Savings overhaul required

Klare1

Daughter is 22 and has finished uni with only tuition fees and minimal maintenance loans outstanding.
She works for a well known supermarket 12 hour per week contract but usually works around about 30 hours and has worked there for 18 months.
She is keen to move to London or Manchester to pursue her chosen carer path so will need to start looking to rent somewhere.
Currently has ISA £17K paying 4% but would have to close if she made an withdrawl. Also has help to buy ISA that can still be activated but has nothing in it currently. She has £11K in her graduate current account paying zero interest.
She also has a Starling account with a zero balance.
 
We currently pay her mobile phone until the end of contract in Summer 2024. And has no credit card etc.

We’ve checked credit score and its good/excellent (Experian 966) 
If she moves and becomes a renter is it best that she keeps her ALL her savings in easy access until career progresses or move some into her HTB ISA (bonus would have to be claimed by 1/12/30) but there is no guarantee that she will ever buy)
Would she be wise to take out a credit card (Paying off IN FULL)? As this will build her credit rating -does that help with getting approved by landlords?

As we’ve never rented this is all new and we’re keen to set her on the right path. We are happy to be rent guarantors if necessary.

She doesn't want to move until she has a job to go to but is also willing to work part time in the Supermarket.  

Thanks in advance for any advice

subjecttocontract

She may be restricted as to which rental properties will be available to her. Many landlords now expect their tenants to meet the criteria for rent guarantee insurance. If she doesn't meet the criteria she won't be offered a tenancy. It really depends on the level of rent & her earnings.

Albermarle

Also in many areas the rental market is very hot and difficult to get a place.

What is happening in the rental market? — MoneySavingExpert Forum

elkiedee

If she has a really good credit score already she doesn't need to take out more credit/potential debt to build it, surely.

I think she could probably get an ISA account with slightly less restriction, that she could withdraw from if needed without having to close, and a higher interest rate. She would need one that accepts transfers in, then ask for it to be transferred (rather than take it all out and pay it back into the new account herself). She could also open an easy access account that would pay a small amount of interest and split the £11,000 now in her current account between that and her ISA, especially if it's a more accessible account. Opening a range of accounts for slightly different purposes might not get the best rates on all of them, but it's easier to manage online/keep an eye on them all.

 I've opened a second current account with a debit card but no overdraft - exactly what I wanted - with the Nationwide, a Triple Access Online ISA at 4.25% variable which I've transferred most of my existing old savings in a Nationwide account earning 2.3% recently and almost nothing for some years before that, an instant access saver at 3.25% variable which is for money I expect to spend over the next few months on some things for the household, clothes for me, some school uniform bits for my younger son, but it will get a few pence interest until I need to use it. I can move money between current account and savings accounts really easily. And I have opened a Regular Saver account with the maximum £200 monthly payment - I don't expect to be able to pay in nearly as much in the next 11 months but I will get the headline rate of 8% on £200, which is more than any of my other accounts would pay on that sum, and I will probably add a little each month, even if I have to move it from the more accessible savings accounts earning less (not the Triple Access ISA though) and see how I go. The advantage of this is that I can keep tabs on all this together through online banking.

cloud_dog

Is there a reason a Lifetime ISA is not being investigated / used?

Exodi

cloud_dog said:

Is there a reason a Lifetime ISA is not being investigated / used?

The OP said "there is no guarantee that she will ever buy".

The problem with the LISA is that, unlike the HTB ISA, you are penalised for withdrawing the money.

See Martins recent letter for an example: https://blog.moneysavingexpert.com/2024/01/martin-lewis--letter-responding-to-the-chancellor-on-lifetime-is/

"On £20,000 saved, the 25% bonus added is £5,000, but the withdrawal penalty is £6,250, so they end up with £1,250 LESS than what they put in."

Of course they could just leave the money for retirement if they don't decide to buy, though I'm sure the idea of tying up all a significant portion of your savings as a youngster isn't like to be a popular one, especially on top of already contributing through a workplace pension.

Klare1 said:

Currently has ISA £17K paying 4% but would have to close if she made an withdrawl.

Would she consider investing? She could retain ISA status in a S&S ISA and most would expect it to exceed 4% over the long term (presuming she invested sensibly in some broad market index funds).

Klare1 said:

Also has help to buy ISA that can still be activated but has nothing in it currently. 

I'm not sure where you live but in many places these are nearing useless as the cap of £250k (£450k in London) has not been increased since it was introduced in 2015. Unfortunately we cannot say the same about house prices.

Klare1 said:

She has £11K in her graduate current account paying zero interest.

Crazy, she could open account with someone like Tandem, transferring the money backwards and forwards at whim as and when she needs it (usually arrives in a couple of hours). The rate is 4.9% meaning her £11k would gain her £45 in interest every month. Separately, I can't see many people needing immediate access to £11k.

Klare1 said:

Would she be wise to take out a credit card (Paying off IN FULL)? As this will build her credit rating -does that help with getting approved by landlords?

As we’ve never rented this is all new and we’re keen to set her on the right path. We are happy to be rent guarantors if necessary.

I expect a guarantor will be necessary in most cases and in such event, they're unlikely to credit check your daughter. I acted as a rent guarantor for my parents recently (they were moving back to the UK) and there was very little interest in their finances, though the same couldn't be said for me. I had to provide proof of home ownership, payslips, etc.

Exodi

Albermarle said:

Also in many areas the rental market is very hot and difficult to get a place.

What is happening in the rental market? — MoneySavingExpert Forum

Yes, and this. 

Helping my parents searching was a real eye-opener. Properties with double digit number of viewings booked, people reserving properties that they hadn't even viewed to beat the crowd, I had to pay a fee to 'secure' the property which in normal times I would have been against, had I not spent the whole week calling nearly every estate agent in the county.

It was at a point where I'd be viewing properties listed that day on OnTheMarket/RightMove so I could immediately call the estate agent to get a viewing arranged, any property listed more than a few days ago was as good as gone. The property they did eventually get still had the previous tenants stuff into it as they'd only left a few days before, the house was given a touch-up after they had moved in (a condition they had to agree to else forfeit the property).

Chaos. I don't envy renters.

jimjames

Exodi said:

Albermarle said:

Also in many areas the rental market is very hot and difficult to get a place.

What is happening in the rental market? — MoneySavingExpert Forum

Yes, and this. 

Helping my parents searching was a real eye-opener. Properties with double digit number of viewings booked, people reserving properties that they hadn't even viewed to beat the crowd, 

Chaos. I don't envy renters.

Totally agree. Recently needed to get new tenants for one of my properties having had same ones for last 10 years. Advertised via OpenRent rather than using an agency and we had 75 applications for it, many of them would have been suitable, some less so but it really came down to the info provided to even choose who to allow to view rather than even getting to the stage of credit checking. At the time in our local area it was one of only 3 two bed properties advertised.

xylophone

Consider applying to  Principality ISA to arrange transfer in from existing provider?  

https://www.principality.co.uk/savings-accounts/isas/Online-ISA

Once  achieved, she could add to it from the money in the non interest paying current account. Note that it is a flexible ISA.

 With regard to renting in London or Manchester, I wonder would it be worth exploring sharing a student property?

She is still young herself and it might suit her for a year or so while she is finding her feet in a new city?

powerspowers

Don’t share with students as she’ll end up liable for all (or 75%) of the council tax. 

Albermarle

xylophone said:

Consider applying to  Principality ISA to arrange transfer in from existing provider?  

https://www.principality.co.uk/savings-accounts/isas/Online-ISA

Once  achieved, she could add to it from the money in the non interest paying current account. Note that it is a flexible ISA.

 With regard to renting in London or Manchester, I wonder would it be worth exploring sharing a student property?

She is still young herself and it might suit her for a year or so while she is finding her feet in a new city?

There are plenty of HMO's in big cities that cater for young adults/professionals. Same as with a student house, you get your own room with shared bathrooms/kitchen/ lounge.