Mortgage application and saving accounts

DreamerFTB

I am planning to apply for a mortgage a the end of 2015, in the meanwhile I am building my 20% deposit.

Now I am looking to maximise the interests on my deposit and to get good rates it seems the best option is to divide the deposit in multiple saving accounts (santander 123, tsb plus, an ISA and so on). I will not ask for credit, just saving accounts.

Will having multiple saving accounts be a bad sign on my credit history when I'll apply for a mortgage? Will they credit check me if I apply for a saving account?

Thank you!

DreamerFTB

Just want to add that most saving accounts with higher interest rates wants a minimum £500 monthly deposit. Basically I'll have to deposit £500 one day of the month and put £500 back on my base account the day after.

Will this be a problem when applying for a mortgage?
The balance will always be 0 (500 out one day, 500 in the day after), but maybe a lot of movements can cause problems in terms of mortgage affordability?

Thanks!

Thrugelmir

Other than from a point of you proving the source of the deposit. Lenders will have no interest in your savings accounts.

anna42hmr

Some of the accounts you mention are not savings accounts, tsb plus, sentencer 123 etc are current accounts.

As such regardless of whether you ask for an overdraft etc they do show on your credit reports and will do a credit search at the time of the application.

What i would say is if you are planning to do that then do it sooner than later so that there are not lots of credit searches near to the mortgage application and so that the money has been there sometime.

As for holding the funds over a number of accounts my mortgage lender (TSB) had no problem with it at all (my deposit was also split over a large number of current accounts and none of it was in savings accounts).


All my savings both pre and post mortgage are held in current accounts and has not caused problems for me.

If your sole aim is to maximise interest for the short time, you may want to forget an ISA as their rates are considerably lower than the current accounts. Especially as the money will not be in them for the long term so the use or loose the limit would not apply necessarily as you will be withdrawing from it any way.

You may also want to look into nationwide direct (5%), Lloyds club (up to 4% but also gives access to the monthly saver at 4% which does allow withdrawals from it) Tesco bank (3%), Bank of Scotland vantage (up to 3%) Yorkshire bank (up to 2%)

As for the account funding you do not have to use one account to fund all of them and send the money back and forth to all of them from the same account. Instead you can use standing orders to allow the balances of the accounts to cover each payments, that way each account has 1 in bound payment and 1 outbound payment.

You can do this in a couple of ways for instance a funding circle so once a month a payment goes from account A into account B into account C into account D and back to account A

Or you can pair accounts up so payment for example is £1000 from Account A into account B and the same day the payment of the same amount goes from account B into account A so effectivly the money is swapped between them. Account C and D would also be paired up with the amount just bouncing between them

You will just need to do some reading up on the accounts requirements (what it needs paying in each month, what they class as a month, if direct debits are needed, if the money has to be external or can be from an account with same bank).

If you are planning on using santander123 solely as a savings account you will need to take into account the interest will be reduced by the monthly £2 fee unless you earn cash back from them for direct debits).