Tax-free saving for first time buyers

Nationwide launches ISSA version of its popular Save to Buy account

13 February 2012

Nationwide Building Society is today launching an ISA version of its popular1 Save to Buy account. This means that first time buyers can take advantage of their tax-free ISA allowance while also getting the opportunity to apply for a Nationwide mortgage with a lower deposit of just 5% (95% LTV).

Saving

Available to open through any Nationwide branch, Save to Buy ISA is guaranteed to pay 2.00% above the Bank of England Base Rate, so at launch the account will pay a competitive rate of 2.50% AER tax-free on balances of up to £20,000. This is the same rate as the regular savings Save to Buy account, therefore ensuring that savers have the opportunity to take advantage of their tax-free allowance.

The account can be opened with £50 with customers having to save at least £50 per month towards the deposit for their first home. Customers also have the flexibility of not paying the minimum monthly amount for up to three months during a rolling 12 month period.

Cash-back

The attractive cash-back offer of up to £1,000 will also be available through Save to Buy ISA. To qualify for the full cash-back reward of £1,000, the first-time buyer(s) will need to save at least £10,000 in the account and go on to take out a Nationwide mortgage up to 95% LTV.

There are three ways in which first-time buyers can take advantage of the Save to Buy ISA and still qualify for the full £1,000 cash-back. These include:

  • Joint mortgage applicants can combine ISA balances, so a husband and wife applying for a joint mortgage can each have up to £5,340 in individual Save to Buy ISAs per tax year.
  • Single mortgage applicants can open a Save to Buy ISA account, save their full cash ISA allowance of £5,340, and then open a standard Save to Buy Account to save the remaining amount in order to reach the threshold for maximum cash-back.
  • Save to Buy ISA also allows consolidation of existing Nationwide ISAs.

Other cash-back amounts are available as outlined in the table below:

Amount saved Cash-back reward
Under £2,500 £0
£2,500 - £4,999 £250
£5,000 - £9,999 £500
£10,000+ £1,000

Mortgages

The mortgage element of the account remains the same, so for first-time buyers to be eligible to apply for a Nationwide 95% LTV mortgage, they must have been saving in a Save to Buy account for between six months and three years. Save to Buy customers will also qualify for any standard Nationwide first-time buyer deals available at the time, for example the current £500 product fee discount.

Martyn Dyson, Nationwide's head of mortgages, said: "When you're saving for that first home, every penny counts, which is why we've 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% LTV mortgages.

"As one of the country's leading mortgage providers, Nationwide is committed to doing more to support first time buyers. So what better way to do that than by offering first-time buyers a tax-efficient way to save for that first home and demonstrating that the Society really is 'On Your Side'."

Notes to editors:

* AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest were paid and compounded once each year. Tax-free is the contractual rate of interest payable where interest is exempt from income tax.

1 Nationwide has more than 12,000 customers saving into Save to Buy

  • Applications are required for all products. Further details of terms and conditions are available on request.
  • Opening a Save to Buy savings account does not guarantee acceptance for a Save to Buy mortgage. All mortgages are subject to eligibility, underwriting and criteria.
  • A first time buyer is somebody who has not had a mortgage in the last three years preceding the opening of the account.

About Nationwide Building Society
Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.

Since the credit crunch began in 2007, Nationwide has remained profitable against a very difficult economic environment. In the half year ending September 2011 Nationwide made a strong underlying profit of £172 million – up 17% from the previous year. Its strong financial performance and prudent business model means that Nationwide is included in Global Finance magazine's Top 50 Safest Banks in the World.

Nationwide has around 700 branches and customers can manage their finances in branch, on the telephone, internet and post. The Society has around 16,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

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