Deposit Savings

looknohands

I'm a first time buyer, been looking for a house with my girlfriend for some time now, we have £16k of deposit savings that are currently sitting entirely in my 0.8% ISA which is easy to access. We also have a £5k gift which we will have when we purchase.

We've been very fussy with houses, have seen one we liked but missed out on it, we've decided it's best to be fussy so we are going to continue saving more to increase deposit or buy something more expensive.

I've maxed out my ISA now for the year with my deposit so wondering what other ways are good for me to continue saving for a deposit? Obviously I'm expecting no return if we buy next week! but seeing as we've already been looking for a year I might be able to make a little bit back on any savings in the time it takes us to find, rather than it just sitting in a regular savings account.

Are Premium Bonds worth doing for something like this, can you withdraw them quick enough to pay deposit?

chris_m

Have a look at some of the interest-paying current accounts - eg TSB pay 5% pa on up to £2K if you can pay £500/month in, Santander123 3% pa on £3K-20K if you pay in £500/month, pay a £2/month (to be £5/month from Jan) fee and have a couple of direct debits going out, others with similar offerings, etc.

You don't even need to keep the monthly deposits in the accounts (just enough to maximise your interest), you can bounce it between them and still meet the conditions.

Both those I mentioned are current accounts so very easy access, and probably better returns than PBs unless you get lucky.

looknohands

Thanks Chris, these sound great. Just one question, might not be the forum for this but do you know if having multiple current accounts puts off lenders at all, (I might need to go and ask in mortgages).

One thought was can I 'give' my girlfriend money to save in her ISA, as she has £14k left on her allowance. Not sure if this is dodgy to do.

chris_m

looknohands wrote: »

Thanks Chris, these sound great. Just one question, might not be the forum for this but do you know if having multiple current accounts puts off lenders at all,

Not sure I'm afraid. It's not something I've looked into - at my stage in life (retiring next Thursday, woohoo) I'm not looking at any further borrowing myself.

xylophone

You could keep your existing current accounts for consistency and open one joint and two sole Lloyds Club accounts - you can deposit £5000 in each - once you have funded one of them with the required £1500 a month from an exterior source (money in one of your old current accounts), it can be cycled through the other two internally and then back to wherever you wish with the monthly interest.

If you are short of the required direct debits, these are easily arranged if you open a Tesco easy access saver and an internet saver which will pull money from the Lloyds account with DDs.

A sole account each with TSB and a joint account would give you further scope for building up savings of £6000 at 5%.

Once again, cycling money around should not prove a problem?

I don't see any reason why your having several current accounts should worry a mortgagee, especially as you could demonstrate that you were building a deposit in them?

colsten

You could move your ISA into these current accounts, too, as they pay more than double in interest.

If you don't apply for / use overdrafts, they should not have a negative impact on your ability to get a mortgage. Best perhaps to verify this in princple with a mortgage broker or two before you go ahead.

compbren

It's a shame you've filled your ISA as you could have applied for a help to buy one when they launch in December giving you £50 voucher back when you put in £200 each month.

I'm pretty similar to you except I'm doing it alone.