Nationwide is launching a tax-free savings account aimed at first-time buyers saving for a deposit.
The society is today introducing an Isa version of its existing Save to Buy account, which allows first-time buyers to apply for a 95 per cent LTV mortgage when they deposit £50 a month into the account.
The Save to Buy Isa is guaranteed to pay 2 per cent above the base rate, so is currently paying 2.5 per cent, the same rate as Nationwide’s regular Save to Buy account but with the added benefit of being tax free.
The account can be opened with £50 and has a maximum total balance of £20,000. Consumers must save at least £50 a month but have the flexibility of not paying the minimum for up to three months during a rolling 12-month period.
The Save to Buy Isa offers a cash-back reward of £1,000 for those who save at least £10,000 in the account and go on to take out a Nationwide mortgage.
First-time buyers must have been saving in a Save to Buy account for between six months and three years to be eligible to apply for a 95 per cent LTV mortgage with Nationwide.
Head of mortgages Martyn Dyson says: “When you are saving for that first home, every penny counts, which is why we have launched an Isa version of our popular Save to Buy account.
“Now savers can take advantage of their tax-free savings allowance while also making themselves eligible to apply for one of Nationwide’s 95 per cent LTV mortgages.”