£40k savings - where to put it to maximise interest over 6 - 12 months

jaspal

Hi, thanks to some crazy savings over the last 3 years my partner and I finally have £40k in savings. Combination of taking 2nd jobs, budget holidays, no going out, selling motorbike & selling 2nd car, paying off all credit cards and ripping them up, getting a lodger, and so much more ... basically trying very hard to be MSE's.. :j

Currently this money is spread out between various savings accounts, ISA's & excess money in current accounts.

Now although we have a $180k mortgage, we decided not to use this to reduce our mortgage as we are looking to use the savings to put a deposit down for an investment property. Timeframe: 6 - 12 months.

We are currently saving approximately £1000 per month as well - so hopefully we will have £46k - £50k to use as a deposit toward the property.

I need help to determine where to put this money to best use so it makes maximum interest until we need it.

Additional info (some may or may not matter...)
I am a higher rate tax payer and whereas my partner is is not.
No children
Mortgage is the only debt we have (no credit cards etc)
We have not got an ISA for this year as yet.

jaspal

bump..............

maximise

Well done, I'd really be interested to see what our fellow MSExperts can come up with.
I'd put the money in an A&L £2.5k 5% and Santander (Abbey) £2.5k 5% both for each of you, plus Lloyds Vantage £7k .... by the sounds of it you've probably already got something like that. Congrats to you both!

opinions4u

Currently this money is spread out between various savings accounts, ISA's & excess money in current accounts.

Consider a savings account at www.theaa.com/savings paying 2.8% gross and allowing easy access for the excess. Don't forget we're in a new tax year as well. You could put £5,100 each in to a cash ISA.

Now although we have a $180k mortgage, we decided not to use this to reduce our mortgage as we are looking to use the savings to put a deposit down for an investment property. Timeframe: 6 - 12 months.

Are you really sure an all egg in one basket property investment is a good idea? My view is that over the next 5 years you will pay more in interest on a typical mortgage than you will see property values appreciate. But it's your call.