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Saving for your mortgage deposit

Your home may be repossessed if you do not keep up repayments on your mortgage

A quick guide to help find the money required

Saving for a mortgage deposit is quite a commitment. So we offer our Help to Buy: ISA to help make it easier for you.

How big a deposit to save

The amount you need to borrow is known as loan-to-value, or LTV. It’s how much mortgage you have as a percentage of the property value. So if you have a loan to value of 90% you would have put down a 10% deposit. Based on the example above you would have a £18,847 deposit and a mortgage for £169,599. Our mortgage calculator gives you an indication of monthly mortgage repayments. If you’d like to discuss your individual circumstances or obtain a personalised quotation, please contact us.

Pick the right account for you

You could use a traditional savings account that allows you to save, generally, a regular amount each month. Regular savings may attract a better rate of interest than basic savings accounts. Before you decide to use a savings account make sure you know all the options they offer. Some accounts have a limit to the number of withdrawals you can make in a year and some reduce the interest you receive if you miss a month’s saving. If you would like to find out more, have a look at the terms and conditions of Clydesdale Bank’s Savings Accounts.

Save for your deposit the tax-efficient way

You could choose to save using a cash ISA. You will receive interest and ISAs are tax free, up to the annual allowance set by the government. A Cash ISA Instant Access account from Clydesdale Bank gives you an easy way to earn more money on your savings, as none of your growth gets taxed (up to the annual allowance limit). The value of any tax benefits to you depends on your individual circumstances.

The value of any tax benefits to you depends on your individual circumstances, the Law and Her Majesty's Revenue and Customs (HMRC) practice which are subject to change. The proceeds of an ISA are currently free from UK Income Tax and Capital Gains Tax,provided all ISA conditions are met.

Make sure you leave your deposit alone

You could also look at fixed-rate savings accounts. These generally offer a higher rate of interest in return for you agreeing not to touch your money for the fixed period. So you normally have a one or two year period where you can’t access your money. And if you’re saving for a deposit this can be very useful.

Know all the costs

Another thing to be aware of are the costs of moving home. We’ve got an in-depth article to help you identify these costs and to help you figure out how much each of them might cost you.

Get more from your deposit

If you're a first time buyer, we offer our Help to Buy: ISA to give you a helping hand with saving for a deposit for your first home.
Terms and conditions apply. Click here to see all the details of our Help to Buy: ISA.

Be determined, win the day

Do your homework to find the best type of savings account available for you and your circumstances. A deposit can seem like a Herculean task. But with the right planning, patience and determination you’ll get there and be even closer to the house you’re dreaming of.

Sources:
  1. The Guardian, January 2015 (opens in a new window)

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