People saving up for a deposit on a house should use a tax free cash ISA, it has been claimed.
Britons looking to set aside sufficient funds to afford a deposit on a mortgage should consider the possibility of using a cash ISA in order to store funds for this goal.
That is the view of Justin Modray of online resource Candid Money, who believes that these savings accounts represent a "sensible" way of gradually building up enough money to pay for the down-payment on their residential property in the wake of the recession.
Mr Modray explained that cash ISAs are an ideal "low risk and tax-free" method towards this aim, but insisted that prior to starting to save people need to make sure they set up a plan to know "how much and for how long" they will have to set aside money for.
The interest earned from standard savings accounts is subjected to income tax, so depending on the amount of money you earn per year, you could pay up to half of the interest you earn to the tax man - significantly reducing the potential earnings.
"Work out a monthly budget that allows you to save sufficiently, if necessary cut down on a few luxuries such as eating out and clothes shopping," he advised.
Furthermore, the expert noted it is a good idea to be strict and stick to any targets set to garner enough cash for this large financial commitment and recommended setting up a "direct debit to a savings account so the money leaves your current account each month before you're tempted to spend it".
These comments came after the Royal Institution of Chartered Surveyors released its latest UK Housing Market Survey last week (May 10th), which revealed that property sellers are returning to test the housing market this spring, with 18 per cent more chartered surveyors reporting a rise rather than fall in new instructions in April.
Meanwhile, data released by Scottish Widows around the same time showed that 17 million people in Britain admit they are neglecting their financial wellbeing at present due to the fact that they have accrued large debts throughout the global economic downturn.
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