Review of Newcastle Building Society Big Home Saver

Written by Karen Bryan

newcastle bs

Update 21 September 2015 – Today I received an email from the Newcastle Building Society informing me that from the 26 October 2015, the underlying gross rate paid on the Big Home Saver would drop by 0.25% to 1.75%.

Update 15 June 2015 – When I visited the website today, I noticed that the Newcastle Building Society Big Home Saver accounts are now only available in branches. I was able to open my Big Home Saver account online last year.

Update 3 April 2015 – I received a letter informing me that the rate of interest paid on the Newcastle Building Society Big Home Saver will drop from 1 May 2015. From the date, it’ll pay an underlying variable rate of interest of 1%, plus a variable bonus of 1.0% for each one month period during which at least one deposit and no withdrawals are made. There’s also a new condition which limits the maximum balance in the account to £30,000.

The Newcastle Building Society Big Home Saver is geared to attract people saving toward a mortgage deposit. You can save between £1 – £1,250 a month. After 12 months, it offers £500 cashback if you save between £5,000 – £9,999, or £1,000 cashback if you save £10,000, and then proceed to take out a mortgage with the Newcastle. You can operate the account online, by post or in a branch. The account is also available as a tax-free Cash ISA account.

The Newcastle Big Home Saver Issue 2 pays an underlying variable rate of interest of 1.4%, plus a variable bonus of 1% for each one month period during which at least one deposit and no withdrawals are made. You can make unlimited withdrawals with no notice, but you’d then lose the 1% bonus for that month.

listen to ‘Review of Newcastle Building Society Big Home Saver’ on Audioboo

Subscribe to the My Money Podcast from Help Me To Save in iTunes

After reading through the account’s terms and conditions, it appeared to me that there was no requirement to apply for a Newcastle Building Society mortgage. However, I emailed the Newcastle to check that this was the case. They replied saying “I can confirm that there are no penalties or loss of interest if you do not proceed with a mortgage with the Society”.

Given that the highest rate of interest I could find on savings accounts offering unlimited access, which can be operated online, was 1.35% on a Tesco Bank Internet Saver, the Newcastle Big Home Saver’s rate (including bonus) of 2.4% looks like an attractive option for anyone who saves regularly and doesn’t need frequent access to their cash. Yes, there are regular savings accounts, such as the Club Lloyds Monthly Saver, paying higher rates of interest, but they are usually only available to current account customers and/or have restricted access.

I don’t know if the Newcastle offers competitive mortgage rates. But if you are saving up for a deposit, having a Big Home Saver Account gives you the added potential benefit of cashback if, after researching mortgages offered by other providers, you decide to take out a mortgage with the Newcastle.

If you can save between £500 – £1,000 a month, you could earn a slightly higher interest rate of 2.5% (variable) in a Nationwide Regular Savings Account. However, the rate of interest paid on that Nationwide account depends on the monthly overall increase in your balance being between £500 – £1,000 e.g. if your balance increases between £1 – £99, the rate is only 0.1%.

Therefore, if there’s any chance that you’ll need to withdraw money from the Nationwide Regular Savings Account, you’d probably be better off with a Newcastle Big Home Saver, as you’d earn 1.4% that month, even if you made a withdrawal.

As the rate of interest paid on the Newcastle Building Society Big Home Saver is variable, you need to keep an eye on the rate and be ready to shift your savings if the rate drops.

Rates of interest correct on 27 July 2014.