Best saving option for house deposit build up...

rags2riches_2

Hi,

Over the next few months as our remaining debts are cleared we will be in a position where will be able to save £2,000 per month to look to build a deposit up for our first house purchase.

We will only be looking to save for about 12 months so will be depositing £24,000 over a 12 month period. We would then want to withdraw this money to use as our deposit.

My question is what is the best option to put this money to get a decent return. I currently have an ISA with my bank but I'm only getting an interest rate of 0.05%.

Any suggestions would be greatly appreciated.

Thanks in advance.

cjv

Are you and/or your partner under 40? You may both be eligible for a Lifetime ISA, as you stated it will be your first house purchase

https://lifetimeisa.campaign.gov.uk/

eskbanker

Agree with Lifetime ISAs x2 if eligible - also, regular savings accounts are tailor-made for saving every month for a year and you can earn 5%: http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

FatherAbraham

rags2riches wrote: »

Hi,

Over the next few months as our remaining debts are cleared we will be in a position where will be able to save £2,000 per month to look to build a deposit up for our first house purchase.

We will only be looking to save for about 12 months so will be depositing £24,000 over a 12 month period. We would then want to withdraw this money to use as our deposit.

My question is what is the best option to put this money to get a decent return. I currently have an ISA with my bank but I'm only getting an interest rate of 0.05%.

Any suggestions would be greatly appreciated.

Thanks in advance.

This sounds like a job for a battery of regular savers. Put together regular saver accounts from HSBC, Marks and Spooky bank, and First Direct, and you can save 900 per month at 5% interest.

Warmest regards,
FA

FatherAbraham

You could consider monthly investing into a UK residential property fund, in order to match your assets to your expected liabilitie.

Warmest regards,
FA

rags2riches_2

Thanks so much for the suggestions. These forums are always a great place to come for quality advice.

binaryuniverse

It's important to remember that Lifetime ISAs only pay out on up to £4000 saved.
Open a Skipton Lifetime ISA (one each) and stick £1 in those. Only put the £4000 in towards the of March as the interest is a rubbish 0.5%. Before then put the money in to as many regular savers as possible.

I'd also open a Nationwide FlexDirect account. This will let you put in £2500 and start getting interest on that immediately.

It's also worth noting that the top paying regular savers do also require you to have a bank account with them as well. So if you're planning on getting a mortgage you may want to be careful about having so many applications and fresh accounts on your report. But it may okay once 12 months have passed.

eskbanker

binaryuniverse wrote: »

It's important to remember that Lifetime ISAs only pay out on up to £4000 saved.

It's also important to remember that this is per person per (tax) year and so a couple (OP refers to 'we') can get £16K into a pair of LISAs by 6 April 2018, which will then be enhanced to £20K via bonus additions by the end of May 2018.

rags2riches_2

eskbanker wrote: »

It's also important to remember that this is per person per (tax) year and so a couple (OP refers to 'we') can get £16K into a pair of LISAs by 6 April 2018, which will then be enhanced to £20K via bonus additions by the end of May 2018.

Could you explain this further please?

It's my understanding that me and my wife could open one each (which we have done now thanks to the advice) and pay in £4K by 6 April 2018 to get the 1k bonus each?

Therefore I thought we could only get 8k into a pair of LISAs enhanced to 10k via bonus additions?

eskbanker

rags2riches wrote: »

Could you explain this further please?

It's my understanding that me and my wife could open one each (which we have done now thanks to the advice) and pay in £4K by 6 April 2018 to get the 1k bonus each?

Therefore I thought we could only get 8k into a pair of LISAs enhanced to 10k via bonus additions?

You can get £8K in during this tax year, which finishes on 5 April 2018, and the extra £2K will be added by the end of April 2018.

However, the next tax year then starts on 6 April 2018 and you can each pay in another £4K immediately, which will be enhanced by the 25% bonus the following month (the bonus payment timescales are monthly after this tax year). Actually, given bonuses being paid monthly, if you pay the 2018/19 contribution in by 5 May, it would still work out the same as if you pay it in on 6 April, but the point remains that feeding a LISA with the full annual contribution at the start of the 2018/19 year gives a swift bonus payment, and hence my original comment that you can convert £16K into £20K by the end of May 2018....

rags2riches_2

eskbanker wrote: »

You can get £8K in during this tax year, which finishes on 5 April 2018, and the extra £2K will be added by the end of April 2018.

However, the next tax year then starts on 6 April 2018 and you can each pay in another £4K immediately, which will be enhanced by the 25% bonus the following month (the bonus payment timescales are monthly after this tax year). Actually, given bonuses being paid monthly, if you pay the 2018/19 contribution in by 5 May, it would still work out the same as if you pay it in on 6 April, but the point remains that feeding a LISA with the full annual contribution at the start of the 2018/19 year gives a swift bonus payment, and hence my original comment that you can convert £16K into £20K by the end of May 2018....

Aha that makes perfect sense. That's brilliant and strangely enough didn't even think of putting the 4K in each which we will have elsewhere in the first month of the new tax year.

Really appreciate your advice. Thanks for taking the time to reply. :T