Debt free - now new bank account needed

Boblet

Hi,

first post on here and looking for a bit of advice.

My partner has recently been diagnosed with a critical illness (very treatable, thankfully) which means that our critical illness cover is due to pay out and wipe out our mortgage. So the silver lining to this dark cloud means that we will very soon be completely debt free with a little bit of money left over.

The mortgage account we have used for the past twelve years has been The RBS One Account, which, frankly has been a godsend in terms of its flexibility and budgeting tools.

For those not familiar, The One Account enables you to open little virtual savings "pots", eg car insurance, holiday, home improvments etc that you can put into on a monthly basis so you have the money when it comes to the annual outlay rather than taking a big hit on your account. Pretty similar to the budgeting spreadsheet on this site really. So really we would like to carry on in a similar vein with an account that offers similar facilities.

So, as a result of being debt free, we expect to have circa £500 per month surplus to invest in somewhere that offers a good return. But, frankly are clueless on what the best options are.

I'm going to peruse this site, and potentially speak to a financial advisor in the near future but thought I'd see if anyone on here has any advice or experiences to give me some avenues to go down.

Many thanks.

bigadaj

First thought is do you need to clear the mortgage, if you can get more in savings interest then that can be profitable.

Otherwise full high interest current accounts and regular savers, then reconsider once you get abive £10-£20k.

Boblet

That's not occured to me actually. May consider that. The amount will be circa £58k. Any thoughts on any low risk investment options?

The mortgage rate is currently at 4% so would need to balance it against that.

edit: I'm probably looking at "saving options" rather that "investment".

xylophone

I should think that it would give you peace of mind to clear the mortgage.

As for the £58,000, with the stock market so volatile, you might wish to consider the high interest current account route ( if you are accepted for the accounts), until personal and national circumstances settle down.

It might suit you to open a joint Santander 123 account from which all your household DDs can be paid - the cashback would almost certainly cover the fee and you would receive a fair interest rate on £20,000.

You might then each open a TSB plus current account and a joint TSB current account - you need to go paperless and pay in £500 a month, but this is easily managed by setting up same day SOs on the three accounts.

(£6000)

You might then each open a sole Nationwide Flexdirect account and a joint- external pay in of £1000 a month required but cycle in/out from Santander TSB by same day SO.

(£7,500)

You could open two sole and one joint Lloyds TSB Club account - each requires a pay in of £1500 a month, (and 2 DDs) but again internal SOs can be set up.

(£15000)

You can each set up two Tesco current accounts - no regular pay in or DDs required.

(£12,000).

You would use the "space" in the Tesco accounts to hold the interest which you would sweep in from the other accounts.

As to the spare monthly £500, NW offers a monthly Flex regular saver @ 5% interest.

You could sweep money from Tesco to fill another of the NW savers - this would leave space to fill the Tescos when the high rate on the NW Flexdirect current account ends after a year.

If all the above seems too much bother, it would be possible to have a joint and two single Santander 123 accounts but you would not be maximising the potential for interest.