Best savings option and understanding tax on savings

NurseMoneySaver1122

My partner and I have around £63,000 savings (for a mortgage deposit).

Currently have around £15,000 of it in a Lifetime ISA in my name (I earn below the taxable threshold). 

Partner has around £48,000 in a Chase account earning 1.5% (he’s a basic rate taxpayer).

I know ML’s latest highest easy access is YBS at 2.5% up to £5000, then 2% over that. 

- Just wondering if that is the best option to move the £48,000 from Chase? I think I calculated we’d be earning £82pm interest instead of £60pm.

And if so, how long after changing banks should you wait before a mortgage application; 6 months? (unlikely we will apply any time soon given the current climate but just in case!). 

Also, are we missing any tax on savings related issues? This area is one I’m not too clued up on!

Thanks in advance 

jimjames

YBS is a savings account so will have no credit record so will have zero impact on mortgage application.

Albermarle

If you have taxable income more than £17570 pa, you can earn £1000 in interest without having to pay any tax on it ( £500 if you are a higher rate taxpayer). Any savings in an ISA the interest is not counted for the above as it is tax free.

If you earn less than £17570 you can earn a lot more interest without paying tax. The exact amount depends on your earnings.

NurseMoneySaver1122

jimjames said:

YBS is a savings account so will have no credit record so will have zero impact on mortgage application.

Oh fantastic…I didn’t realise that!!! Even more reason to do it then!

xylophone

The partner was  not eligible for LISA?

Has he used his ISA Allowance?

Coventry BS  will offer 2.5% (from Friday) on this cash ISA.

https://www.coventrybuildingsociety.co.uk/member/product/savings/cash_isa/limited-access-isa-online-3.html

cricidmuslibale

xylophone said:

The partner was  not eligible for LISA?

Has he used his ISA Allowance?

Coventry BS  will offer 2.5% (from Friday) on this cash ISA.

https://www.coventrybuildingsociety.co.uk/member/product/savings/cash_isa/limited-access-isa-online-3.html

I'm pretty sure Coventry BS are "only" offering 2.25% (from Friday) on that cash ISA.

NurseMoneySaver1122

xylophone said:

The partner was  not eligible for LISA?

Has he used his ISA Allowance?

Coventry BS  will offer 2.5% (from Friday) on this cash ISA.

https://www.coventrybuildingsociety.co.uk/member/product/savings/cash_isa/limited-access-isa-online-3.html

No partner not eligible for LISA

The only savings he has are the ones listed above, so no ISA allowance used at all.

So maybe makes sense for us to put just £5000 in YBS then the remainder in Coventry BS ISA (if it is either 2.5% or 2.25%) 

cricidmuslibale

NurseMoneySaver1122 said:

xylophone said:

The partner was  not eligible for LISA?

Has he used his ISA Allowance?

Coventry BS  will offer 2.5% (from Friday) on this cash ISA.

https://www.coventrybuildingsociety.co.uk/member/product/savings/cash_isa/limited-access-isa-online-3.html

No partner not eligible for LISA

The only savings he has are the ones listed above, so no ISA allowance used at all.

So maybe makes sense for us to put just £5000 in YBS then the remainder in Coventry BS ISA (if it is either 2.5% or 2.25%) 

You can put your partner's maximum yearly ISA allowance of £20000 in the Coventry BS ISA (paying 2.25% from this Friday onwards) and then you could put £10000 of his money in YBS and also earn 2.25%; the first £5000 will earn 2.50% and the second £5000 will earn 2.00% which means that the whole £10000 will earn 2.25% as this is the average of the two interest rates.

The other £18000 of your partner's money could then be put in Nationwide's Triple Access Saver which currently pays 2.10% for up to three withdrawals per year or better still, if you're both ok with Shariah accounts, in Al Rayan which currently pays 2.35% as its expected profit rate which, in practical terms, is very very likely to pay you as though it were a 2.35% interest rate.

NurseMoneySaver1122

So easy access savings have once again changed since my post…highest now being Santander at 2.75% I believe. 

I have also had an email from Chase (where my savings currently are), so state my interest rate will be going up to 2.1% on 24th Oct.

So two questions:

- On our amount of savings, when is it really worth moving our savings to a better interest rate account (what percentage difference)? I don’t mind switching, just would like to set myself a “time to transfer” interest rate difference.

- If we’re unsure when we are applying for a mortgage, are there any issues with lenders seeing that you’ve constantly moved your savings? Would that affect an application in any way?

many thanks for all the helpful advice so far!

Albermarle

On our amount of savings, when is it really worth moving our savings to a better interest rate account (what percentage difference)? I don’t mind switching, just would like to set myself a “time to transfer” interest rate difference.

It is your choice. Some people will set up new accounts, (not always straightforward) for just a few Pounds gain,  and then a few weeks later transfer out again.

On the other side I read that over 30% of people never even check, or know, what interest their savings are getting ( presumably rubbish ones).

So you need to set your own 'time to transfer' 

km1500

on 48000 at 2.1% in Chase you will earn £1008 per year

if yiu move it all to eg Santander at 2.75% you will earn £1320 in a year

Rates are likely to change early November anyway (BOE meeting)