Nationwide yesterday introduced an account aimed at helping first-time homebuyers to save regularly towards their deposit.
The good points
The interest rate paid at 2.5 per cent is OK but, more importantly, anyone saving in the account will need just a 5 per cent deposit to qualify for a Nationwide mortgage rather than the normal minimum 10 per cent. Save up £10,000 and you'll also qualify for cashback of £1,000.
The bad points
There's a risk that the Nationwide will not grant you a mortgage when you apply, leaving you with just a relatively poor savings account. The interest rate is not great so if you don't get the mortgage deal, you'd be better off saving elsewhere.
Any account that helps people save the deposit towards their first home is a good thing. Nationwide has introduced flexibility into this account so that while there's a minimum £50 deposit needed every month, you are allowed three months off. But you may be better off saving in a higher-paying account and getting a separate mortgage deal.