Saving for a House Deposit

Sparx

Having read through this thread I'm still not 100% what method of saving would be best for me.

I'm looking to start saving from this month with my partner for a house deposit. We plan to save around £1000-1400 per month (total) for around 12-18 months or until we have £18-20k. We don't mind having it locked up for 12 months [max] on any of the savings account(s).

Currently I thought the best way to save; would be to open 2 Cash ISAs in each of our names, then once they are filled just open an Instant Access savings account probably nearer Christmas next year again once we have £11k odd (hit the ISAs' limit).

Alternatively, I was thinking of just opening up (from now) a 1 year fixed rate bond which both of us will set-up a SO to save.

I was initially looking at M&S accounts but keep seeing all sorts of bad reviews and comments trying to get in touch with them or even transfer money in - let alone get it out later!

I've just come across Coventry BS' Cash ISA @ 3.1% variable account which looks promising.

Again alternatively for a 1 yr fixed bond I found the Baroda @ 2.7% accounts, but they are of course not well known (at least in my eyes anyway).

Anyone have any suggestions on the best way to save? Comments and thoughts be appreciated!

Cyrus

If your starting from scratch why not open 2 first direct saver accounts (8%, you can only deposit £300/month/account) and 2 HSBC regular saver accounts (6%, you can only deposit £250/month/account). So thats £1100 a month saved at better interest rates than any ISA and fixed rate bond I've seen.

innovate

Cyrus wrote: »

If your starting from scratch why not open 2 first direct saver accounts (8%, you can only deposit £300/month/account) and 2 HSBC regular saver accounts (6%, you can only deposit £250/month/account). So thats £1100 a month saved at better interest rates than any ISA and fixed rate bond I've seen.

Sadly, HSBC only pay 4% now for most people
http://www.hsbc.co.uk/1/2/savings-accounts/regular-savings-accounts/details?HBEU_dyn_lnk=SavingsAccount_RegularSaver_FindOutMore_Btn

innovate

Sparx wrote: »

Currently I thought the best way to save; would be to open 2 Cash ISAs in each of our names, then once they are filled just open an Instant Access savings account probably nearer Christmas next year again once we have £11k odd (hit the ISAs' limit).

The cash ISA limit is £5,640 per person this financial year, £5,760 next

Sparx wrote: »

Alternatively, I was thinking of just opening up (from now) a 1 year fixed rate bond which both of us will set-up a SO to save.

All fixed-rate accounts are usually heavily restricting the number of deposits you can make. On most that number is 1. So it's great if you have a lump sum but not so useful for regular contributions.

Have you considered the current account "savers"? All are presently paying more interest than most savings accounts, incl cash ISAs.

1. Halifax Reward - - cyclce [the same] £1K through the account each month, get £5 / mth after basic rate tax. Each of you can have one of these, and you can have one joint one = £180 profit in 12 months from £1K. Of course you can use the £1K elsewhere to earn a bit of interest, e.g. in
2. Lloyds Vantage accounts. Each person can have 3 of these, interest on balances between £3K and £5K is 3% AER. So that's a home for 2 x £15K, and you can't get any more 'instant access' than a current account
3. Santander 123. It costs £2/mth but you might get £55 via Quidco for signing up, it pays cashback on some regular Direct Debits (Council Tax, Phone, Utilities etc), and it pays 3% AER on balances between £3K and £20K. Assuming you and your partner are living together, it would probably only make sense to open one of these

Cyrus

innovate wrote: »

Sadly, HSBC only pay 4% now for most people
http://www.hsbc.co.uk/1/2/savings-accounts/regular-savings-accounts/details?HBEU_dyn_lnk=SavingsAccount_RegularSaver_FindOutMore_Btn

Gutted....

Sparx

Cyrus wrote: »

If your starting from scratch why not open 2 first direct saver accounts (8%, you can only deposit £300/month/account) and 2 HSBC regular saver accounts (6%, you can only deposit £250/month/account). So thats £1100 a month saved at better interest rates than any ISA and fixed rate bond I've seen.

Don't you have to be a HSBC current account customer to open those accounts up? At least to be eligible for the 4%+ rates.

innovate wrote: »

The cash ISA limit is £5,640 per person this financial year, £5,760 next

I said both my partner and myself would open an ISA each, so that is £11,280 of savings right? Then my sentence continued that we would open up another regular/instant savings accounts after we hit the limit. Or would that not work for some reason?

innovate wrote: »

All fixed-rate accounts are usually heavily restricting the number of deposits you can make. On most that number is 1. So it's great if you have a lump sum but not so useful for regular contributions.

Have you considered the current account "savers"? All are presently paying more interest than most savings accounts, incl cash ISAs.

1. Halifax Reward - - cyclce [the same] £1K through the account each month, get £5 / mth after basic rate tax. Each of you can have one of these, and you can have one joint one = £180 profit in 12 months from £1K. Of course you can use the £1K elsewhere to earn a bit of interest, e.g. in
2. Lloyds Vantage accounts. Each person can have 3 of these, interest on balances between £3K and £5K is 3% AER. So that's a home for 2 x £15K, and you can't get any more 'instant access' than a current account
3. Santander 123. It costs £2/mth but you might get £55 via Quidco for signing up, it pays cashback on some regular Direct Debits (Council Tax, Phone, Utilities etc), and it pays 3% AER on balances between £3K and £20K. Assuming you and your partner are living together, it would probably only make sense to open one of these

By heavily restricted on deposits (1) do you mean they only let you deposit one lump sum a month? If so that is what I intend to do.

I'm already a LTSB Platinum customer and actually a few weeks ago upgraded my account to Vantage. So I could even be better off keeping the money in my current account? Well, if the rates are better I'll open a 2nd current account with Vantage and use that as the 'savings' pot if it works out.

Cyrus

Sparx wrote: »

Don't you have to be a HSBC current account customer to open those accounts up? At least to be eligible for the 4%+ rates.

Yeah probably, but why not just open one?

jimjames

Sparx wrote: »

I said both my partner and myself would open an ISA each, so that is £11,280 of savings right? Then my sentence continued that we would open up another regular/instant savings accounts after we hit the limit. Or would that not work for some reason?

By heavily restricted on deposits (1) do you mean they only let you deposit one lump sum a month? If so that is what I intend to do.

You can do £11280 total this year using both your ISA allowances and then the same (well the new ISA limit) after April next year.

Heavily restricted means 1 deposit only - not one per month! To do one per month you'd need to open a new fixed rate each month as they constantly are changing.

Sparx

Cyrus wrote: »

Yeah probably, but why not just open one?

Because I already hold 4x current accounts; 2x LTSB (sole and joint), 1x Barclays and 1x NatWest. Does it not have any detrimental effect on my credit rating to hold several bank accounts? (genuine question)

If it doesn't then I may look to open an account with HSBC. I was with them for just over 10 years but it appears I could of made a mistake by closing it a few months ago.

EDIT: Just had a look on HSBC's website and for a current account with them I have to pay in £500 p/mo with them. That would be quite a hassle would it not? My sole LTSB account is my main bank account. To then juggle it from there to a HSBC current to a HSBC savers would be a pain (if that would even work at all)..

EDIT2: Strike that! It appears if you are under 24 (which I am) the £500 minimum monthly deposit does not apply.

jimjames wrote: »

You can do £11280 total this year using both your ISA allowances and then the same (well the new ISA limit) after April next year.

Heavily restricted means 1 deposit only - not one per month! To do one per month you'd need to open a new fixed rate each month as they constantly are changing.

Crikey! It seems I have a severe misunderstanding of fixed rate bond accounts then. So typically you can only deposit one lump sum and then you have to leave it for the year?

So I guess my only options are regular/instant savers, cash ISAs and current accounts with preferential rates, i.e. LTSB Vantage, Halifax Reward, etc??

innovate

Sparx wrote: »

Don't you have to be a HSBC current account customer to open those accounts up? At least to be eligible for the 4%+ rates.

Yeah, you need a current account with HSBC to use their Reg Saver (like you need a current acct at First Direct for their Reg Saver). That doesn't mean you have to use that current account for anything other than the Standing Order to feed the Regular Saver, and to receive the money for the Standing Order. Trust me, this works - I have this arrangement myself, and plenty of other MSErs have too.

Sparx wrote: »

By heavily restricted on deposits (1) do you mean they only let you deposit one lump sum a month? If so that is what I intend to do.

No, it is generally one deposit and that's it. Not one per month, just only one at the start of the fixed term.
If you want to deposit monthly, you need a Regular Saver or an Instant Access account. If you want the higher interest rates of a Fixed Term Account, you have to pay all your money upfront and lock it away for the duration of the Fixed Term.

Sparx wrote: »

I'm already a LTSB Platinum customer and actually a few weeks ago upgraded my account to Vantage. So I could even be better off keeping the money in my current account? Well, if the rates are better I'll open a 2nd current account with Vantage and use that as the 'savings' pot if it works out.

Vantage is certainly not bad in the current interest rate situation, and having 3 Vantages may well be your best bet. But make as many of them Classic Vantages - i.e. don't pay any fees for the account. Do you actually need the Platinum account? The Platinum fee eats all of your Vantage interest and more......

Sparx

innovate wrote: »

Vantage is certainly not bad in the current interest rate situation, and having 3 Vantages may well be your best bet. But make as many of them Classic Vantages - i.e. don't pay any fees for the account. Do you actually need the Platinum account? The Platinum fee eats all of your Vantage interest and more......

My 2 accounts with LTSB are a Sole Classic and a Joint Platinum. My partner and myself both use of the benefits, i.e. mobile phone & travel insurance, £300 interest free overdraft, breakdown cover, etc.

If I did use the Vantage of course I would stick with Classics, no point duplicating existing benefits.

I'm already looking at applying for a HSBC current account again. As long as it doesn't harm my credit report having 5 current accounts. 2 are used (LTSB sole and joint) but my Barclays/Natwest accounts are dormant, just useful to have another bank account or 2 if anything happens!