IMPORTANT! This is MoneySavingExpert's open forum - anyone can post

Please exercise caution & report any spam, illegal, offensive, racist, libellous post to forumteam@moneysavingexpert.com

  • Be nice to all MoneySavers
  • All the best tips go in the MoneySavingExpert weekly email

    Plus all the new guides, deals & loopholes

  • No spam/referral links
or Login with Facebook
Savings advice needed
Reply
Views: 1,586
Thread Tools Search this Thread Display Modes
# 1
scgf
Old 11-11-2012, 6:23 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default Savings advice needed

Hi guys. I have an inheritance of 30K coming my way soon and am wondering what to do with it.

I earn around 42K a year and am 55 years old. I have an 85K mortgage, a 5 year 12K loan just taken out with the Derbyshire at 5.6% and a 10K car finance PCP plan which is interest free and costs 172 a month.

My mortgage runs until I'm 65 and is the one thing which would stop me retiring at 60. I am a teacher and will have been teaching for 40 years when I reach the age of 61.

I've never early had savings before having always preferred to enjoy life and spend everything I earned.

Not really sure what to do with this 30K windfall. Just wondering if anyone has any advice for me. Any advice would be most gratefully received.
scgf is offline
Reply With Quote Report Post
# 2
innovate
Old 11-11-2012, 6:37 PM
PPR
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jun 2005
Location: On this planet
Posts: 15,717
Default

What is the interest rate on your mortgage? It's most likely higher than the interest rates on any savings account these days.

Could you re-pay parts of your mortgage, or your loan, without incurring any penalties?

Savings rates are pretty dire now but it's always a good idea to have a slush fund for a rainy day. You could put 5,640 into an instant access cash ISA now, another 5,640 (plus a bit) into another one in April, and transfer the first ISA to an ISA that pays better interest at the same time (April is usually the best time to find good ISA).

Until you know what you will do, you could "park" any surplus in Lloyds Vantage accounts @ 3% AER for balances between 3K and 5K. You can have 3 of these, making a home for 15K. And/or you could look at the Santander 123, which also pays 3% AER, on balances between 3K and 20K. The latter has a fee but people manage to recover it from monthly cashback, and there is also a 60 cashback offer from Quidco for just opening the account. Both Vantage and 123 have pre-reqs that you need to research further but they aren't too onerous.

The remainder of your money could then go towards paying off the loan, and/or some of the mortgage.
innovate is offline
Reply With Quote Report Post
The Following 2 Users Say Thank You to innovate For This Useful Post: Show me >>
# 3
opinions4u
Old 11-11-2012, 6:39 PM
PPR
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jan 2006
Posts: 19,146
Default

Open the best easy access savings account you can find NOW. Link at the top of the page. Stick 1 in it, then you can have an account ready to receive the funds.

Lots of options open to you. I'd clear the Natiowide debt and keep the rest in cash ISA and easy access savings accounts. That should pay for another can before you retire.

If you wish to retire earlier you could reduce mortgage debt, overpay mortgage and get that out of the way long before you're 65.

What do you want to achieve with it?
opinions4u is offline
Reply With Quote Report Post
The Following User Says Thank You to opinions4u For This Useful Post: Show me >>
# 4
scgf
Old 11-11-2012, 9:26 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

Thanks guys. Excellent advice.

Half of my mortgage is linked to the US Libor rate so is currently less than 2%. This rate ends in 2014 and reverts to the Leeds BS standard variable rate at over 5% so I can move it without paying any penalties. The other half is already at the SVR so I am planning on re-mortgaging in 2014. What about an offset mortgage account? Might that benefit me?
scgf is offline
Reply With Quote Report Post
# 5
Gromitt
Old 11-11-2012, 11:14 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Sep 2011
Posts: 4,950
Default

Offset mortgage is great if you want to protect against interest on a chunk of your mortgage, and your not likely to get anywhere near the mortgage interest in a savings account, but offset interest is typically higher than normal, so if you don't want the cash, overpay as much as possible. Your on a decent salary, so should be able to start saving a considerable amount each month. Fill up your ISA with it, that'll be your rainy day fund, and then overpay on your mortgage and loan if possible, whichever has the highest interest first.
Gromitt is offline
Reply With Quote Report Post
# 6
atush
Old 12-11-2012, 12:02 AM
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Sep 2010
Posts: 10,486
Default

I would ask your mortgage provider what the amt extra you are allowed to over pay is- and what is needed to bring the term down to 5 years from ten. But if yo are on a special deal they may not allow overpaying so you might have to wait til you are back on SVR.

I agree, you should pay off the 12K loan, and put the rest into ISAs. consider a regular saver for the amt that would have been the 12K loan payment.
atush is offline
Reply With Quote Report Post
# 7
scgf
Old 13-11-2012, 10:56 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

I'm going to put 5640 into an ISA with IF

I'm going to pay off the 12K loan and put the rest in an IF isaver account.

Thinking maybe I could overpay my mortgage with the 250 per month I would have made in loan repayments. Given I would have put the balance of my inheritance into an iSaver I will already have decent emergency savings.

How does that sound?
scgf is offline
Reply With Quote Report Post
# 8
innovate
Old 14-11-2012, 7:04 AM
PPR
Deliciously Dedicated Diehard MoneySaving Devotee
 
Join Date: Jun 2005
Location: On this planet
Posts: 15,717
Default

You can get better interest for an ISA elsewhere, e.g. 3% instant access at Cheshire BS. Its postal access only though. Or 2.75% at Birmingham Midshires. Wherever you put your ISA - keep an eye on the rates in March/April time, it might make sense to transfer if the rates are better then. You might even want to consider a 1- or more years fixed term then.

Next April would also be the time to start a second instant access ISA, to put any of your spare savings up to next year's allowance into a tax shelter.

The First Direct Regular Saver might be of interest whilst they still pay 8%?

I would also open a Halifax current account and cycle 1K a month through it, to get the monthly fiver. You could shuttle the money between your isaver and Halifax. 60 a year for 1K is brilliant return, plus you'd get a bit from the isaver.

Personally, I would put spare money into Lloyds Vantage, simply on the grounds that 3% AER is more than you get in the isaver.

Other than that your plan sounds great.
innovate is offline
Reply With Quote Report Post
The Following User Says Thank You to innovate For This Useful Post: Show me >>
# 9
scgf
Old 14-11-2012, 7:45 AM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

Cheers Innovate.

I already have a Lloyds TSB current account which I rarely use, so could easily add vantage to that. The only think which has put me off is that I can't get my head round the terms and conditions. I need to fund it with 1000 a month - how is that going to work if I have 5000 sitting in it? Would appreciate advice on this.
scgf is offline
Reply With Quote Report Post
# 10
Gromitt
Old 14-11-2012, 7:50 AM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Sep 2011
Posts: 4,950
Default

Quote:
Originally Posted by scgf View Post
I can't get my head round the terms and conditions. I need to fund it with 1000 a month - how is that going to work if I have 5000 sitting in it? Would appreciate advice on this.
Just transfer the 1K and straight out again, thats all you need to do. So it will at 6K for about 10 seconds or so.

You can have 3 such accounts and transfer between them, so apply for another 2, and then transfer from 1->2->3->1. No need to get faster payments involved.

If you only have 10K to spare, only grab an extra one. If you only have 5K, you can use a savings account I believe.
Gromitt is offline
Reply With Quote Report Post
The Following 2 Users Say Thank You to Gromitt For This Useful Post: Show me >>
# 11
scgf
Old 14-11-2012, 12:52 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

I have added Vantage to my existing Classic account and just opened an additional account and added Vantage to that.

So, if I pay, say, 5000 into each and have a standing order to pay 1000 from 1 -> 2 then a few days later pay 1000 from 2 -> 1 would that work?

If the 1000 is to come from another account then it's going to have to be in that third account to start with and I'm concerned that if I am leaving 1000 lying around for this purpose then I will not be gaining much interest on it. Not sure if I would have enough salary available to make the transfers, even for a day, since all my direct debits leave my current account the day after my salary is paid in.
scgf is offline
Reply With Quote Report Post
# 12
calypso rhapsody
Old 14-11-2012, 5:19 PM
MoneySaving Stalwart
 
Join Date: Oct 2008
Posts: 553
Default

Yes standing orders between the two do work - you don't even have to leave the couple of days between (and probably shouldn't as you get no interest on the balance over 5k)
calypso rhapsody is offline
Reply With Quote Report Post
The Following User Says Thank You to calypso rhapsody For This Useful Post: Show me >>
# 13
scgf
Old 14-11-2012, 8:58 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

So, If I put 5K in my two Vantage accounts and have a SO to send 1000 from Vantage account 1 to Vantage account 2, and a SO to send 1000 from Vantage account 2 to Vantage account 1, both on, say, 1st of the month, the accounts get the 3% interest and everything ticks along nicely.

Can anyone spot a flaw in this plan?
scgf is offline
Reply With Quote Report Post
# 14
Zekko
Old 14-11-2012, 10:37 PM
MoneySaving Convert
 
Join Date: Sep 2010
Posts: 182
Default

Quote:
Originally Posted by scgf View Post
So, If I put 5K in my two Vantage accounts and have a SO to send 1000 from Vantage account 1 to Vantage account 2, and a SO to send 1000 from Vantage account 2 to Vantage account 1, both on, say, 1st of the month, the accounts get the 3% interest and everything ticks along nicely.

Can anyone spot a flaw in this plan?
There is no flaw. I've been doing this the last 2 years!
Zekko is offline
Reply With Quote Report Post
The Following User Says Thank You to Zekko For This Useful Post: Show me >>
# 15
nilrem
Old 14-11-2012, 10:46 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Apr 2007
Posts: 2,050
Default

Quote:
Originally Posted by Gromitt View Post
Just transfer the 1K and straight out again, thats all you need to do. So it will at 6K for about 10 seconds or so.

You can have 3 such accounts and transfer between them, so apply for another 2, and then transfer from 1->2->3->1. No need to get faster payments involved.

If you only have 10K to spare, only grab an extra one. If you only have 5K, you can use a savings account I believe.
Lol Quite amazing what one has to do to get a decent interest rate now! You would think the institutions would realise that folks will do this, if they had any sense they would just say sod it have the one account and you can have the 3% interest!
nilrem is offline
Reply With Quote Report Post
# 16
badger09
Old 14-11-2012, 10:54 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Oct 2010
Posts: 2,035
Default

Quote:
Originally Posted by nilrem View Post
Lol Quite amazing what one has to do to get a decent interest rate now! You would think the institutions would realise that folks will do this, if they had any sense they would just say sod it have the one account and you can have the 3% interest!
Not many folks are actually savvy enough to play the banks at their own game and banks rely on customer ignorance and or inertia.

This forum (and the main site) are a goldmine of information and most of the posters genuinely want to help others, but in terms of the total population, very few people read it and fewer act on it
badger09 is offline
Reply With Quote Report Post
# 17
nilrem
Old 14-11-2012, 11:13 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Apr 2007
Posts: 2,050
Default

Quote:
Originally Posted by badger09 View Post
Not many folks are actually savvy enough to play the banks at their own game and banks rely on customer ignorance and or inertia.
Suppose so, explains why I have 4 Natwest esaver accounts, have to keep opening a new one to get decent interest!
nilrem is offline
Reply With Quote Report Post
# 18
scgf
Old 17-11-2012, 7:53 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

Thanks guys. I have the 30K and am waiting for the cheque to clear. I have set up some future bill payments to pay off my Nationwide Loan, and to pay 2 x 5000 into my Vantage accounts. Now I want to move 5640 to an ISA.

I am just getting my head around ISAs, but what happens if the interest rate of the chosen ISA falls uncompetitively say a year from now? Is it possible to move the funds to a different organisation without losing out on any interest? I notice some places offer good rates but with a bonus which will be removed after, say, a year or 18 months.
scgf is offline
Reply With Quote Report Post
# 19
Gromitt
Old 17-11-2012, 8:55 PM
Fantastically Fervent MoneySaving Super Fan
 
Join Date: Sep 2011
Posts: 4,950
Default

Quote:
Originally Posted by scgf View Post
I am just getting my head around ISAs, but what happens if the interest rate of the chosen ISA falls uncompetitively say a year from now?
You find someone who has a favorable rate and accepts "Transfers in", and then give them the details of the ISA you want to move to them. They'll do it all for you. You can do this as often as you like, plus you can still open a new ISA with someone else and deposit funds in that.
Gromitt is offline
Reply With Quote Report Post
# 20
scgf
Old 17-11-2012, 8:58 PM
MoneySaving Stalwart
 
Join Date: Jul 2005
Posts: 250
Default

Thanks. If I put 5640 into one ISA, I can't open another in the same tax year? Is that right? The next year I can either add to my current ISA - up to whatever the limit is in the next financial year, or start a new ISA with a different organisaton.

Have I got it right?
scgf is offline
Reply With Quote Report Post
Reply

Bookmarks
 
 




Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

 Forum Jump  

Contact Us - MoneySavingExpert.com - Archive - Privacy Statement - Top

Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

All times are GMT +1. The time now is 5:36 AM.

 Forum Jump  

Free MoneySaving Email

Top deals: Week of 27 August 2014

Get all this & more in MoneySavingExpert's weekly email full of guides, vouchers and Deals

GET THIS FREE WEEKLY EMAIL Full of deals, guides & it's spam free

Latest News & Blogs

Martin's Twitter Feed

profile

Cheap Travel Money

Find the best online rate for holiday cash with MSE's TravelMoneyMax.

Find the best online rate for your holiday cash with MoneySavingExpert's TravelMoneyMax.

TuneChecker Top Albums

  • ED SHEERANX (DELUXE EDITION)
  • VARIOUS ARTISTSNOW THAT'S WHAT I CALL MUSIC! 88
  • SAM SMITHIN THE LONELY HOUR (DELUXE EDITION)

MSE's Twitter Feed

profile
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.
We use Skimlinks and other affiliated links in some of our boards, for some of our users.