Saving for deposit - what sort of account?

[doadeer]

We are starting to save for a deposit for a house, we live in an expensive area so this will be quite a large sum over a number of years. Probably about 4 years.

What is the best type of account for this?

Anyone help?

A lisa, which is a lifetime isa.

It gives you something like 25% of what you save up till 12k

Your bank will be able to advise

Ah when I looked you can't use that for a house deposit over £500k which ours will be.

If you’re going to be saving £125,000 a year you need to go into your bank and ask advice for your particular situation.

Sorry that was poorly phrased, a property we would buy would be over £500k, probably closer to £600 - which isn't eligible for LISA. We save about 15k per year into a standard current account at the moment

I was going to suggest LISA with moneybox. But you're right, the bonus is only if your house is up to 450k. Most people don't buy their first house over that, I guess of you can afford that you don't need the bonus to help. My suggestion would be to go for a notice account initially. It will stop you from dipping into the money which really helps with savings.

Oh sorry I misunderstood. I would still advise visiting your bank as they would be able to give guidance but obviously avoid any risk accounts with it being for a deposit.

Yes good advice thank you.

We had a rather unplanned baby so we are skipping the normal first home process and needing to go straight for a 3 bed. We will just keep saving till we have the deposit.

You just have to go for any interest you can, but not risking your money so use something like money supermarket for an instant access and notice accounts or even premium bonds as the payout rate is above instant access and you should get quite close to it as your savings grow.

However, you say you're looking at a £600k 3 bed, but have you thought about buying a smaller 2 bed, maybe in a cheaper area so you can buy a lot sooner, as if this is your first baby, you don't need a 3 bed.

You'll save many years of rent, will pay less stamp duty and would become eligible for the LISA help. You might also be able to find a 2 bed semi or end terrace with scope to extend, so will be able to make your home larger later, without the cost and hassle of moving a second time.

I really really love where I live and it's amazing schools so I want to wait until my son is in a good primary anyway. I don't live near family so living near friends and in the community we've made is important. Plus to be honest there aren't many bargain places around here!

We live in two bed now, we wouldn't buy something this size.

premium bonds are a prize draw and the idea that you WILL win is fantasy. Savings rates are well below inflation and have been for years.

that said you can get better than the zero that a current account will pay - at the moment, anyway. Shop around.