Save to buy

Thrugelmir

omcornwall wrote: »

Yes, I'm trying to understand what exactly these save to buy accounts are. They appear to be an enticement for people to save with building societies who will make money from your savings and then from a future mortgage with them.

This is how building societies worked 20 to 30 years ago. Preference was given to those who saved for a 2 plus year period towards a deposit. As lenders need the savings funds to advance mortgages.

Personally I take the view that mortgage availability will remain tight for some years yet. So while these accounts may not offer the best rates. They will assist FTB's getting onto the first rung of the ladder.

In answer to your other question. By saving with one (or more) financial institutions for an extended period. Then your credit record will be enhanced. As you will have a track record with the lender when you eventually apply for a mortgage.

leereni

Thanks for the last post. The problem I've got is I've banked with LLoydsTSB for the past 12 years so I would need to start a new one with another provider. I'm thinking about saving with lloyds however they don't offer a save to buy account. Do you think it's worth starting a new save to buy account with a new provider or just save with lloydstsb?

hillcats

The bottom line here is:
You need the best account available (search on-line) that will pay you the MOST interest.

kingstreet

Knowing my luck, I would have saved for years, then been told I didn't satisfy the lender's criteria when I applied for the mortgage.

Seems a bit hit and miss.

Perhaps "credit" files should become broader records of individuals' financial standing by including information on their savings habits, as well as their repayment profile?

leereni

Yes I agree. They show what is mainly negative information. I had a telephone account several years ago and it wasn't until I missed a payment the company posted information on my credit file. Companies should post more information as to what guidelines satisfy their lending criteria. I would be happy to save £500 a month into a savings account for the next year or two knowing I will have a mortgage given my circumstances won't change. However, I'm not convinced this would happen.

Thrugelmir

omcornwall wrote: »

However, I'm not convinced this would happen.

At least it would improve the possibility of obtaining a mortgage. As preference will most likely be given to those that save over an extended period.

joedenise

What about saving some in a "save to buy" savings account and putting some in a high interest ISA. That way you'll have some earning good interest as well as a savings pot with a bank/building society.

Denise

kingstreet

Shouldn't there be a "save to buy" ISA?

leereni

Yes, I'm going to save in several account including a cash ISA, investment ISA and save to buy. Then I've tackled all avenues. Hopefully in 18 months time why file will look better and I'll have about £15000 - £20000 in savings. Given I'm looking for a shared ownership scheme and the mortgage will be about £80000 the large deposit will be good enough for mortgage providers.

noodle

Idle thought... I wonder if lenders could offer a deposit savings account with a return linked to UK house prices. It would be interesting to see if such a product garnered any popularity (given the very real prospect that 'savers' would get back less than they paid in - though, assuming the cash was used for the intended purpose, that wouldn't matter.)

A savvy investor could presumably create the same outcome (tax free) independently by using a spread bet? Though I'm nowehere near savvy enough to be confident of how one would do that!