Temporary coming off the housing ladder, hold in ISA or other?

Lumabones

Hi all!

Our house has recently sold, subject to contract. And due to not finding any property of interest, are temporarily coming off the ladder and staying with my parents.
Everything is going smoothly (yet slowly..) and my partner and I were discussing how the money will be handled once the sale has gone through. 

He is fine with just letting the solicitors hold it, but I'm a bit reluctant, firstly because we were lucky that the profit from our house sale was pretty substantional. Secondly, we plan on using some of the profits to secure reliable cars. Would an ISA be recommended? Or would it be easy to access these funds through our solicitor, who would get interest in that case?

First time selling so a little unsure of the process. Probably also worth noting that no house in our area has caught our eye, so my parents offered space so we aren't rushing into things. 

Any recommendations greatly appreciated!

propertyhunter

You should keep that money so you have access to it, and not with the solicitor. Plus it earns no interest so its value is eroding as inflation bites. At least putting it into an easy access ISA mitigates some of this loss. 

If you're going to purchase a home with some of that money, chances are it will be in at least 3 months assuming you find a home today, and that's three months of interest you could miss out on. 

propertyhunter

Also remember you only have a £20k allowance per individual for ISA subscriptions in each financial year, so some might need to go into another savings account depending on the amounts - and keep everything within the £85k limit for FSCS protection. 

mebu60

I agree with ph, I would definitely have the money myself.
Easy access accounts generally pay more interest than a cash ISA and may be a better bet for you dependent upon your individual income tax situations.
Also, as ph says, note the £20k per person per tax year ISA subscription limit and the FSCS limit of £85k per institution (which can comprise multiple brands). 

fackers_2

I’m in the same boat, within a week of receiving the money I’ve put it into a 6 month fixed saving account which is at 3.69% Great rate currently. 

It’s working for me, the interest will likely equate to the legal fees + other bits once it’s matured  

Jonboy_1984

Funds held in solicitors client accounts are also only covered by the normal FSCS rules limits, and if they use the same bank as your personal accounts you are only covered once(!), so I would take the funds and spread them myself.

https://www.ilfm.org.uk/site/blog/ilfm-blog/ls-new-limit

(there is the 6 month temporary high balance rule in place but 6 months soon passed in property sales)

Lumabones

fackers_2 said:

I’m in the same boat, within a week of receiving the money I’ve put it into a 6 month fixed saving account which is at 3.69% Great rate currently. 

It’s working for me, the interest will likely equate to the legal fees + other bits once it’s matured  

That's awesome! I might go this route too then. 


I might go into my current bank and see if they can offer me a good rate before I shop about.

badger09

Lumabones said:

fackers_2 said:

I’m in the same boat, within a week of receiving the money I’ve put it into a 6 month fixed saving account which is at 3.69% Great rate currently. 

It’s working for me, the interest will likely equate to the legal fees + other bits once it’s matured  

That's awesome! I might go this route too then. 


I might go into my current bank and see if they can offer me a good rate before I shop about.

Forget it. No bank is going to offer an individual customer a preferential interest rate. Unless you’re talking about several £million when it might be a vague possibility. 

Look on the Savings & Investments forum for the best rates available for various durations. 

grumiofoundation

Lumabones said:

fackers_2 said:

I’m in the same boat, within a week of receiving the money I’ve put it into a 6 month fixed saving account which is at 3.69% Great rate currently. 

It’s working for me, the interest will likely equate to the legal fees + other bits once it’s matured  

That's awesome! I might go this route too then. 


I might go into my current bank and see if they can offer me a good rate before I shop about.

You can look up what your current bank* will offer. As above you won't get a special rate

*sensible idea to have two current accounts in case there is an issue with one bank e.g. IT failure

Ditzy_Mitzy

Keep it yourselves, somewhere secure.  ISAs and what have you are reasonable savings vehicles, but you'll only be able to put in up to the limit.  Some of the investment managers offer low risk (often zero risk) cash funds with interest.  Banks do too, of course.  Another thing to consider, if you are looking to be living with your parents for a year or more, are fixed term bank accounts (FTBAs).  These carry a higher rate of interest, but require the funds to be locked away for a fixed period.  The high street banks do them, as do some other more obscure organisations such as the Islamic banks.  Often the funds 'locked away' can be got out in an emergency, but there will either be an exit fee or a forfeit of all or some interest.  Worth thinking about if applicable.  Avoid peer to peer lenders; property funds are a mixed bag; collective investments can offer much better returns than cash investments, but you will be gambling your original profits.  Best advice, however, given the state of things is to stick to investment types (simple cash) that offer lower potential rewards but protect the initial capital absolutely.  

Reliable cars?  Most things ten to fifteen years old, petrol and non-turbocharged will see you right.  Premium marques aren't what they are cracked up to be, often, and it's often best to look in the middle of the market.  Diesels can be fragile; manuals and traditional automatics usually aren't; dual clutch and robotic manuals are known to go wrong.  You shouldn't need to spend more than £2 or £3,000 on such a thing; most petrols from 2005-ish onwards are emission zone compliant too, if that's relevant.  Remember not to put too much useful capital in a depreciating asset.