Where should I put £100k for 9/10 months?

Halle71

Hello

My parents are giving us £100k that is intended to pay off the majority of our mortgage. However we are tied into a discounted product that ends on 30th November and the Early Repayment Fee is equal to what we would save so it is not worth us paying it off until then (although we can overpay by £500 per month without penalty which is what we will do).

Does anyone have any low risk suggestions what I should do with this money, even just the best savings account for this period? I am a 40% tax bracket earner if that makes any difference.

Many thanks

H

foofi22

The simple answer is stick in an easy access cash savings account(s) as you require the money shortly.

I say 'accounts' because it would be sensible to split the money up across institutions so you are covered if they go bust. Generally some current accounts offer the best rates.

This is what I would do:
Current accounts at Lloyds, TSB and somewhere else (can't remember) offer 3% on £5k max. You can have 3 of each, so that's £45k covered. Your other half can do the same, with another £45k. That leaves £10k, you can do something similar with the Nationwide FlexDirect account, which leaves £5k to put somewhere else.

But ask yourself, do you have sufficient savings already? (e.g. 6 months pay for example), do you have a pension plan? Do you have long-term investment plans? If not, then maybe diverting some of this money would be sensible.

Halle71

Thanks for the advice (and reminder about the maximum you can safely hold in one institution), I will look into all of those accounts.

I will have savings equivalent to six months pay in a couple of months when I've recovered from being on maternity leave, a personal and work pension, an ISA and we own a BTL property that has a significant amount of equity. This all looks good on paper so why am I still shopping at Lidl? :rotfl:
Also, my dad specifically wants us to use the money for property - ideally to move now but we are not ready because of our school situation.

Issybobs

You can put up To 20k in santander 123 current account pays 3% terms apply though eg 2 direct debits pay in £500 a month

Issybobs

I would also max out on premium bonds your situation sounds quite comfy.

So would you really miss the interest if you didn't win at all

It's a lottery but a lot less hassle than chasing top rates opening new accounts just for 9/10 months

IronWolf

I presume you have a partner? so you may each be able to open a santander 123 account.

Apart from that the savings options are very limited, they all pay rubbish interest rates at the moment. This page usually has the best ones available http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Halle71

He's already got a Santander 123 account but I may be able to top it up.

Rates are rubbish - when I didn't have any money I remember saings accounts were paying 3/4/5% interest. To be honest the only reason I have this money is to minimise any inheritance tax liability so I guess that is a bigger benefit than a few percent interest.

ColdIron

Issybobs wrote: »

I would also max out on premium bonds your situation sounds quite comfy.

So would you really miss the interest if you didn't win at all

It's a lottery but a lot less hassle than chasing top rates opening new accounts just for 9/10 months

Personally I wouldn't use PBs if I could find a better rate than 1.8% as a higher rate taxpayer. You might get lucky but you probably won't and don't forget you are not entered into the draw for the first month you own them making them less suitable for short term savings

Archi_Bald

Halle71 wrote: »

He's already got a Santander 123 account but I may be able to top it up.

Between 2 people, you can have 4 123 accounts , i.e. 2 each.

But be aware, the money belongs to the person in whose account the money is.

IronWolf

Halle71 wrote: »

He's already got a Santander 123 account but I may be able to top it up.

Rates are rubbish - when I didn't have any money I remember saings accounts were paying 3/4/5% interest. To be honest the only reason I have this money is to minimise any inheritance tax liability so I guess that is a bigger benefit than a few percent interest.

Be careful, if your father dies within 7 years of the gift it can still be liable for inheritance tax.

badger09

IronWolf wrote: »

Be careful, if your father dies within 7 years of the gift it can still be liable for inheritance tax.

Not sure how OP can 'be careful', unless she's thinking about bumping her parents off - in which case, your warning stands