First-time buyers can "Save To Buy" with Nationwide

Nationwide is to launch Save to Buy - an account for first-time buyers to save regularly towards their deposit that also enables them to apply for a Nationwide mortgage with a lower deposit of 5% (95% LTV).  The account will be available from 6 May 2011.

The savings element

Save to Buy will offer first-time buyers a regular savings account paying a competitive rate of 2.5% gross p.a./AER variable on balances up to £20,000.   The account can be opened with just £50 and customers have to save at least £50 per month, plus customers have the flexibility of not paying the minimum monthly amount for up to three months during a rolling 12-month period.

If the first-time buyer goes on to take out a Nationwide 95% LTV mortgage, there is also an attractive cash-back reward of up to £1,000; the more they save, the more cash-back they receive.

The mortgage element

For first-time buyers to be eligible to apply for a Nationwide 95% LTV deposit mortgage, they must have been saving in Save to Buy for between six months and three years.  They will then be eligible to apply for competitive mortgages of up to 95% LTV that were previously exclusively available to existing customers moving home.  With many first-time buyer deals only available up to 90% LTV, Save to Buy therefore gives borrowers more buying power and reduces the minimum deposit amount by half.

In addition, as first-time buyers, Save to Buy customers will also qualify for any Nationwide first-time buyer deals available at the time, for example the current Nationwide offer is a £500 discount off the product fee. 

To help first-time buyers with their savings goal, the Society can also provide an affordability check to provide potential borrowers with more information on the amount they may be able to borrow, as well as help answer general questions relating to the mortgage process.

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 5% 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 5% 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."