A cash ISA is a way to save up for a deposit as many alternatives to the government’s Help to Buy ISA are no longer open for new applications, peer-to-peer lending platform Sourced Capital has claimed.
There are a variety of cash ISA saving accounts that average a return of 2.12% a year with a maximum annual investment of £20,000 allowed.
This means that investing £20,000 a year on the current average UK house price of £235,298, and when taking into account the addition of compound interest, maximising the benefits of a cash ISA would see the cost of a property paid off in 10 years.
This is compared to the 11.8 years it would require to save £20,000 a year with no benefit from interest.
Stephen Moss, founder and managing director at Sourced Capital, said: “Record low interest rates over such a prolonged period have been great for those looking to secure a mortgage, however, those still trying to accumulate a savings pot have suffered where the rate of interest is concerned.
“As a result, the consumer has become savvy when it comes to saving and the market has been flooded with a whole host of options to make our money work harder.
“While some cash ISAs are proving popular, the peer to peer sector has really led the way with some of the best rates of return and whether you are trying to save a mortgage deposit, or pay off your property completely, there are a number of platforms like Sourced who can help you reach your goal far quicker than some of the more mainstream options.
“As always, the biggest hurdle is educating the consumer on the additional options open to them and although their capital may be at risk, investing via more professional platforms in the peer to peer sector can bring a much better return.”
With the lower cost of buying in Northern Ireland and Scotland, it would take six and seven years respectively.
And in the North East a cash ISA can also cut saving time to six years however in London, it would take 19 years to save using a cash ISA.