The Suffolk Building Society has launched a Hiuse Deposit Savings Account in response to rising house prices and the large mortgage deposits required.
The account is available to those aged 18-35 aspiring to buy their first or their next home, provided they do not currently own a property.
The product has three key elements.
The variable rate ensures savers receive what the society calls a fair rate of return on all their money within the account, regardless of whether regular payments are maintained.
The fixed bonus acts as an incentive for savers to put money aside regularly.
And the retail voucher is a financial pat on the back, congratulating savers on reaching their ultimate goal and helping them to furnish or decorate their new home.
Society chief executive Richard Norrington says: “Research from the Building Societies Association (BSA) shows that 53% of would-be first-time buyers see saving for a deposit as one of the biggest barriers to owning a home.
“For example, the national average for a 10% deposit is over £29k and East Anglia is close to that figure, so it’s easy to see why many young people feel the property ladder is slipping out of reach.”
Variable interest rate on full balance
The account will allow individual or joint savers to deposit up to £1,000 per month (minimum £10), with a maximum balance of £36,000 permitted.
All accumulated funds will receive a variable interest rate, currently at 3.25%, calculated daily and paid annually.
Savers can keep the account open on a rolling basis for up to 10 years, rather than having to withdraw the funds annually – as would be the case with a standard regular saver.
Fixed bonus on yearly additions
On each anniversary of the account opening date, the Society will pay an additional fixed bonus of 1.5% on the money deposited during the preceding year.
This bonus applies only to funds deposited in that year and not to the total account balance.
To qualify, at least 11 monthly payments must be made during the year.
Withdrawals
Savers are permitted one free withdrawal each year. More withdrawals are allowed, but this means savers forfeit the bonus for that year.
Retail voucher on completion
As an additional incentive to save for their home, each account will also be eligible for a retail voucher worth £500 if the holders complete on a mortgage with Suffolk Building Society.
Savers who complete their property purchase without taking a mortgage from the Society will receive a voucher of £150.
The retail voucher is currently redeemable with Argos, B&Q, Dunelm, or IKEA.
