Saving for mortgage

chris_h16

Hi

In a few months time we will have finished our Debt Management Plan and will have £300 spare a month than we have had over the past 5 years.

We've only ever rented and always intended to buy a house at some point.

Basically what is the best way/kind of savings account to save for a mortgage. We are looking at saving £200 for about 5 years, that way it gives us enough time to get a decent deposit and our credit file to be rebuilt.
Is it best to save in a regular saver or a one that locks the money in, or an ISA etc.

Regards in advance

innovate

The First Direct Regular Saver at 8% AER still beats the pants off any other savings account, ISA or not. The other Reg Savers aren't so good, so if you had more than £300 a month to save, you might do better with an ISA.

When your Reg Saver matures, you can put the money into an ISA, and perhaps start a new Reg Saver. Since April-ish is usually the best time for ISA interest, it might make sense to open an instant-access ISA the, ready to take your matured Reg Saver later in the year (Fixed rate ISAs will offer better interest rates but you generally have to pay in your entire deposit within a couple of weeks of opening the account). Then open another Reg Saver & repeat.

You don't say which bank you have your current account with - there's two that might be worth looking at now

1. Santander 123 - costs £2/mth but you can get cashback and interest that might pay a lot more than £2/mth. They might also have special offers for 123 customers come ISA-season
2. Nationwide Flexaccount - costs nothing but they might offer a good ISA rate to customers who paid in £750/mth for at least 3 months

With a bit of management, it is quite possible to manage more than one current account (and it can give you a safety line in case of Natwest-like system meltdowns).

chris_h16

We have our current account with LoydsTSB and would probably be paying £200-300 a month

I've noticed some accounts ask you have £1000 to open the account.

innovate

chris_h16 wrote: »

I've noticed some accounts ask you have £1000 to open the account.

They ask you to pay in £1K or so a month - - but they don't say that this has to be in a single sum. They also don't say the money needs to stay in your account. :cool:.
You need to pay precisely nothing into the First Direct account to get access to their 8% Reg Saver. Find the threads on that if you are interested.

Do you have Vantage on your Lloyds account? At least that would pay you a few pennies in interest for any balance you have in your current account.

Lloyds do have a 2-year fixed rate ISA that allows regular payments (very unusual) but it never topped the ISA interest rate tables in the last 18 months or so. It's currently a terrible 2% unless you have more than £10K in it (2.05%), and you need £3K to open it.

JustinCredibleGillespie

Sorry to hi-jack this thread a bit. I've recently had a few old defaults settled on my credit files, do you need to have 'decent' credit to open a Regular Saver with FD?

JCG

xx

chris_h16

You need a First Direct 1st current account to get the 8% savings account, and you need to pay in £1500 per month into the 1st account after 6 months.

chris_h16

Is it better to use an isa or a 5 year fixed savings account or regular saver?