Big House Deposit + savings account

Peter1988

Hello, we are currently chain free as we sold our property for a decent price and are now looking for a new property to purchase which is taking longer than expected. We have in excess of £90k in our solicitors bank account which is earning 0.1 - 0.2%

Could anyone recommend a better place to keep this money until we need the money again to use as a deposit against a property?

Thanks in advance

innovate

First observation is that you have more than £85K, so you might want to think of splitting it across two accounts at different financial groups, or to put the money into a joint account, where you get up to £170K protection.

The rest depends on how quickly you will need the money again. If it's just a couple of months, any instant access account will do (as long as it comes with the right FSCS protection). If you don't expect to need the money for a year or two, look at fixed rate, fixed term savings.

Assuming you are tax payers, I would look at putting the maximum money into ISAs, and the rest into other savings accounts. If one of you is not a tax payer, they can get gross interest by filling in an R85.

Credit-Crunched

I assume if the delay is significant then the sols will be returning the money in line with SRA guidelines 2.5

"2.5 Solicitors as bankers

As a solicitor, it is not a proper part of your everyday business or practice to operate a banking facility for third parties, whether or not they are your clients. This was determined by the Solicitors Disciplinary Tribunal in the case of Wood and Burdett (case number 8669/2002 filed on 13 January 2004). You should not, therefore, be party to an arrangement that is tantamount to providing banking facilities through a client account, as stated in guidance note (ix) of rule 15 SAR.

With this in mind, you should assess each case on its own merit based upon the individual circumstances that present themselves. If there is a good reason to continue to hold your client's money pending its investment or use in further transactions on which you continue to advise and act, it is unlikely that this would amount to a breach of the SAR. However, you should review this position if there is likely to be any significant delay in receiving further instructions."

Peter1988

Thanks for the replies, to be honest I'm still a little confused as to what to do. We're temporarily holding the money with the solicitors and have had a recent statement saying we've earned less than £10 since the money has been there. It's really difficult to say how long the money will be sitting unused for due to not knowing when properties will come on the market, how long the process will take (no onward chain, how fast the sellers can move etc).

I'm thinking maybe take out £6000 and put in an ISA under my partners name who pays less tax than me, but also currently does not have an ISA. I still have space in my ISA for tax free savings so perhaps I could top that up too?

Many Thanks and any advice is very much appreciated.

SG27

innovate wrote: »

First observation is that you have more than £85K, so you might want to think of splitting it across two accounts at different financial groups, or to put the money into a joint account, where you get up to £170K protection.

The rest depends on how quickly you will need the money again. If it's just a couple of months, any instant access account will do (as long as it comes with the right FSCS protection). If you don't expect to need the money for a year or two, look at fixed rate, fixed term savings.

Assuming you are tax payers, I would look at putting the maximum money into ISAs, and the rest into other savings accounts. If one of you is not a tax payer, they can get gross interest by filling in an R85.

The OP says we so they can open a joint account and have £170k FSCS protection.

I would go with Santander instant access 3.2% which is where mine and my partners non isa house deposit is.

sleepless_saver

SG27 wrote: »

The OP says we so they can open a joint account and have £170k FSCS protection.

I would go with Santander instant access 3.2% which is where mine and my partners non isa house deposit is.

That would give them £2300 a year assuming they are basic rate tax payers - compared to less than £150 max in the solicitors account.

In the OP's position, I'd just get all the money out into a decent easy access account as soon as possible and worry about ISAs later. At the moment they're losing potential income of about £6 a day having it sitting in the solicitor's account. With an easy access account there's no problem getting it back to the solicitor when needed.

SG27

sleepless_saver wrote: »

That would give them £2300 a year assuming they are basic rate tax payers - compared to less than £150 max in the solicitors account.

In the OP's position, I'd just get all the money out into a decent easy access account as soon as possible and worry about ISAs later. At the moment they're losing potential income of about £6 a day having it sitting in the solicitor's account. With an easy access account there's no problem getting it back to the solicitor when needed.

Yes exactly and with top instant access isas around the 3.2% they will only be earning about an extra £5 per month (basic rate tax)if they maxed out both allowances. So yes sort out a decent instant access account first.

Peter1988

I've sorted out a joint easy access account via Santander. My only concern is that will the money be safe in those accounts? Due to it being such a large amount of money I'm just worried more now about worst case scenario of my account being hacked or what have you?

sleepless_saver

It's just as safe there as in the solicitor's account. I reckon savings accounts are much more secure than current accounts as you're not using a card in public places where thieves can get access to security info.

Keep your security details safe, use a computer with proper security to access the account, and don't worry about it.