Best place to save for a mortgage from scratch

tombooth

Hi All,

I am thinking about starting to save money towards a mortgage some time in the next 5-10 years. I currently have no savings at all and should be able to save somewhere in the region of £100 per month.

I was hoping that someone could give me some advice on where to start looking to get the best return on this over the long term. Should I put it in an ISA or am I better off going with a standard savings account?

Thanks,
Tom

Archi_Bald

Neither ISAs nor other savings accounts are your best option because their interest rates are terrible. Look at current accounts instead (use them as savings accounts). Start with a TSB Plus account. It requires £500 minimum monthly deposit but you can easily shuttle this sum (in one or several goes) with your existing current account.

There is a separate thread about TSB Plus on this forum.

tombooth

Forgot to mention that I am currently bankrupt (lost a house during the credit crunch after taking out a 125% mortgage with Northern Rock and ending up in massive negative equity).
This means that most normal current accounts are not accessible to me (not sure about savings accounts).

RickyC_IFSWP

With that time frame, consider Stocks and Shares ISAs so your investments can grow. Start off with selecting some index funds to reduce cost and save regularly into it.

ViolaLass

Do you have any emergency savings?

tombooth

RickyC IFSWP - Is there anywhere that I could read up on some more information about this as I have no knowledge of stocks and shares at all. I don't even know what index funds are!

ViolaLass - I could get my hands on a couple of hundred quid if I needed to but no emergency savings as such

RickyC_IFSWP

tombooth wrote: »

RickyC IFSWP - Is there anywhere that I could read up on some more information about this as I have no knowledge of stocks and shares at all. I don't even know what index funds are!

ViolaLass - I could get my hands on a couple of hundred quid if I needed to but no emergency savings as such

You can find the MSE Stocks and Shares ISA guide under "Banking Saving" tab. Link: http://www.moneysavingexpert.com/savings/stocks-shares-isas?_ga=1.116839107.417637923.1397400516

Post back if you have other questions after reading it. I'm sure you'll get some good help from everyone on here.

innovate

You should not follow the MS S&S ISA Guide, for reasons discussed in this thread: https://forums.moneysavingexpert.com/discussion/4948628

One of the most severe issues with the MSE article is that it states you start with a provider and then select your investments. This totally the wrong way round - step 1 is to select your investments, and then you look for the cheapest provider.

In terms of how you select investments, you could read some books ("Smarter Investing" by Tim Hale), or there is the excellent monevator website.

I am not convinced that investing £100 a month for the next 10 years is the best way to save up for a mortgage. It would be ok if you had a lump sum now and could put it to one side for 10 years but this is not the scenario we are talking about. In any case, even if you do decided to use the investment approach, you should not jump in head first. Put your next 6-12 months of monthly £100 into a high-interest paying current account, whilst you educate yourself about investments.

Don't respond to PMs that suggest somebody can help you with investments.

Sanne

If you can't get a current account you can try a regular saver which doesn't require a savings account. Those that don't require a current account with the same provider offer slightly lower interest but probably easier to open - and still offer higher rates than ordinary saving accounts.

Make sure you check the T&Cs in terms of withdrawing, missing payments, varying payment amounts etc. - some allow this, others don't, and if you don't have any other savings I would be leaning towards one that does.

tombooth

Thanks - I've had a quick look through the guide above and I'm not sure that investing in S&S would be right for me anyway. I don't like risk (certainly not a betting man!) and it seems like the sort of thing that I would read about for a year and still not make my mind up about which way to go...

It might not give me the best return but I think that putting my money into an account with guaranteed interest would be better for me as I wouldn't want to have to manage it and check it etc.

As I mentioned earlier my main problem is that I have a bankruptcy on my credit report from 2009 so I am unable to access most current accounts (not sure about savings accounts) so I'm wondering what would be the best type of account (or ISA) that I could get.

tombooth

Thanks Sanne, I missed your post whilst writing this one! Does this site (or any other) offer comparisons for savings accounts? When comparing them do I need to look solely at the interest rate or are there other considerations (aside from the T&Cs)?

Sorry for all the questions but I have never had the opportunity to save before and due to my circumstances I can't just go with the obvious TSB Plus account