I just don't know where to start...

jotrez

Hi all, I'm hoping someone can give me some guidance, as I stated above I just don't know where to start right now.


I am looking to start saving for a deposit on a house. Therefore originally I looked at opening a first time buyer ISA when they arrive. However, I believe you can only save a maximum of £200 a month with these? I'm looking to try and save around £500 or more a month if my finances allow. Therefore, do I open the first time buyer ISA in December, pay in what I can and then open a savings account to put the rest away or do I open a 'normal' ISA now, bundle as much as I can in before April and then open a first time byer ISA?


I have looked at the savings account options, the best of which seems to be with Santander, but as you need to deposit at least £500 a month and have a few direct debits set up from this account it would make my current account pretty redundant, or is there the possibility to pay £500 a month from my current account to Santander and then £200 of that each month then goes to the first time buyer ISA?


The option of opening a 'normal' ISA and bundling everything I can into that may leave me a little short on the £1600 or so I can then push into the first time buyer ISA's initial set up amount.


I spoke with an independent financial advisor earlier and she was very little help to me and didn't really help me with what my best option might be. I'm willing to consider other options also but I'm just very stuck as to where to turn as I don't want a bank/building society to just try and push their products my way.

Hopefully someone on here can be of help :undecided

Sam_J12

My advice to you would be to open the help to buy ISA - an absolute no brainer given the 25% gift when you come to put down a deposit. You can put in £1200 in the first month and £200 thereafter. Given you will take a few years (I guess) to build up a deposit, you should definitely go for it. If you have a partner then he/she can also open one too. You can get a total government gift of up to £6k this way (£3k on your own).

My second bit of advice would be not to bother with a cash ISAs, as the interest rate will be significantly less than what you can achieve from opening current accounts.

Third bit of advice would be to investigate the best paying current accounts and put any money not going into your ISA there. The interest rates on these vary from 3%-5%. Also, there are a couple of regular saver accounts attached to M&S bank and First Direct bank account, that will give you 6% on some of your money. There is loads of information on the moneysupermarket main website, so check it out.

Fourth bit of advice - check out the other government schemes out there, in particular the Help to Buy equity loans. A good overview is here: https://www.gov.uk/affordable-home-ownership-schemes/overview .

Archi_Bald

HTB ISA is a good idea. Forget all other ISAs as you can get much better interest elsewhere.

Forget the Santander 123, too, as again you can get better interest elsewhere.

Look into a TSB Plus account to start with, and then perhaps a couple of Tesco current accounts. They are both very easy to run. There are other options but they'll probably just confuse you so I won't mention them.

The TSB Plus needs £500 deposit a month to pay any interest. You do not need to leave the money in the account - - although, of course, you want as close as £2,000 in it to earn interest.

A Financial Advisor won't be of any use to you as they are only interested in people who can invest tens of thousands.

So, in summary:

1. open a TSB Plus asap and put as near to £2K into it as you can. Plan to swap £500 a month with your existing current account. Read the T&Cs for other conditions.
2. open your HTB ISA as soon as you can (Dec 1 probably earliest)
3. when the TSB Plus nears £2,000, open a Tesco current account and fill it to £3,000
4. when that Tesco is full, open a second one for up to £3K
5. when all accounts are near full (£8,000 in total), review your options at the time

disclaimer: above assumes TSB Plus pays 5% AER, Tesco 3% AER and allows 2

jotrez

Thank you Sam. I did look at the First Direct account but like a couple of others I don't know if I may have a bit of trouble opening it due to them needing £1000 min a month paid in (I'm sure theirs was in this category). I get paid monthly, but as I get paid on the last day of the month- if the boss pays late on a Friday or during the weekend, this then doesn't clear until the Monday which is obviously in the following month. The bank queried it with me when I applied for a loan previously but they were ok once I explained it, but I'm not sure if it could prove a hindrance in a case with another bank that needs x amount paying in?

jotrez

Thank you Archi Bald. I am thankful for any advice at all

Sam_J12

jotrez wrote: »

Thank you Sam. I did look at the First Direct account but like a couple of others I don't know if I may have a bit of trouble opening it due to them needing £1000 min a month paid in (I'm sure theirs was in this category). I get paid monthly, but as I get paid on the last day of the month- if the boss pays late on a Friday or during the weekend, this then doesn't clear until the Monday which is obviously in the following month. The bank queried it with me when I applied for a loan previously but they were ok once I explained it, but I'm not sure if it could prove a hindrance in a case with another bank that needs x amount paying in?

There is a simple trick to get around that - simply do a bank transfer one from account to another, and then straight back again. That will count as paying in £1000.

jotrez

Yes that's fine but unfortunately it's a fine line between me making sure I've been paid before the money is due to come out some months and then make sure I still have the £1000 if i set the transfer to a date later on in the month. I see also to qualify for this you have to have another account with them ( can't recall the name). The biggest advantage of keeping my current account is that I would still have quite a reasonable overdraft i could use if required at any point due to an unexpected expense.

Archi_Bald

If I were you, I'd forget First Direct. At least for the first year or so, until you have enough money for your ISA and to fill those current accounts.

But if you can't resist: there is a dead easy way to avoid the monthly £1,000 deposit. You just need a quid in their normal savings account. It's all described on their site - - - you have to start learning to read the T&Cs.

Not sure why you are obsessed with payment dates - - - you just have to pay some time during a calendar month. Middle of a month is what most people would consider safest.

jotrez

I'm not particularly drawn to the first direct account, it was just one option amongst many that I looked at. I have also read the t's & c's for many accounts. Therefore, I cannot always remember off hand which piece of information relates to which account instantly.

The tsb account is much more probable for me. The reason being my basic wage after tax but minus any overtime is only just over £1000 a month so for me to keep dipping into my overdraft if the timings were out or an unexpected bill arrived ( and therefore incurring the associated overdraft charges) would counteract the benefits of what the account could offer me in the short term.

kangoora

jotrez wrote: »

I'm not particularly drawn to the first direct account, it was just one option amongst many that I looked at. I have also read the t's & c's for many accounts. Therefore, I cannot always remember off hand which piece of information relates to which account instantly.

The tsb account is much more probable for me. The reason being my basic wage after tax but minus any overtime is only just over £1000 a month so for me to keep dipping into my overdraft if the timings were out or an unexpected bill arrived ( and therefore incurring the associated overdraft charges) would counteract the benefits of what the account could offer me in the short term.

Well, if you're saving for a house presumably at some point you'll have more than £1,000 which isn't going to get eaten up by late pay packets or expensive bills.

Just get to your first £1,000 which is 'safe' from being needed and then open up a TSB a/c and set up a standing order to draw out £500 and pay it back into the account the next day.

If you can't get to that level of savings then I think a house purchase may be a long way off

Eco_Miser

You get paid on the last day of the month, except on those occasions payday is late.
So, with the TSB or any of the interest-paying current accounts, on those months when you don't get paid at the beginning of the month for the previous month, withdraw £500 at the beginning of the month (or transfer to another account), then pay it back in the same day - this takes care of the required pay-in at the beginning of the month, so it doesn't matter if that month's pay is late.

If your utility etc. DD's dates are so close to payday that delays cause you to go overdrawn either ask the payees to take the money later in the month, or better, ensure that you have at least a month's worth of outgoings in the account before payday (that is, at all times except when payday is late).
This is more important than saving for a house deposit, since if you don't you'll lose more in overdraft charges than you gain in interest.