Short Term Saving for Mortgage Options

TheGirlLovesToSave

Hi,

I'm a single professional girl in my 30's looking to downsize and rapidly save as much money as I can for a mortgage in late 2012 or early 2013.

My plan is to try and save as much as I possibly can over the next year/year and a half to build up a deposit and get on the housing ladder.

These are my details and approximates on how I plan to save my money:

Rent/Living Arrangements -
£900pcm, currently living on my own.
*£650pcm if move into shared house which I am planning to do by August.

= SAVING £300pcm

Travel/Transport -
£205pcm, tube to work plus petrol occasional trips home by car & its upkeep/permits/insurance/MOT/service etc.
*£195pcm, cycling into work 4 times per week but including initial outlay for purchasing bike plus equipment/repairs in 1st year.
*£157pcm from year 2 cycling to work.

= SAVING £10pcm in 1st year/£38pcm in 2nd year

Mobile -
£15pcm, since did not upgrade last year.
*Don't think I can beat this deal at all but welcome any suggestions although due an upgrade in about a month.

Food -
£200pcm, vegetarian and make myself lunch most days in the week plus rarely eat out. Shop in lower end Supermarket.
*Again don't think I can beat this deal at all but welcome any suggestions.

Drink -
£50pcm, don't really drink socially that much

Leisure/Hobbies -
None although really keen to join a gym. Currently run around my local area.

Fashion/Beauty -
£300pcm, majority of this is hair care as have very weak/dry hair that needs A LOT of TLC
*£250, will stop shopping frivolously each month

=SAVING £50

Income
£1800pcm, less tax/NI/Pension Contributions and blasted student loan.
*£2133pcm (approx based on pay rise due in July)

=SAVING £333pcm

So in total could put aside around £690pcm.

These are all rounded figures and have probably missed off a few things and made assumptions but feel that I could put around £600 each month.

Now my question is what would be the best saving option for me to make as high a return as possible in such a short period of time.

Although:
-I haven't used my ISA allowances.
-Prefer low risk options as cannot afford to lose this money.
-Will not need to touch this money for 1-2years if this offers higher return.
-Also have additional saved amount of £11k to invest/save for the duration of time.

Any thoughts/advice greatly appreciated.

Thanks for reading

~TGLTS~





I currently rent my own place but will be moving into a shared house to reduce costs

Annisele

You might be better off over on the Debt Free Wannabee board. I appreciate that you're not actually in debt, but you're still trying to reduce your outgoings and there are peeps over there who are experts in that!

There are stickies on the DFW board showing you how to post a SOA (statement of affairs). I can't help much myself, but I'd bet they can shave quite a bit off a £200pm food bill for a single person.

If you're wanting to access your money in the next year or so, that pretty much rules out investments - cash is king for short term needs.

TheGirlLovesToSave

Thanks Annisele but I'm really looking for savings advice (as outgoings can be worked out pretty easily). I'm not very financially savvy when it comes to the cash I have in the bank and how to make it work better.

Annisele

Well, the main site has an article on savings.

In your position, I'd be tempted to use part of the £11k to max out my cash ISA allowance using the highest paying cash ISA I could find with either a variable rate or a fix of no more than one year. I'd stick the rest of the £11k in the highest paying non-ISA savings account I could find.

For the monthly savings, you might want to consider a regular saving account (First Direct's offering is here; most of the banks offer a similar thing). They're generally a bit rubbish in that you can only put limited cash in them and you generally have to have a current account with that bank, but they have their uses. For example, I bank with First Direct anyway so I figure that I might as well use their regular saver.

TheGirlLovesToSave

Again thanks for the advice. Its seems that I should max out my ISA then work on find the best saving accounts. I've heard about the NS&I savings are they worth putting some of my money towards?

Lokolo

Santander offer a 5% regular saver, assuming you haven't had a mortgage before

http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&cid=1210611105334&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateB2

Save £300 a month in there.

TheGirlLovesToSave

No, I've never had a mortgage. Is there any tax on that or are there any monthly fees? I have always wondered if there is a maximum amount of accounts you can have. I've already got accounts with NatWest, Barclays, Nationwide and Halifax so would there be a problem if I took the Santader one.

Annisele

In general you pay tax on all income. There are some products that are tax free (ISAs, some NS&I products) but you're safe to assume that if something doesn't advertise itself as tax free, you'll be paying tax on it. With an income of £1,800 per month you'll be paying tax at 20% - effectively bringing an interest rate of 5% down to 4%.

You can have as many accounts as you like, subject to the terms and conditions of those accounts. For example, lots of student accounts say that you can only have one student account - but the banks don't tend to care unless you're running up overdrafts on more than one of them.

TheGirlLovesToSave

Thanks for all the info...feel a little clearer now about where I should go from here.

fiesta04

Annisele, very good advice given to OP.

kidmugsy

Put £5340 into an instant access cash ISA that has a good combination of interest rate and convenience. Bung £5700 into ns&i's Index-Linked Savings Certificates - you can withdraw the money after a year with only the lightest of penalties. For the monthly cash, consider some Regular Saver accounts - you can get 4% (gross) at the moment: see the specialist thread.
https://forums.moneysavingexpert.com/discussion/608697

There you are - easy-peasy.