Best 2 year home for £20k windfall

gpkwells

Hi all,

Just looking for a little guidance/advice/opinion.

I will be inheriting £20,000 some time in early 2015. Thank you Granny :A

It will be used for a property deposit in late 2016 to early 2017.

I have manageable debt but don't want to use this to clear it as I will never have capital available for a property deposit.

Where would be the best risk free home for it. For 18-24 months.

I don't need or want instant access - avoiding temptation!

Options I am looking at so far:

Premium Bonds.
Peer to Peer highly diversified over at least 100 businesses.
Building Society Savings.
Cash ISA's.

If you need any more info please ask.

Thank you,

Paul.

[Deleted User]

If you have debt that is so great that it would wipe out £20k and prevent you from saving £20k over the next many years, how do you expect to get a mortgage and to be able to service that debt in the face of rising interest rates? The rules regarding mortgage affordability are not casual, you may need to re-evaluate whether or not you're going to be able to afford to purchase property.

Perhaps a better idea would be to post a thread outlining your situation (debts), your goals (property ownership) and the tools you have available (income, inheritance) and then knowledgeable posters will give you a solid plan towards your goal.

That said if £20k is all the cash you have (and you're a 20% tax payer) then split it across a variety of current accounts to achieve a fairly good rate of return without risk. Remember that if your debts have high interest that's probably going to wipe out any gains you make by saving instead of paying off the debt.

gpkwells

My debt is approx £27,000
£20000 personal loan at 5.9%
£7000 on 0% CC for 36 months

Annual income £60000
Additional household income £10000

I can service the debt and after seeing an IFA my circumstances would not prevent me getting a mortgage if I had a suitable capital deposit. Hence wanting advice on the best place to park the money for 18-24 months.

I could not amass £20k in that timeframe!

Thanks,

Paul.

enthusiasticsaver

I am surprised that on that income you are not saving significant amounts unless you have high rent/outgoings maybe? I understand where you are coming from in not wanting to use all the £20k to reduce debt but you are never going to get a savings rate of 5.9% in the timeframe you are talking about. The best you can hope for is one of the interest paying current accounts - We have a Santander 123 which pays 3% interest on 3-20K and is easily accessible although you do need to pay in £500 per month minimum and set up 2 direct debits. You may get a reasonable cash isa but most of them are paying less than the current accounts unfortunately. My advice would be to use your quite high income to reduce your debts as far as possible as if you have a poor credit record then the lowest mortgage rates may not be available to you. Good luck.

gpkwells

It's not so much about the money growing, more about having the capital lump available when I need it. However if it going to sit somewhere I would like it to be in the best short term place, hence thinking premium bonds/peer to peer etc.

My outgoings are quite high as I am recently divorced and have two children with my ex wife. I am supporting them as well as renting a house suitable for them to stay over etc.

The majority of my debt came from: marital debt that I solely took, setting up a new home and a little bit of single life exuberance

xylophone

Is there a reason why on a household income of £70,000 you are not able to save substantial amounts?

gpkwells

xylophone wrote: »

Is there a reason why on a household income of £70,000 you are not able to save substantial amounts?

See above post.

Supporting my children costs me £1000 per month

I save £200 per month - 100 months (8.33 years) to save £20k

xylophone

Our posts crossed!

Are you using your pension so as to reduce your liability to 40% tax?

You could look at Nationwide Flexdirect - 5% on up to £2500 for a year.

TSB- 5% on £2000.

Club Lloyds - 4% on up to £5000.

BOS (x3) - 3% on up to £15000 between the three.

Santander 123 - 3% on up to £20,000.

These are current accounts and require funding and sometimes DDs but all this is easily managed once the accounts are set up.

You do need to read the T&Cs carefully.

See https://forums.moneysavingexpert.com/discussion/5090719

colsten

What would you do if you had an emergency (boiler, car repair etc) or if you lost your job?

gpkwells

Boiler down to land lord.

Car - would have to use CC/monthly savings

Job very very secure so that is highly unlikely.

gpkwells

xylophone wrote: »

Our posts crossed!

Are you using your pension so as to reduce your liability to 40% tax?

You could look at Nationwide Flexdirect - 5% on up to £2500 for a year.

TSB- 5% on £2000.

Club Lloyds - 4% on up to £5000.

BOS (x3) - 3% on up to £15000 between the three.

Santander 123 - 3% on up to £20,000.

These are current accounts and require funding and sometimes DDs but all this is easily managed once the accounts are set up.

You do need to read the T&Cs carefully.

See https://forums.moneysavingexpert.com/discussion/5090719

I have a non-contribution pension with employer paying 7% in. I top this up a little but plan to increase when spousal maintenance ends.

Don't want to use current accounts due to instant access

Premium Bonds seem wise as interest growth isn't the priority - capital secure and possible growth through occasional prizes?