An IF-ISA can get you onto the housing ladder 7 years faster than a Cash ISA

The latest research by leading peer to peer lending platform Sourced Capital, part of the Sourced.co Group, has looked at how best to invest when it comes to saving for a house in order to save years’ worth of painstaking saving.

Cash ISAs have become a popular way for many to stash away the cash with the aim of climbing the ladder, with the Help to Buy ISA in particular helping many save that all important deposit.

While buyers can no longer take advantage of the scheme there are a whole host 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 you pay off the cost of a property in 10 years compared to the 11.8 years it would require to save £20,000 a year with no benefit from interest.

With the lower cost of buying in Northern Ireland and Scotland, it would take 6 and 7 years respectively, instead of 7 and 7.7 years saving £20,000 a year straight up, and in the North East a Cash ISA can also cut your saving time to 6 years instead of 6.5.

In London, you’re looking at a longer saving stretch of 19 years although this is marginally better than saving for 23.8 years without the help of an ISA.

However, investing in an Innovative Finance ISA (IFISA) through a peer to peer platform such as Sourced Capital could help you pay off your property much faster, with annual returns hitting 10% and higher.

With backing from the UK government, showing their confidence in the sector, there is now encouragement to invest in property through peer to peer lending. The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs. Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax. This enables you to invest your money into the growing peer to peer market.

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA.

While this investment option allows for a much quicker return across the board, nearly 3 years faster in the UK as a whole, the time saving is most notable in London where an IFISA investment could accrue a big enough saving pot to buy in the capital at a cost of £475,458 in just 12 year’s, as opposed to 19 year’s via the average Cash ISA – a seven year difference!

Stephen Moss, founder and MD of Sourced Capital, commented: 

“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.”

Time to save the total value of a home: Cash vs Cash ISA vs IFISA (Based on maximum annual Cash ISA investment of £20,000 and taking compound interest into account)
Location
Average House Price
Savings – 20k only
LONG TERM CASH ISA – 2.12%
Sourced IFISA – 10%

Time to buy (years)
Time to buy (years)
Time to buy (years)
London
£475,458
23.8
19 years
12 years
South East
£326,636
16.3
13 years 8 months
9 years 3 months
East of England
£291,281
14.6
12 years
8 years 8 months
South West
£259,758
13.0
11 years
8 years
West Midlands Region
£204,238
10.2
9 years
6 years 10 months
East Midlands
£197,792
9.9
8 years 5 months
6 years 5 months
North West
£169,362
8.5
7 years
5 years 11 months
Yorkshire and The Humber
£165,642
8.3
7 years
5 year 9 months
North East
£130,712
6.5
6 years
4 years 8 months

 

 

 

 

England
£251,222
12.6
11 years
7 years 11 months
Wales
£172,574
8.6
7 years
6 years
Scotland
£154,798
7.7
7 years
5 years
Northern Ireland
£139,951
7.0
6 years
5 years

 

 

 

 

United Kingdom
£235,298
11.8
10 years
7 years 3 months
 
Sources
 
Average House Price
Average Cash ISA Rate
ISA Allowance
Compound Interest Workings

Properganda PR

National and local media coverage for property businesses. Journo quotes delivered in minutes.

You May Also Enjoy

Estate Agent Talk

Demand for project properties soars versus general market

New research from The Property DriveBuy reveals that demand for fixer-upper properties is easily eclipsing overall market demand as homebuyers demonstrate a strong appetite for renovation projects amidst ongoing affordability restrictions due to stubbornly higher mortgage rates and slow but steady house price growth. Across England, there are currently an estimated 601,525 homes listed for…
Read More
Estate Agent Talk

5,600 sellers slash asking price within first 30 days

5,600 home sellers slash asking price within first 30 days of hitting the market, as market stagnates ahead of Autumn Budget The latest research from nationwide cash buying company and quick sale specialists, Springbok Properties, has revealed that as many as 5,559 home sellers have slashed their asking prices within 30 days of entering the…
Read More
Estate Agent Talk

How to Protect Your Property Investment Before You Buy or Sell

Buying or selling property can be one of the biggest financial moves you’ll ever make, which is why protecting that investment should come before anything else. Taking the time to do the right checks and work with the right experts saves you from expensive surprises in the future. Preparation gives you power when it comes…
Read More
Rightmove logo
Breaking News

Market remains resilient, but not strong enough to drive usual Autumn bounce

The average price of property coming to the market for sale rises by 0.3% (+£1,165) this month to £371,422. This is below the ten-year average October bounce of +1.1%, as the decade-high level of property for sale limits seller pricing power The month of September saw a softening of activity year-on-year compared with a strong…
Read More
Breaking News

House prices post second consecutive quarter of growth this year

The latest Property Market Index Review by London lettings and estate agent, Benham and Reeves, has revealed that the property market has continued to demonstrate resilience in 2025, with house prices increasing for a second consecutive quarter in Q2, following four consecutive quarterly increases seen in 2024. The Benham and Reeves Property Market Index Review*…
Read More
Commercial Agent Talk

Reliable Commercial Roofers in Middlesbrough for Quality Roofing Solutions

Any commercial building can only be very safe and last long when it has a very strong roof. With time, the roofing system may be weakened by nature due to weather, similarity in age and structural wear, thereby resulting in expensive repair if not corrected early. This is the reason why you need to employ…
Read More