Savings Advice

SDM85

Hi everybody

I will soon inherit a fairly substantial, but not huge, amount of money from my late father's estate. I intend to put it all in a savings account to use it as a deposit on a house in the future. I will probably not need to touch it for the next few years.

I was wondering what advice anyone can give me in terms of what would be the best savings account for me? Obviously I would like to make as much interest as possible. From what I've researched myself, the Post Office seem to offer the best savings accounts. But I'm quite new to this so would appreciate any advice.

Thank you in advance for any information.

SDM85

DavidHayton

Hi! You seem to know what you want ... security of capital with greatest rate of interest. I would suggest that you have a look at the advice on the main site: http://www.moneysavingexpert.com/banking/

best wishes
david

Loughton_Monkey

There are several comparison sites that give you everything you need to know.

Not only are they generally correct, they will instantly give you all the choices. Far quicker, cheaper, and certain than asking 'real people' to regurgitate common knowledge with all the 'ifs' and 'buts'.

Simple!

SDM85

Thanks guys.

Which comparison site is best to use?

psychic_teabag

The comparison sites do indeed give best-of-breed for various categories. If you know in advance when you'll need the money, it's relatively easy to choose an appropriate fixed term. But when you don't know exactly when you'll need the money, it can be a little tricky. There are a few accounts that don't show up because they have loopholes which can be exploited. Specifically, these are long-term accounts with early-access clauses. Eg
Newcastle BS have a 5-year account with tiered interest with 120-day notice for withdrawal
Coventry have a 5-year account with 180-day loss of interest on withdrawals.
M&S have a 3-year account with a fixed £100 fee for early access - for a large enough sum, this is better than a loss of interest

depending on the amount saved, how soon you will need the money, and how much advanced warning you'll have, one of these might suit your needs. Search the forum for examples comparing and contrasting these accounts.

xrjtg

You might also want to look into the Santander First Home Saver, which might not show up on comparison sites. Despite the name, this isn't because you're looking to buy a house—it's because it pays 5% AER interest, which is hard to match elsewhere.

SDM85

xrjtg wrote: »

You might also want to look into the Santander First Home Saver, which might not show up on comparison sites. Despite the name, this isn't because you're looking to buy a house—it's because it pays 5% AER interest, which is hard to match elsewhere.

That sounds good, better than anything I have seen. I will almost certainly use the money as a deposit on a house in the future, but is there an obligation with the Santander First Home Saver that I must use it for purchasing a property?

psychic_teabag

No, not required to buy a house, but it's intended as a regular saver, not for a lump sum. Max initial deposit is something like £5k though I have heard that you can massively overpay the second installment, forgoing interest that month, but then getting 5% thereafter.

SDM85

So if I went with the Santander First Home Saver Account, I could only deposit £5k initially? What would be best to do with the remainder of what I inherit? Put it in a separate account and transfer £300 a month?

SDM85

Having done a few calculations, I would make more interest with the Post Office Fixed 3 year term at 4% than the Santander First Home Saver, depositing £300 a month at 5%.

Lokolo_2

SDM85 wrote: »

Having done a few calculations, I would make more interest with the Post Office Fixed 3 year term at 4% than the Santander First Home Saver, depositing £300 a month at 5%.

However, as Psychic Teabag said, you can deposit the rest of the lump sum in the second month, so all you would get is an interest penalty of only 0.1% paid for that month but you'd then have all your money in that account and be earning 5% AER thereafter :j