I am trying to find the best way to save for a deposit for a house. I previously owned a home with my ex-husband. When we divorced, it was sold and we just about got our deposit back. I went on to raise my family in a rental property. My children have now grown up and left home, so I want to buy a property for my retirement. I can afford to save £300 to £350 a month. From what I can see, I don’t qualify for the Help to Buy Isa as I’m not a first-time buyer, and I can’t get a Lifetime Isa (Lisa) as I’m in my 40s. Is there another option that I have missed? It seems very unfair that everyone younger than me can get these 25% savings bonuses, but I can’t!
I’m afraid it isn’t just age that stops you from getting a Lisa. You are also not a first-time buyer and that scuppers you from having access to the 25% bonus from either the Help to Buy Isa or the Lisa – for your house purchase. But you are also right that as you are in your 40s, you can’t even open a Lisa to use for your retirement.
All you can do is to make sure that whatever product you do save your money into is paying the best rates, so that you can earn as much interest as possible.
There are some regular savings accounts that pay as much as 5%, but these tend to be linked to current accounts. Nationwide, for example, pays 5% AER on its FlexDirect current account, on balances of up to £2,500 (this rate includes a 4% bonus for 12 months, so you’ll need to review in a year’s time), but if you open this account you get access to its Flex Regular Online Saver account, which also pays 5% fixed for 12 months on deposits of up to £250 a month.
However, there are some terms and conditions that you will need to follow in order to ensure that you are earning these headline rates of interest.
First Direct, M&S Bank and Santander also all have regular savings accounts paying 5% AER, linked to their current accounts – and each current account offers incentives that may or may not be valuable to your circumstances. So, once again, it’s important not to put the cart before the horse – make sure that if you choose one of these current accounts, it is not simply to get access to the 5% regular savings account.
The best regular saver that does not require a current account to be opened is with Saffron Building Society. Its Regular Saver (Issue 3) pays 3.5% – still a lot more than you’ll earn if you were to save on a regular basis into a standard easy-access savings account – the best rates on these accounts are up to 1.3%.
My other suggestion is to make sure to regularly review your savings accounts, especially those that you know will drop in 12 months’ time. Make your cash work as hard as you can, since you don’t qualify for the government bonus.