Borrowers can use ISA allowances to save and apply for a Nationwide mortgage six months later with a 5% deposit.
The Save to Buy ISA is available direct through Nationwide branches and is guaranteed to pay 2% above the Bank of England base rate.
The account can be opened with £50 with customers obliged to save at least £50 per month towards the deposit for their first home.
Savers can also qualify for cash back rewards up to £1,000 through the Save to Buy ISA.
In order to be eligible, savers will need to save at least £10,000 and go on to take out a Nationwide mortgage up to 95% LTV. For first-time buyers to be able to apply for a 95% LTV mortgage, they must have been saving in a Save to Buy account for between six months and three years.
Save to Buy customers will also qualify for any standard Nationwide first-time buyer deals available at the time.
Martyn Dyson, Nationwide’s head of mortgages, said: “When you’re saving for that first home, every penny counts, which is why we’ve launched an ISA version of our popular Save to Buy account.
“As one of the country’s leading mortgage providers, we’re committed to doing more to support first-time buyers.”
There are three ways in which first-time buyers can take advantage of the Save to Buy ISA and still qualify for the full £1,000 cash-back. These include:
– Joint mortgage applicants can combine ISA balances, so a husband and wife applying for a joint mortgage can each have up to £5,340 in individual Save to Buy ISAs per tax year.
– Single mortgage applicants can open a Save to Buy ISA account, save their full cash ISA allowance of £5,340, and then open a standard Save to Buy Account to save the remaining amount in order to reach the threshold for maximum cash-back.
– Save to Buy ISA also allows consolidation of existing Nationwide ISAs.
