those saving between £2,501 and £7,500 and then 2% for the next tier of up to £25,000.
The £500 cash bonus is paid to customers upon taking a mortgage out with Principality directly.
Julie-Ann Haines, chief customer officer, at Principality Building Society said: “Our ethos as a mutual building society is to help people to prosper in their homes and we realise that it is getting more difficult for young people to save and get into their first home.
“First Home Steps will support savers in reaching the goal of home ownership, whilst also giving them flexibility when they need it.”
Savers can make multiple deposits of up to £1,500 per calendar month and they can have three withdrawals per year, without penalties.
Savings options
First-time buyers looking for a way to save and gain bonuses can also take advantage of the Lifetime ISA (LISA), which is available to anyone aged between 18 and 40.
Savers can put up to £4,000 per tax year into the LISA and will also receive a 25% government bonus, meaning they could earn up to £1,000 extra per year. The money must be used either to fund the purchase of their first home or for retirement.
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