What To Do With Savings?

AndyBSG

After some advice on making the most of my savings.

At the moment I am quite comfortably saving £2,000 a month with a view to buying a house about this time next time next year.

I've just maxed out my cash ISA for the year and also have 15K in a Halifax Online saver account. I'll be taking out a new ISA in April and already have 5K set aside for this but am wondering what the most efficient way is to use the 3-5K i'll save between now and then(and the additional 6K I should save by the end of the year?

I want the money somewhere that I can access it in an emergency but realistically i'm not expecting to touch it until 12 months time.

Should I just stick it in my savings account or is there a minimal risk way I can put it somewhere and get a slightly better rate of interest than High Street banks offer?

Thanks for any advice

Rafter

Andy,

No such thing as a minimal risk when you leave the 'safe haven' of FSCS protected savings and bank accounts.

Your best bet seems to be some of the top paying bank accounts or regular deposit accounts. Although, if you are a higher rate tax payer, having used all your ISA allowance you are going to struggle to earn much more than 2% after tax which will only be around £240 in interest over the next 12 months - still not to be sniffed at - but unlikely to protect the value of your savings against expected house price inflation of 5% plus next year.

You might be better off advancing your house purchase plan and taking advantage of the government backed lower deposit schemes - particularly if you only take a two year scheme and keep saving you should be able to remortage after a couple of years to a lower rate having built up more equity in your property - particularly if house prices continue to rise over the next couple of years.

Good luck

R.

bsms1147

I imagine your savings account is paying a pittance.

Look at current accounts, start with the one paying 5%, then the ones paying 4% (if available to you) then 3%. Nothing should be earning less than 3% gross.

bigadaj

You can explore the options detailed on numerous threads about maxing out some current accounts, Santander being the main one as you can get 3% on up to 20k and being mindful of credit searches for mortgage applications.

Everyone thinks house prices will continue to rise and whilst there is demand then if you look at things like rents in many areas these are reducing in percentage yield cases and with mortgage rates and base rate at a record lows these can only go one way, with an adverse impact on house prices.

Where in the country you are looking to buy could be a bigger factor in terms of price rises or potentially falls.