Saving for deposit on a house

mhoney

I have a lump sum of £5k and am hoping to add to this by saving £150-£200 per month from my wages - all to go towards a deposit on a house.
Would a savings account or an ISA be the best investment for my money? Or should I put the lump sum in an ISA and my monthly savings into a regular saving account? If so, what are the best products around at the moment?
Many thanks

mr_fishbulb

What time frame will you need to get at the money? Over 12 months and the regular saver accounts can be good, but if you need to get the money out in less than 12 months you lose a lot of interest.

Are oyu a higher rate tax payer or basic? This can make a difference as to how good an ISA is.

mhoney

I'm hoping to be able to leave the money alone for at least 18 months - 2 years, but may have to access in unforseen circumstances (car breaking down etc etc). I understand this would probably affect the interest rate on a regular saver account?
I'm in the basic tax band.

mr_fishbulb

You could either put the 5K into in one year fixed rate ISA at 3% (Cheshire Building Society Ipswich Building Society, and the Post Office all have this rate). And save the monthly amount into an instant access savings account (but be strict with yourself about not touching it).

Or you could put some of it in the fixed rate ISA, some in an instant access savings account (for emergencies), and also set up a regular monthly saver for the £150-200. But to be honest, the regular saver accounts look like rubbish interest at the moment (best I can see is 4%).

To be honest there won't be much in it when comparing the different interest you would get from each option - rates are awful at the moment. I guess it would boil down to how comfortable you were locking the money away, or if you needed the discipline of a regular saving product to help you save.

Have a look on moneysupermarket and it will tell you best buys for different savings account. And don't let the saving get you down

mhoney

Thanks for the advice, much appreciated

mau408

Have you looked at santander. They had an account for the under 35s not so long ago for those saving up for a house, something like 5% interest but you had to have a mortgage interview and make 100-300 regular payments with them as part of the condition. Check out all terms and conditions. this beats the regular savers available out there and you also get 5% on your savings and in basic tax band is likely it will likely beat an ISA with immediate access (but the account closes).
Its called the :-
First Home Saver (Special Issue 1)

The_Fat_el_Hombre

mau408 wrote: »

Have you looked at santander. They had an account for the under 35s not so long ago for those saving up for a house, something like 5% interest but you had to have a mortgage interview and make 100-300 regular payments with them as part of the condition. Check out all terms and conditions. this beats the regular savers available out there and you also get 5% on your savings and in basic tax band is likely it will likely beat an ISA with immediate access (but the account closes).
Its called the :-
First Home Saver (Special Issue 1)

This is good advice. You can dob your £5k in here and then you have to put between 100 and 300 in per month. At 5% it is better than most, if not all Isa's.

If you might need money in case your car breaks down why not just deposit 4.5k and leave 500 aside in a current account for emergencies?

Simon11

I read your first post and was just about to post about Santanders 5% account before the above people posted:D

I've got it at the moment and its very good- only thing I hate is not being able to see the account online