Easy Question

predator887

Hi,

I am a noob with £2000. I want to save money for a deposit on a house (around £15,000) within approximately 2 years (I plan to deposit at least £500 a month into savings).

My first step is to place this initial £2000 into a Santander 2 year fixed rate cash ISA .

Is this a reasonably logical first step?

Thanks.

Lokolo

No it's not. You will be unable to make more than 1 deposit into that ISA so you will potentially lose the rest of your ISA allowance that year.

You should open up an ISA that allows multiple deposits to use up your allowance. (instant acess usually)

lisyloo

The cash ISA makes a lot of sense as it's protected from income tax.

The 2 year fix only makes sense if you are sure you are not going to want to buy before 2 years.

I don't know if you have a partner, but personally I'd probably go for a variable rate in case you want to move earlier e.g. you meet someone and have a joint deposit, or you get an inheritance.

I would be looking at the penalties on the fixed rate vs variable.

But the ISA part makes sense.

JimmyTheWig

Lokolo wrote: »

No it's not. You will be unable to make more than 1 deposit into that ISA so you will potentially lose the rest of your ISA allowance that year.

You should open up an ISA that allows multiple deposits to use up your allowance. (instant acess usually)

If the rate on the two year fix is good then I'd say the plan sounds reasonable.
For the rest of the money set up a regular savings account (regular as in pay money in each month, rather than regular as in normal) where you should get a decent interest rate.

Ronnie_Grimes

I'd keep your money in UK banks not EU ones just in case the EU crashes and it's banks go with it.

MoneySaverLog

2 regular savers paying 8% and 6% beating any ISA for regular savings of up to £550 a month would be First Direct and HSBC.

At the end of the first year you could then move the money into a ISA and fix for a year, and continue with the regular savers from the start again.

predator887

Thank you all very much. I am in your debt.