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Santander First Home Saver vs ISA
amictus
Posts: 301 Forumite
I have some savings built up that I was planning to dump into a Santander Flexible ISA account (3.5%, 12 month, new money only) as soon as the new tax year starts (see my previous thread). However, I have now spotted the Santander First Home Saver (5%, up to £5000 inital deposit, £300 monthly deposits) which I am eligible for. So, as far as I can tell, it would be sensible to open this account immediately using the £5000 that I was planning to put into an ISA... right?!
Am I correct in thinking that an ISA account would have to offer 4.375% to better the 5% pre-tax rate offered by the First Home Saver account?
Of course, this is based on the assumption that the interest rate for the First Home Saver account will not drop significantly over the next year... is this reasonable?
I realise that it is a good idea to build your ISA balance over time for long term investment as ISA accounts generally offer better rates. By this time next year, I should have another £5000 to put away, so, in order to use my 2010 allowance, I would either add this to my current ISA account or put it in a separate high rate new money ISA account.
I understand that these accounts can be a bit painful to organise, so perhaps someone could just confirm I'm not missing anything obvious before I go through the application procedure.
Many thanks!
Am I correct in thinking that an ISA account would have to offer 4.375% to better the 5% pre-tax rate offered by the First Home Saver account?
Of course, this is based on the assumption that the interest rate for the First Home Saver account will not drop significantly over the next year... is this reasonable?
I realise that it is a good idea to build your ISA balance over time for long term investment as ISA accounts generally offer better rates. By this time next year, I should have another £5000 to put away, so, in order to use my 2010 allowance, I would either add this to my current ISA account or put it in a separate high rate new money ISA account.
I understand that these accounts can be a bit painful to organise, so perhaps someone could just confirm I'm not missing anything obvious before I go through the application procedure.
Many thanks!
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Comments
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It would have to be 4% to beat it.
5 * 0.8 = 4.
Anyway, yes it would be wise, you can also deposit upto £300 a month I think.0 -
The ISA rate needed to match a non-ISA rate of 5% is 4% for a basic rate taxpayer. My guess is that the First Home Saver interest rate probably won't drop, but may not match base rate rises when the latter return to more normal levels. But that's only a guess.0
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The ISA rate needed to match a non-ISA rate of 5% is 4% for a basic rate taxpayer. My guess is that the First Home Saver interest rate probably won't drop, but may not match base rate rises when the latter return to more normal levels. But that's only a guess.
I'd agree with you there, although it might not drop, it probably won't match any increases in the BoE rate, however that is not likely to rise until late next year anyway.
I would be cautious though, if it is an introductory offer you may well see the rat drop without you noticing it. they may not advertise the rates very prominently if it does start to fall.
You don't say whether you are actually saving for a deposit on a house, if so stick to short term savings like these. If not, worth looking at longer term investments, the markets are still quite low, and the patterns of the past suggest it may be a good time to look at shares or the stock market. Again, just be careful as these can lose money as well as gain.0 -
It would have to be 4% to beat it.
5 * 0.8 = 4.
Anyway, yes it would be wise, you can also deposit upto £300 a month I think.The ISA rate needed to match a non-ISA rate of 5% is 4% for a basic rate taxpayer. My guess is that the First Home Saver interest rate probably won't drop, but may not match base rate rises when the latter return to more normal levels. But that's only a guess.bankerwithaheart wrote: »I'd agree with you there, although it might not drop, it probably won't match any increases in the BoE rate, however that is not likely to rise until late next year anyway.
I would be cautious though, if it is an introductory offer you may well see the rat drop without you noticing it. they may not advertise the rates very prominently if it does start to fall.
Great, thanks guys!bankerwithaheart wrote: »You don't say whether you are actually saving for a deposit on a house, if so stick to short term savings like these. If not, worth looking at longer term investments, the markets are still quite low, and the patterns of the past suggest it may be a good time to look at shares or the stock market. Again, just be careful as these can lose money as well as gain.
Thanks for the advice. I actually am saving for my first house deposit, so, as I don't have any idea about investing in shares, I think I'll stick with using a savings account.0 -
I've got a First Home Saver and an Isa and my first home saver takes priority at the moment and will for as long as it's at a higher rate. I think the rates for this account used to be around 8% so if the base rate does go up I'm hopeful the rate on the account will go back up too0
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I've got a First Home Saver and an Isa and my first home saver takes priority at the moment and will for as long as it's at a higher rate. I think the rates for this account used to be around 8% so if the base rate does go up I'm hopeful the rate on the account will go back up too
Yup that would be nice... Let's hope!0 -
The only thing is, it says you need to take in the "validation checklist" when closing the account? And that you need to have a Mortgage interview up to 90 days prior to the account being closed.
What is the validation checklist? And is the mortgage interview basically a way to persuade you toLive for what tomorrow has to bring, not what yesterday has taken away0
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