Where to put house deposit savings?

Tuesday1510

Hi,

Sorry if this has been posted before - this is my first time posting in a forum lol.
Me and my partner are looking to save around £1500 a month for the next 2 years for a house deposit.

What sort of savings account would you recommend this money go into? I have searched the internet but nothing comes up for this sort of sum per month. We are first time buyers.

Thank you,
Fliss

Mr.Saver

I assume you are starting from £0?

I'd start from 5% regular savers like HSBC, First Direct and M&S. If each one of you open one each one of those, you will be able to save at most £1,600/month earning 5% interest for the first year.

At the beginning of the second year, open whatever high interest regular saver available at that time, and pay new funds into them. Move the matured fund from regular savers into TSB and Nationwide current accounts if they are still paying 5% at that time. Those two accounts are available as joint account too, so you and your partner can have total of 3 accounts each, and get 5% interest on total £12,000, the remaining matured fund from regular savers can go into either a 1 year fixed savings account or whatever savings account pays the highest interest at that time.

If all of the above is done correctly, you should be looking at something around £483 interest in year one, and £483 + £600 + whatever interest the remaining funds earn in year two. In total, that's around £1,700 interest paid to you over the two years.

xylophone

Are you both eligible for a LISA?

https://www.moneysavingexpert.com/savings/lifetime-isas/

If so, you might each open one now and put in as much as you can afford up to £4000 before the tax year ends.

You might each open a TSB Classic Plus account and a joint and set to paperless.

You might then deposit £500 into each account.

Do this until each of them holds £1500. (you could allow the monthly interest to accumulate until this point is reached.

In following months, don't forget to cycle in/out £500 to each account.

If you have never had Nationwide Flexdirect current accounts, open a sole each and a joint.

You will need to cycle a £1000 a month into each account from an external account - you could do this quite simply by setting matching same day standing orders from each to other and back from the TSB accounts.

Add your £500 a month to each account until fully funded (£2500 each).

Each of you then opens a Nationwide monthly saver and contributes £250 a month to that.

You could then use any other savings account as appropriate - don't forget to fully fund the LISAs before the end of the tax year.

Once the 5% offer on the Flexdirect current account ends (after a year), think again.

Mr.Saver

xylophone wrote: »

If you have never had Nationwide Flexdirect current accounts, open a sole each and a joint.

You will need to cycle a £1000 a month into each account from an external account - you could do this quite simply by setting matching same day standing orders from each to other and back from the TSB accounts.

Add your £500 a month to each account until fully funded (£2500 each).

I would not suggest open the FlexDirect in the first year as the 5% only last for a year. To fully utilize the 5% on 2.5k, OP preferably should only open the accounts when they have enough cash earning less than 5% interest, and have at least 1 year left before the house purchase. This account would get better utilized when the regular savers matures. By then OP would have too much cash earning less than 5% interest, and a full year before the 2 years mark. This is exactly the time point to open those FlexDirect accounts.

I agree with the LISA, the total 4k bonus on 2 accounts for 2 years is much higher than any interest rate on the market. Go a step further, if OP delays the house buying till April 2021, they could get 6k bonus from 3 tax years. (from today to 6 April 2021)

Flobberchops

I second the dual cash LISAs, providing you are both first time buyers and the property is Help to Buy eligible. In these circumstances it's a no-brainer. The rest can go in a selection of regular saver(s) as mentioned above.

eskbanker

Mr.Saver wrote: »

I agree with the LISA, the total 4k bonus on 2 accounts for 2 years is much higher than any interest rate on the market. Go a step further, if OP delays the house buying till April 2021, they could get 6k bonus from 3 tax years. (from today to 6 April 2021)

Today to 6 April 2021 actually spans four separate tax years, so £8K bonus could be achievable over that period (albeit the last instalment wouldn't be paid until late May or early June 2021) if OP and partner have ready access to enough cash to exploit this....

Tuesday1510

Thank you everyone for your suggestions. I am renting property in a contract until September this year so will unfortunately not be able to exploit 4 tax years! I will however, open a LISA each and start saving in there what we can until September where I know it will be £750 each per month. Is this a good idea?
Sorry - I just have no clue!

Thank you again