House Sale Proceeds

jmd4211

Hi,

Not sure this is the right forum, but just wanted to ask a quick question. The sale on my flat is due to be completed this week, and my related purchase is at least a month behind that. Because of money I inherited, I'll have £150,000 kicking about in my account for 4-6 weeks - is there anything I can do with it that will earn me any interest at all?

opinions4u

Easy access accounts with Birmingham Midshires and Santander paying 3.2% a year.

Stick half in each to keep under the FSCS limit.

Get them opened ASAP.

jmd4211

Thanks for the quick response - 2 questions though:

-What is the FSCS limit all about?, and
-How much interest would I make on 75,000 in 2 accounts, over a 4 week period.

Actually, 3 questions - would opening new accounts not jeapordise my mortgage offer? (Extra credit checks etc?)

Littleweedj

jmd4211 wrote: »

Thanks for the quick response - 2 questions though:

-What is the FSCS limit all about?, and
-How much interest would I make on 75,000 in 2 accounts, over a 4 week period.

Actually, 3 questions - would opening new accounts not jeapordise my mortgage offer? (Extra credit checks etc?)

The FSC limit is for £85K each person or double for joint accounts.
Should a bank, building society etc. go under then the government will compensate up to this limit. There are some banks who hold the same licences so check beforehand - you will find the list on MSE.

Don't think it would have any effect to jeapordise your mortgage offer, as you are wisely protecting yourself for any future banking crisis.

eltacano

jmd4211 wrote: »

Hi,

Not sure this is the right forum, but just wanted to ask a quick question. The sale on my flat is due to be completed this week, and my related purchase is at least a month behind that. Because of money I inherited, I'll have £150,000 kicking about in my account for 4-6 weeks - is there anything I can do with it that will earn me any interest at all?

Best offering seems to be Aldermore's Easy Access account, which pays 2.75% pa (see details on this website). There may be other accounts elsewhere paying the same or more (eg Birmingham Midshires and Santander) but they'll include a hefty 12 month bonus for which you won't qualfy.

You may be prepared to put it all with Aldermore since the period of investment is only a month; otherwise, put £85k with them (assuming you don't already have an account with them) and £65k with the next best account.

Good luck: you'll be £300 or £400 richer for your trouble!

badger09

eltacano wrote: »

Best offering seems to be Aldermore's Easy Access account, which pays 2.75% pa (see details on this website). There may be other accounts elsewhere paying the same or more (eg Birmingham Midshires and Santander) but they'll include a hefty 12 month bonus for which you won't qualfy.

You may be prepared to put it all with Aldermore since the period of investment is only a month; otherwise, put £85k with them (assuming you don't already have an account with them) and £65k with the next best account.

Good luck: you'll be £300 or £400 richer for your trouble!

Sorry, but this is incorrect. These accounts include a bonus for 12 months, but if you have your money saved for only one or two months, you will receive the bonus rate for those months. You do not need to have money in these accounts for the full 12 months to qualify for their bonus rate If you do keep money in them, the rate plummets after 12 months

eltacano

Having looked at several of these "bonus accounts" in the past, I am now inherently distrustful of them. They are not bonus accounts, but penalty accounts in the sense that they give you a reasonable rate for 12 months and then it drops to something completely unreasonable. Only banks could make a virtue out of this situation, and hijack the word "bonus". It's just clever or, more accurately, devious marketing.

In some cases, I have found, for example, that the "bonus" is only given for complete months. So if you were to invest for one month and 29 days you'd only get one month's bonus. The banks are full of these kinds of tricks.

Anyway these points take time to check out, and the wording has in my experience often been very confusing or ambiguous. I've had a very quick look at Santander and Birmingham Midshires, and I do agree with you that it does appear that you do not lose out, so thank you for drawing my attention to this. Maybe the banks are finally mending their ways*.

However, as I say, I've seen many examples where you do lose out. Perhaps if you're prepared to plough through the smallprint, you can establish beyond doubt that you will get the bonus. But it can take a lot of effort to do this, and the questioner needs to act quickly, and I would therefore instinctively rather go with a clean account like the Aldermore.

Life's too short!

*I notice however that with the Nottingham 3.1% easy access account you have to keep the account open until September 2013, otherwise you will lose the 2.1% bonus!

Ifts

eltacano wrote: »

*I notice however that with the Nottingham 3.1% easy access account you have to keep the account open until September 2013, otherwise you will lose the 2.1% bonus!

If you did go for the above type of account and needed to withdraw your money before Sept-13, just keep the account open with £1 (or any minimum balance to keep the bonus/acc open) until the end of its term to benefit from any end of term bonus.

I do agree that the small print in the Terms & Conditions can be a pain at times. If in doubt about a financial product, just post the details on here.

The good folk on MSE are very good at spotting these hidden catches, they don't miss much when it comes to analyzing the pro's and con's of financial products.

Rafter

To answer your original question - at 3.2% after basic rate tax you will earn c. £10.50 per day in interest, so £295 over 4 weeks and £442 over 6 weeks.

Personally I'd get the best instant access account with your current bank than risk transfers and delays to another provider which might jeopardise your house purchase if the money is in the wrong account which is likely to cost you a lot more than £300.

However, the point about the FSCS limit is valid. Although incredibly unlikely, in theory, if you bank failed in those 6 weeks you would only get the first £85,000 back in full.

Good luck

R.

JimmyTheWig

I'd definitely say keep within the FSCS limits, so you'll need two accounts.
I agree with Rafter's calculations. Should get you a few hundred pounds.
If you can get a decent enough rate with your own current then I'd be tempted to go with Rafter's suggestion of using that for convenience for one pot of money.

calypso_rhapsody

Ask your solicitor if they have a client account that pays interest on that sort of sum ... probably not but if they do it would reduce all the hassle of moving money around.