- Five years since Nationwide launched Save to Buy – forerunner of Help to Buy ISA
- More than £1.3 billion loaned to Save to Buy mortgage customers for 8,500 homes
- 107,000 Save to Buy ISAs and Savings Accounts opened in the scheme’s lifetime
The benefits of saving for a deposit before applying for a mortgage have been highlighted by figures from Nationwide’s long-running Save to Buy savings-to-mortgage scheme, which marks its fifth anniversary today (16 May 2016).
Save to Buy, launched in May 2011, provided the model for the Help to Buy ISA. It was closed to new customers when Nationwide launched its Help to Buy ISA on 1 December 2015. However, Nationwide’s Help to Buy ISA continues to combine all the benefits of Save to Buy, plus the additional Government bonus when purchasing a first home. Customers also have access to Nationwide’s flexible ISA approach, which allows savers to hold more than one Nationwide cash ISA product in its ISA wrapper. Help to Buy ISA savers can also access Save to Buy mortgage benefits, including discounted mortgage rates and additional cashbacks of up to £1,000.
What the Nationwide statistics, detailing the success of Save to Buy, demonstrate is the positive impact that planning to save can have on a first time buyer’s ability to successfully access a mortgage. They also give an indication of how those with a Help to Buy ISA may be similarly advantaged in future.
More than 8,500 homes have so far been purchased through Nationwide’s Save to Buy scheme. Around £1.3 billion has so far been loaned to those who have saved towards a mortgage deposit through a Save to Buy Savings Account or ISA and who have gone on to take out a Nationwide Save to Buy mortgage.
By the time the Nationwide Help to Buy ISA replaced it, 107,000 Save to Buy savings and ISA accounts had been opened, with an average account balance of £6,823, up from £5,714 the previous year.
Andrew Baddeley-Chappell, Nationwide’s Head of Policy for Mortgages and Savings, said: “Half a million people have opened a Help to Buy ISA to save towards a deposit on a home of their own. Nationwide’s own figures offer clear evidence that if first time buyers plan how to access a mortgage before finding a property, they are far more likely to be successful at securing both.
“Many people do not have the bank of mum and dad to depend upon. Whether through Nationwide’s Save to Buy scheme or now through the Help to Buy ISA, we have focussed our support on those who prudently plan ahead, save regularly and think about what they might need to apply successfully for a mortgage before finding a home. The figures underline how this pays off.”
In addition, the Nationwide figures showed:
- The average loan size for Save to Buy mortgage applicants since launch, of which the vast majority are first time buyers, is £148,000.
- The average deposit is £15,250.
- On average, Save to Buy first time buyers are aged 29, down from 32 in 2015.
- Four fifths of Save to Buy mortgage applications are made in joint names.
“Such schemes are designed to enable mortgage applicants to demonstrate that, by making a regular commitment to save, they understand that good savings habits, money management and strong credit quality go hand in hand.” continued Andrew Baddeley-Chappell. “Through this approach, we have helped our customers to help themselves, so they can access low deposit mortgages and cashbacks to assist with the costs of moving home.”
“It also shows that there is a clear reason for first time buyers always to open a Help to Buy ISA, irrespective of when they intend to buy, and especially if they can save the maximum monthly amounts to increase their government bonus.”