Best <1-year Savings Account for £85k - Your Advice Would Be Much Appreciated!

I'd really appreciate your advice on what my best option would be for a short-term 'home' for a £85k bond that is due to mature in a couple of days.

I'm due to inherit a limited amount of money from the sale of my late father's house at some point over the next months or year, however, the application for Probate has only just been submitted so it could be 2 or many months for any payment to come through. At that point, I plan to invest the total sum as a downpayment on my first property, which will be a huge step for me. Would Vanquis Bank's 90-Day Notice Account (Issue 2), which offers 5.50% variable interest be the best option - or are there any considerations I should be aware of?

I have had two Vanquis savings accounts in the past and am satisfied with their service. Although the last investment was the worst financial decision of my life, that was my responsibility as I took the plunge with a 3-year fixed-rate bond as rates were predicted to plummet further and they actually improved...so it has been a learning experience and not one I want to repeat!

Thank you for your consideration of this query.

Your advice would be most welcome and much appreciated.

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Comments

  • Vanquis looks like a good rate - it beats the 5.4% from FirstSave that is at the top of both Best savings accounts: 5.13% easy access or 5.16% fixed rates (moneysavingexpert.com) and Best 90 Day Notice Accounts | Compare Rates Today (moneyfactscompare.co.uk) lists. If you're sure you'll be able to give the 90 days notice before you need it for the deposit, that is - fine while you still haven't got a date for when you'll actually receive the inheritance, but perhaps when you do, it'd be a good idea to give the notice, and if you still haven't found a home after the 90 days, keeping it in an easy access account after that.
  • soulsaver
    soulsaver Posts: 5,789
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    edited 25 January at 1:55PM
    If you're using the £85k plus interest @ 5.5% for a year you'll be paying tax on a significant portion of the interest.

    If you can lock some of it up for a year and you've not used your ISA allowance, you can shelter £20k now and another £20k after April 6th.


    Have a search on here - but IIRC the current best is Virgin Money, has 5.25% 1 year fix available which is equivalent to 6.56% for comparative purposes in taxed interest. Note - you'd need a VM current account to open it.

    If you get it opened now you'll have at least 30 days to fund it and you can access the cash if necessary but at a 60 day interest penalty. 
  • badger09
    badger09 Posts: 11,063
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    soulsaver said:
    If you're using the £85k plus interest @ 5.5% for a year you'll be paying tax on a significant portion of the interest.

    If you can lock some of it up for a year and you've not used your ISA allowance, you can shelter £20k now and another £20k after April 6th.


    Have a search on here - but IIRC the current best is Virgin Money, has 5.25% 1 year fix available which is equivalent to 6.56% for comparative purposes in taxed interest. Note - you'd need a VM current account to open it.

    If you get it opened now you'll have at least 30 days to fund it and you can access the cash if necessary but at a 60 day interest penalty. 
    Or, if OP is more comfortable not fixing & possibly having to pay withdrawal penalty, a VM Defined Access ISA @ 4.96% (up to 3 withdrawals) isn’t far behind. It is variable rate though. 
  • Peregrina
    Peregrina Posts: 10
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    Thanks so much for these extremely valuable suggestions. I really appreciate your sharing your ideas and advice. I'll definitely check out these possibilities. Thank you very much again. 
  • Peregrina
    Peregrina Posts: 10
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    Hello again folks, I've been looking into the ISA option but don't really understand how it works with the thresholds or the implications. I am self-employed and may pay tax (i.e. I may earn above the personal allowance threshold) for this year. Would I be better opting for the Vanquis 90-day notice account (as I'll definitely be able to wait for three months to access the money) or an ISA given this has a £20k annual limit (and in that case should the rest go into a Vanquis 90 day notice account)? I'd be grateful for your advice as soon as possible as the maturity date is tomorrow.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,820
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    Peregrina said:
    Hello again folks, I've been looking into the ISA option but don't really understand how it works with the thresholds or the implications. I am self-employed and may pay tax (i.e. I may earn above the personal allowance threshold) for this year. Would I be better opting for the Vanquis 90-day notice account (as I'll definitely be able to wait for three months to access the money) or an ISA given this has a £20k annual limit (and in that case should the rest go into a Vanquis 90 day notice a

    If not you're ccount)? I'd be grateful for your advice as soon as possible as the maturity date is tomorrow.
    Do you have any other non savings non dividend income other than your self employment profits?

    If not you're looking at up to £6k taxable interest before paying tax on it.

    Say profits are £13,500 and you haven't applied for Marriage Allowance.

    That will leave you with £4,070 of the savings starter rate band and the £1,000 savings nil rate band to use.  Both of which have 0% tax rates.
  • soulsaver
    soulsaver Posts: 5,789
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    edited 26 January at 11:00AM
    £20k into an ISA and another 20k April 6th (24/25 tax year= new allowance). 
    If you tie the balance up in a 90 notice account, give notice immediately on the £20k you want for the 24/25 ISA.

    Investigate if the starting rate for tax on savings will apply to you. If it does you may not need an ISA at all.

  • Frequentlyhere
    Frequentlyhere Posts: 299
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    Vanquis looks like a good rate - it beats the 5.4% from FirstSave that is at the top of both Best savings accounts: 5.13% easy access or 5.16% fixed rates (moneysavingexpert.com) and Best 90 Day Notice Accounts | Compare Rates Today (moneyfactscompare.co.uk) lists. If you're sure you'll be able to give the 90 days notice before you need it for the deposit, that is - fine while you still haven't got a date for when you'll actually receive the inheritance, but perhaps when you do, it'd be a good idea to give the notice, and if you still haven't found a home after the 90 days, keeping it in an easy access account after that.
    Does anyone know why this Vanquis 90-day 5.5% account (still available) isn't on the top 90-day account MSE or moneyfacts leaderboard?  Am I missing something?
  • soulsaver
    soulsaver Posts: 5,789
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    Vanquis looks like a good rate - it beats the 5.4% from FirstSave that is at the top of both Best savings accounts: 5.13% easy access or 5.16% fixed rates (moneysavingexpert.com) and Best 90 Day Notice Accounts | Compare Rates Today (moneyfactscompare.co.uk) lists. If you're sure you'll be able to give the 90 days notice before you need it for the deposit, that is - fine while you still haven't got a date for when you'll actually receive the inheritance, but perhaps when you do, it'd be a good idea to give the notice, and if you still haven't found a home after the 90 days, keeping it in an easy access account after that.
    Does anyone know why this Vanquis 90-day 5.5% account (still available) isn't on the top 90-day account MSE or moneyfacts leaderboard?  Am I missing something?
    I am looking at this account, too. My question for them is what notice is given for a rate reduction - can't see it covered in the terms.
  • Muttleythefrog
    Muttleythefrog Posts: 19,694
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    edited 29 January at 12:34PM
    Vanquis looks like a good rate - it beats the 5.4% from FirstSave that is at the top of both Best savings accounts: 5.13% easy access or 5.16% fixed rates (moneysavingexpert.com) and Best 90 Day Notice Accounts | Compare Rates Today (moneyfactscompare.co.uk) lists. If you're sure you'll be able to give the 90 days notice before you need it for the deposit, that is - fine while you still haven't got a date for when you'll actually receive the inheritance, but perhaps when you do, it'd be a good idea to give the notice, and if you still haven't found a home after the 90 days, keeping it in an easy access account after that.
    Does anyone know why this Vanquis 90-day 5.5% account (still available) isn't on the top 90-day account MSE or moneyfacts leaderboard?  Am I missing something?
    Good question... can't see any reason why it shouldn't be. It seems to have been on the market since autumn. So my question also is is it an erroneous omission or is there something I'm missing. It definitely seems to still be available to apply for.
    "Do not attribute to conspiracy what can adequately be explained by incompetence" - rogerblack
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