Saving for a deposit

claire16c

DH and I want to start saving around £1k a month for the next 3 years to save £36k as a deposit for a house.

There are so many savings accounts around it would be great to get some advice on which account would be good interest wise as it seems to be a minefield that you can read about forever so whilst doing my own research I am interested in other opinions to help speed up my decision. I would prefer not to have to open another bank account and move salaries so prefer one that doesnt require that.

Its unlikely we would need to take the money out once it is put in. It would also be good if the account allowed you to put in more than £1k a month if we could do that sometimes. But, at the same time, would be great if we could find one that doesnt have a massive penalty if due to unforeseen circumstances we couldnt pay in one month.

I would prefer it to be online than having to go somewhere in person, so totally happy with online only account.

calypso_rhapsody

Take a look at the savings page on this website - the link is at the top of the page.

If you are (or expect to be) tax payers then opening cash ISAs to the limit each tax year would probably be a good idea ... you have £5340 each this tax year and a slightly higher amount next year so that could absorb most of your £1k a month ...

Also look at the various regular saver accounts. They generally pay a higher rate (even after taking hte tax benefit of the ISA into account) but run only for 12 months.

Whatever account you choose do keep an eye on rates - they often include a bonus for the first year and then drop to something miserly after that. So you will need to be wiling to move the money. Note if it is an ISA you are transferring you need to go through the proper process - don't close it.

claire16c

Thanks. Looks like ISAS could be the way to go then. My DH closed his ISA about a month ago, I have an ISA thats got about 10quid in it (we went travelling and so used the entire lot for that so we're basically starting at zero again) as they both had/have a horrendous rate of 0.1% or something so I was going to close mine and get a new one. I guess I just wasnt sure whether its best to get an ISA or a regular savings account that might have a higher rate? So I suppose its just comparing the two.

I dont mind about moving money each year.

apt

The First Direct regular saver at 8% would seem to be the obvious home for two lots of £300 per month for the first year. You do have to open a current account to get this, but that also comes with a £100 bonus if you are new to First Direct.

financial_illiterate

You could use a combination of ISAs and Regular Savings and basically use the maturing reg savers to fill each years ISA entitlement.

As its not an especially long term undertaking (3 years) I would probably go with the best net rate (after tax) rather than worry too much about the long term benefits of putting money in an ISA ahead of other savings accounts.

Of course, it may well be the best net rate is an ISA!

You could also add any extra money above the regular £1k into the ISA as you go along.

calypso_rhapsody

Yes you really do need to compare the rates between ISA and regular savers - the FD RSA is a great rate but you do need to open a current account with them (not sure you have to change your main current account but you do need to pay a certain amount in each month - which you could do with a standing order and then move it out again).

You mention that both of you have had ISAs in the past - if these were opened this tax year (April 2011 to April 2012) then the amount you can put into another ISA this tax year will be limited. I suspect they may be older but make sure you understand hte rules if you go this way.

As mentioned, saving into an RSA and then moving the money to an ISA can work well ... you get the benefit of hte 12 month better rate and then of the tax shelter ...

Good luck

claire16c

Thanks for the advice everyone.

and yes ISAs are reaaallly old!

penny_pincha

Cheshire BS offers 5% to regular savers (Platinum Monthly Saver) you can save up to £500 a month. If there were 2 of you you could both open one to save £1000 per month. You can make one withdrawal a year, but if you are saving for a deposit that wouldn't be a problem.

atush

So start saving into a regualr saver asap and then put anything over that into an Instant Access ISA. Next year you can transfer the prev year's money intoa fixed rate ISa and start filling a new years allowance one up

xylophone

http://www.ybs.co.uk/savings/taxfree/fixed-rate-isa-18mth.html
might suit one of you at least?