Savvy saving
If you’re looking to invest money into property you’ll need to have sizeable savings – since the recession, lenders have been reluctant to give out larger sums, with most now requiring a substantial deposit, sometimes up to 25% of a property’s value. Even if you have a large sum, maybe from the selling of a previous property, that money needs to go somewhere whilst you decide on your next venture. When looking for a savings account, the first thing everyone looks out for is the interest rate factor but this isn’t the only thing you should be focussing on – here are some of the questions you should be asking of your bank account.
- Is there a minimum deposit required? Some accounts require you to open the account with a minimum amount so be sure to check that you can meet this.
- Do you need to continually pay in a set sum? Ideally you should be paying into your savings regularly but do consider how much you can afford to save and how often. Also watch for the terms and conditions – some accounts only offer the advertised interest rate if you don’t miss any payments in; the penalty otherwise is interest drops to a fraction of that originally quoted.
- Understand how the interest is calculated – most people misunderstand how much they should be earning from their savings. Remember you only earn interest on the money that’s been in the account and this depends on how regularly you are saving.
- What kind of flexibility can you have? If you want to withdraw sums from the account regularly, this usually results in lower rates of interest, whereas if you choose an account with limited access, whilst you may achieve a higher interest rate, you may not be able to get at the cash easily, during emergencies. Decide whether you can afford to have your cash tied up in one place and unattainable.
Santander has a large range of savings accounts to suit different needs, with interest rates starting from 2.5% AER. Check the website for more details.
