Savings advice

pbfhpunk

Ok here is my situaton at the moment.

I have 28,000 in Premium Bonds

I have an 18k loan

I don't want to loose the loan completely for various reasons but want to get the payments down to around £200 saving £100 a month.

We have an appointment with the bank on Saturday to go through some things.

My plan is:
Pay £8k (requested withdrawal from PB the other day so hopefully will be in bank soon) off the loan to bring payments down

Open ISAs for my husband and myself for this year (3,600x2)
April 6th open new ones for us both (3,600x)

So so far used 22,400.

What would you advise with the last £5,600?

And so you think that plan is ok?

I know I'll get advised to pay off the total loan but that's not an option at the moment, any spare cash we have though will go to over pay it.

All products will be with RBS.

The 8K I've requested from PB will be used to either pay of the loan or pay in this year's ISAs if we can then I can jsut request more money from PB to pay of the loan.

Thanks

Helen

stephenni1971

I understand that you want ( or need ) to keep the loan going for your own reasons but as for the rest of what you are doing...

Are you looking for capital growth or income?

What is your attitude to risk?

Do you have any financial goals you are planning for ?

What sort of level of disposable income do you have?

What other financial commitments have you - mortgage, c cards, regular contributions to pensions?

Had to discuss your actions without more background information.

Lokolo

a) Pay off with the loan (although you are against this). This will free up extra income/month for you which you can then put into a regular saver

or b) Put it into an instant access savings account and then drip feed out of it into a regular saver (see above)

Interest on loan is likely to be higher than savings so option a) would be better financially.

chesky369

Pay as much as possible off your loan as IT'S COSTING YOU MONEY.

pbfhpunk

As I said I don't want to pay off all of the loan. I have £8k to pay part of it.

I don't know what our disposable income is yet as we're relocating with new jobs and not sure waht the running costs of the new house will be although the rent and the CT so far add around £250 on what we're currently paying.

I want the money to be a deposit for a house when we buy one in a year or so after getting to know the area we're moving to more and settling into jobs.

I don't see how what other things we're paying factor in to what to do with the savings - not being rude but if you can explain why it does then that's ok.

Not looking for huge risks money will be needed in at the very least a year but probably later.

Thanks

Helen

chesky369

I didn't say pay all of it, just as much as possible. How much is it costing you per month? In total. If you paid off say half of it, then you would have all that money to put into a regular saver or, if you could manage, a fixed term account - you might be able to find a six-month one if you didn't want to do a whole year. But anything is probably better than premium bonds at the moment - literally, a complete waste of money.

pbfhpunk

Thanks, yes that's why I want to take it out of PB to but into savings. I can pay £8k straight off the loan, and it may be in a couple of months I can pay of £1k-£2k more, we were planning on lowing the payments and overpaying what we're saving off it anyway, so always reducing it.

Is the ISA thing I said possible, getting 2 now and 2 at the start of the next year. not 100% sure how they work but do they keep earning resonable interest year on year or just for the first tax year and then the rate goes down? - sorry if that's a stupid queston!

RBS have this on their site
Earn 3.51% GROSS/AER (variable), backed by a Base Rate guarantee until 1 February 2010. Plus, if you’re a Royalties Gold or Royalties Private customer you could earn a further 0.5% p.a. bonus for 12 months from account opening.

We're Royalties Gold customers so would get the bonus. Also for the savings account does this seems good? http://www.rbs.co.uk/personal/savings-investment/g1/instant-access/first-home.ashx

We'll probably do an RBS mortgage just because it's easier as they know all our history and my previous one was (I sold my house 18months ago and my husband has never had a mortgage so not sure if we qualify as first time buyers though!)

Thanks for all you help again.

H

Baldur

pbfhpunk wrote: »

Is the ISA thing I said possible, getting 2 now and 2 at the start of the next year. not 100% sure how they work but do they keep earning resonable interest year on year or just for the first tax year and then the rate goes down? - sorry if that's a stupid queston!

It depends on the type of Cash ISA that you choose - variable rate ones are, err....., variable, so the rate can change at any time, whether in the first year or not (unless the Terms & Conditions say differently). Fixed rate Cash ISAs pay you the originally contracted rate for a fixed period of time.

You usually have to keep an eye on Cash ISAs and be prepared to transfer them at least annually, if you want decent rates.

chesky369

You've only got about a week to get this year's cash ISAs sorted, so you're probably just as well getting almost any product, provided you're allowed to transfer it at some future point - use it or lose it is the name of the game here.

pbfhpunk

Yes, I've got an appointment with the bank on Saturday and just checked and the premium bond money has come through so got £8k. I can always cash in more of the PB to pay the 8k off the loan.

Thanks

H

stephenni1971

My questions were simply to get some background to your situation....

If for example you had c card debts then paying those off would in most cases be preferable to investing in cash ISA as rates would be normally 15% + interest charged against max 3% interest earned.

If you are looking a safe home for a year as it is your intention to purchase in 2010, then options would include 1 year bonds or highest interest paying accounts.