Five ways to save money you have never heard before

Here are five fab financial products that don't follow the crowd - find out why they could be right for you...

When it comes to product innovation, Lloyds TSB recently came up trumps with its Lend a Hand mortgage, which allows first-time buyers to get their mitts on a juicy fixed rate of just 4.39% for three years and a £995 arrangement fee.

What's more, you'd only need a 5% deposit to qualify.

Of course, these 'too good to be true' deals always come with a catch, and in order to qualify for the mortgage, a relative (perhaps a wealthy parent) will have to lock away the equivalent of 20% of the value of the property in a savings account until the borrower has built up a 10% equity stake.

However, with the ladder floating out of many first-time buyer's reach, this product comes at a time when other lenders are shying away from anyone who doesn't have a bumper deposit.

In fact, those savings will earn a fixed rate of 3.5% while it's tucked away.

Lloyds is not the first bank to catch the market's eye by stepping away from tradition, and as the market becomes saturated with more 'middle of the road' products, it's important for providers to stand out from the rest.

So, if you're looking for a way to bank and save with a twist, here's four other products that could be right up your alley.

Zopa

Launched in 2005, Zopa was the first to shun the traditional model of the high street bank, and instead relies on people like you and me to lend to each other.

Potential borrowers can apply directly to Zopa, which then offers you a loan according to how good it thinks your credit rating is. Alternatively, you could join Zopa Listings, and list your reasons for needing the money in a Dragon's Den style pitch in the hope that the good Zopa community will come to your rescue.

Unlike many personal loans, you can also repay your loan at any time, without incurring any early repayment penalties.

If, on the other hand you're looking to save, Zopa may still be the answer. Over the past 12 months, Zopa has given its lenders an average return of 8.4% (after fees, but excluding bad debt). This is more than 16 times the current Bank of England base rate, and far superior to most savings accounts.

If you don't need to get your hands on your money at short notice, perhaps this unorthodox method of saving - by lending your money - could be the way forward!

You can find out more about the ins and outs of Zopa in our latest video.

Investec High 5 account

With savings rates so low, one of our greatest concerns at the moment is where to stash our cash. The trouble is, finding an account which pays a decent return, and stays consistent when others lag behind is becoming increasingly hard to find.

That's where the Investec High 5 savings account comes in. Instead of setting its own rates, this account pays the average of the five highest savings rates in the market, published by Moneyfacts.

The rate changes on a weekly basis, and currently stands at 3.03%. So, if you've fallen foul of savings providers in the past, with this account, at least you won't have to constantly keep an eye on the rate you're getting.

One thing to bear in mind is the High 5 account is only for the high rollers among you, and you'll need a minimum deposit of £25,000 to open an account.

In addition, if you want to make a withdrawal, you'll need to give three months notice.

And, for those concerned about the safety of their cash, Investec is a member of the Financial Services Compensation Scheme, and should it go bust, up to £50,000 of your cash is protected.

MBNA and Egg Money

In recent years, both Egg and MBNA have redefined the meaning of the term 'flexible friend' with their credit cards.

When it comes to financial products with a twist, Egg has always been at the forefront of innovation, and products such as Egg Money (sadly not available to new customers) have led the way.

But one nifty feature Egg's Visa card possesses is the ability to transfer part of your credit limit as cash into a bank account to pay off an overdraft or loan - or just to give your bank account a much needed injection (a 3% fee applies) - as well as to another credit card.

MBNA's market leading Virgin Credit card also allows you to do this for a slightly higher fee of 4% (although you can get around this by using one of the credit card cheques in your welcome pack instead, on which you will be charged the lesser fee of 2.98%).

Offset mortgages

If you're a homeowner, one way to maximise the benefits of your current and savings accounts is to link them to your mortgage, and with savings rates so low at the moment, an offset deal could be a smart move.

Offset mortgages work by using your savings/current account balances to reduce the amount of debt on your mortgage - without actually having to pay any of it off.

So, if you're lucky enough to have a decent wad of savings, the amount of money you have in credit at the bank is balanced against the amount of debt you owe.

Say you have £50,000 in the bank. Although you won't earn interest on your savings in an offset mortgage, you won't pay mortgage interest on £50,000 of your debt either.

Several lenders offer offset mortgages, including First Direct, Intelligent Finance, RBS and Woolwich, but as John Fitzsimons highlights, offset mortgages are often better for those with a bit of cash. For example, the best deal from Woolwich is only available if you have a 40% deposit.

You can find out how much you could save by using our very own offset calculator.

Obviously, some of these products are aimed at the minority (I for one don't have £25,000 lying at the back of the sofa).

But with interest rates low and the recession still in full swing, it pays to think outside the box and make the most of your cash in these credit crunched times.

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