Saving for Deposit

sufjanspirit

Hi Moneysavers,

I am looking to save money for a deposit on a flat/house by the time I turn 25 (31st March 2014) and need to know the best way to save until then to maximise!

I currently live at home, so save approx. £1000 a month, plus what is left over from my allowence for monthly social/car/etc. normally goes from £50-£100.

I currently have:

Tesco ISA @ 2% - full at £5760
First Direct Saver @0.05% - 2377.67

There are no other savings or investments at the moment.

Can anyone give me any advice? I thought about regular savers (First Direct @ 6%) but that i believe is paid annually, so not worth doing?

Thanks for any advice,

B

atush

Yes, regular savers are worth doing, and you can put them in ISAs once they mature. But in your case you don't have a full year so no (unless you think you wont have enough by then- have you been to a mtg advisor to see how much you can borrow?)

You also need More than your deposit- you need money for mtg fees, insurance, Completion and moving. If saving this will put you to Sept next year, open a regular saver.

Other good savings rates available via special current accts like the Santander 123.

MisterMotivated

A couple of Nationwide FlexDirect accounts, or a Santander 123 account would probably be the best in terms of interest. If you're only going to be saving for another six months, then it depends how much effort you can be bothered to put in to maximise returns. The Santander 123 account, for example, would net you around £70 after tax (assuming you lumped in the money from FD). There won't be much of a difference compared to most other interest paying accounts in that time... For FlexDirect, you'd need several accounts, which might be more hassle than it's worth for the extra interest.

sufjanspirit

I understand I will need more than my deposit - I was advised by a mortgage advisor I could get a £135k mortgage based on my in and outgoings (this isnt based on offshore bonus, which i get through work quite regularly - just off my salary which is the minimum i would get in a month)

I am aiming for £20k by March (to cover everything), and as I just highlighted above i will be offshore for some time between now and then to make up the "deficit". I just want to make sure I can get the money working as hard for me as possible. I *may* still be at home come september next year, though this is most certainly not what I want.

The Santander 123 account, do you not need to transfer to it, and have 2 direct debits come out of it to gain the bonus cashback/interest?

Rob_192

Of course regular savers are worth doing, especially the First Direct one at 6%. What's the problem with it being paid annually?
You won't achieve 6% anywhere else, so you may as well top-slice £300/month into a FD regular saver and then decide what to do with the rest.

As with all Regular savers, you only get the full interest on the first £300, 11/12ths on the next £300, 10/12ths on the next... and so on, but for the time it's in the account iy will be earning 6% (per annum) which as I say is more than you'll get anywhere else.

At the end of the year and as soon as you are able, take the accumulated total (+ interest) and bang it in the next best available account and start again.

Edit - Ah, just realised you need the money by March 2014, so I see your point. In which case Nationwide Flexdirect Account and Lloyds Vantage Accounts are the next best. (and Santander 123 if you can face dealing with them!)

sufjanspirit

I dont think the Santander one is worth doing with the £2 a month charge?

with the Nationwide Flexdirect, do you have to have any Direct Debits? I had a quick look and it just says you need to pay in £1000 a month?

Thanks again everyone!

Prothet_of_Doom

Have you thought about On Line share dealing ? Shares go up as well as down so MUCH more risky, but possibly alot more reward if you know what you are doing.

Why not put £2K in and see if you can double it, but don't risk all your money.

sufjanspirit

Shares is something that I have thought about doing, however I have NO IDEA where to start. I understand the inherent risks, but I tend to want to do things that I know and understand how they work....and tbh I have absoloutly 0 knowledge of that area!

Also, I dont want to gamble £2000 away stopping me from moving out of my parents house....ill be 25, should have been away ages ago!

badger09

Prothet_of_Doom wrote: »

Have you thought about On Line share dealing ? Shares go up as well as down so MUCH more risky, but possibly alot more reward if you know what you are doing.

Why not put £2K in and see if you can double it, but don't risk all your money.

I think this is highly irresponsible.

You might as well suggest OP puts £2k on a horse in the 3.30 at Kempton (if there is such a race ), any horse will do, as one of them has to win, though some of them can lose :cool: .

MisterMotivated

Nationwide FlexDirect doesn't need any direct debits, just the £1k per month deposit. However, as they're limited to £2.5k, you'd need a few, and they're only "guaranteed" to pay out interest on one account. I'm not aware of anyone who doesn't get interest on additional accounts so far, but this strategy assumes they'll let you open 4 (ie the max allowed) in fairly quick succession.

With such a short term, ruling out accounts paying annually and shares, etc, you're pretty limited in your options tbh, eg "Vantage" accounts are usually limited to £5k, Santander has £2pm fee and FlexDirect is limited to £2.5k per account.

atush

You aren't going to get a huge return w/o a lot of effort. Go for an NSI 6 months acct, easy access or PB's?