Nationwide Building Society has launched Save to Buy, which lets first time buyers save towards a deposit.
The scheme will give first time buyers access to a range of mortgages at a higher loan to value, and will also offer cashback of up to £1,000 if the borrower then takes out a Nationwide mortgage. Any money saved will earn interest of 2.5 per cent.
Martyn Dyson, Nationwide’s head of mortgages, said: “We’ve listened to our customers and we know there is a need for mortgages with a five per cent deposit for first-time buyers which aren’t widely available in the market. So with Save to Buy, they can save a deposit with a competitive interest rate and then have access to a five per cent deposit mortgage, meaning their first home could be a closer reality than they might think.
“We’ll also help with those all important home-related expenses with a cash-back savings reward, where the more they save, the more cash-back they earn.”
Savers must put a minimum of £50 a month into the account, although three payment holidays per year are permitted.
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