Best 12-month option for £100k?

savingbunny

Hi, I will be receiving ~£100k inheritance at the end of the month. I am married with a Help to Buy loan on our mortgaged house. We discussed potential options with a financial advisor and decided our best option is to pay off the help to buy loan when we reach the end of our mortgage term Dec 2025.

So, my question is... Where do I put the £100k in the meantime? My husband and I have deduced that if we each open a cash ISA with £20k in that is the best starting point. But then what do we do with the remaining £60k? My brain is fried looking at all these different accounts lol. We are looking at a risk-free options only, so no stocks and shares.

Any help/advice greatly appreciated 👍🏼

Mark_d

You can easily put up to 50k in to premium bonds.  Your money is completely secure and your expected return is something like 4% tax free.

Middle_of_the_Road

Mark_d said:

You can easily put up to 50k in to premium bonds.  Your money is completely secure and your expected return is something like 4% tax free.

Or you could put 30k in each of your names. 

Otherwise, if you prefer a savings account, the best rate is currently on a 90 day notice account paying 5.3% variable.

https://www.dfcapital.bank/savings/notice-accounts/

Albermarle

If you will not need the £60k for a year,  you can put it in a one year fixed savings account . However you may have to pay some tax on part of the interest. Less so if you split it between you or have a joint account.
As said above Premium bonds are also a possibility, although again you would have to both have some as £50k is the max holding.
Or you could have some in Premium Bonds and some in a savings account.

gravel_2

ISA each is a good start. You haven't provided enough information to assess normal use of savings accounts and the tax free amounts that can be earned by you and your wife.

Above post recommends PBs. If you put in  £60k between the two of you then the median return is ~3.9% but I believe average luck would be a return of approx 3.5%. This is "good" if you would otherwise pay income tax on earned interest. If not, and you want certainty, then a normal fixed rate will be better for you.

kempiejon

savingbunny said:

Hi, I will be receiving ~£100k inheritance at the end of the month. I am married with a Help to Buy loan on our mortgaged house. We discussed potential options with a financial advisor and decided our best option is to pay off the help to buy loan when we reach the end of our mortgage term Dec 2025.

So, my question is... Where do I put the £100k in the meantime? My husband and I have deduced that if we each open a cash ISA with £20k in that is the best starting point. But then what do we do with the remaining £60k? My brain is fried looking at all these different accounts lol. We are looking at a risk-free options only, so no stocks and shares.

Any help/advice greatly appreciated 👍🏼

In Dec 2025 would the whole sum be directed to paying off the house?
In the short terms filling an ISA each removes that money from tax liability. There might be the chance for another ISA and £20k each after April.  While you wait for a new tax year that £60k could gain £3k in interest annually, do the pair of you have earning such that there would be a tax bill? Nothing wrong with paying tax mind but it might alter responses.

Short term, tax invisible, safe place one might put £50k is premium bonds. One could hope for a few £k in wins, tax free between now and December 2025. The best savings rate after tax might beat that but your tax positions might affect these calcs.
Paying of debts is a good plan, if you've seen a financial advisor I'm surprised there's not more ideas for £100k, perhaps not relevant here.
Would the Help to Buy, maturity date of Dec 2025 use up all the cash or might this be part of a longer term savings commitment with some of the money? What about the rest of the house?

My sums have left out £10k so lets check you've paid all unsecured debts, considered extra payments to the mortgage, I'd be remiss not to mention pensions but your comment about shares and risk free probably means you're not fussed about that. With a windfall there nothing wrong with being a bit indulgent, treat yourselves or something to remember the beneficiary by.

savingbunny

kempiejon said:

savingbunny said:

Hi, I will be receiving ~£100k inheritance at the end of the month. I am married with a Help to Buy loan on our mortgaged house. We discussed potential options with a financial advisor and decided our best option is to pay off the help to buy loan when we reach the end of our mortgage term Dec 2025.

So, my question is... Where do I put the £100k in the meantime? My husband and I have deduced that if we each open a cash ISA with £20k in that is the best starting point. But then what do we do with the remaining £60k? My brain is fried looking at all these different accounts lol. We are looking at a risk-free options only, so no stocks and shares.

Any help/advice greatly appreciated 👍🏼

In Dec 2025 would the whole sum be directed to paying off the house?
In the short terms filling an ISA each removes that money from tax liability. There might be the chance for another ISA and £20k each after April.  While you wait for a new tax year that £60k could gain £3k in interest annually, do the pair of you have earning such that there would be a tax bill? Nothing wrong with paying tax mind but it might alter responses.

Short term, tax invisible, safe place one might put £50k is premium bonds. One could hope for a few £k in wins, tax free between now and December 2025. The best savings rate after tax might beat that but your tax positions might affect these calcs.
Paying of debts is a good plan, if you've seen a financial advisor I'm surprised there's not more ideas for £100k, perhaps not relevant here.
Would the Help to Buy, maturity date of Dec 2025 use up all the cash or might this be part of a longer term savings commitment with some of the money? What about the rest of the house?

My sums have left out £10k so lets check you've paid all unsecured debts, considered extra payments to the mortgage, I'd be remiss not to mention pensions but your comment about shares and risk free probably means you're not fussed about that. With a windfall there nothing wrong with being a bit indulgent, treat yourselves or something to remember the beneficiary by.

The help to buy is a 20% equity loan so unfortunately we don't know exactly how much we'll be paying until they value the house. Our estimate is we'll be paying back around £70k unless house prices fall dramatically.

We only pay basic rate tax if that's what you're asking? We both earn under 40k each and currently no savings. We have no debt other than our equity loan and the mortgage.

savingbunny

gravel_2 said:

ISA each is a good start. You haven't provided enough information to assess normal use of savings accounts and the tax free amounts that can be earned by you and your wife.

Above post recommends PBs. If you put in  £60k between the two of you then the median return is ~3.9% but I believe average luck would be a return of approx 3.5%. This is "good" if you would otherwise pay income tax on earned interest. If not, and you want certainty, then a normal fixed rate will be better for you.

Thanks, hadn't even considered premium bonds! What additional information would you need to assess which option would be best for us?

gravel_2

Do you earn? How much/what tax bracket? Do you have other unwrapped savings and how much do you each expect to earn annually from your existing savings?

savingbunny

gravel_2 said:

Do you earn? How much/what tax bracket? Do you have other unwrapped savings and how much do you each expect to earn annually from your existing savings?

I'm on 40k and my husband is on 35k. We don't have any savings currently.

eskbanker

gravel_2 said:

Above post recommends PBs. If you put in  £60k between the two of you then the median return is ~3.9% but I believe average luck would be a return of approx 3.5%.

Although there's no formal definition of the term, the 'average luck' return is generally considered to be the median return, as opposed to the mean (4.4%).