Proceeds from house sale

remyroo

Hi.
We are in the process of selling our house but sadly the owner of the property we are looking to buy has passed away so we will be renting until probate is granted.
My question is what to do with the proceeds from the sale of our house (approx £400000). Hopefully we will only be renting for 2 or 3 months but would like some returns on the money. It must be an easy access account obviously.
We haven’t been in this position before as previously sold and bought on the same day so any suggestions greatly appreciated.
Thanks

Voyager2002

Probate may take years rather than months. At the end of this process, the housing market may have changed and you might find that your funds are no longer sufficient to buy this house, nor any suitable property.

I suggest that you suspend your sale until you have found somewhere that is suitable and available now: up to you whether you look for another property to purchase, or simply remain in your present home until probate has eventually been completed.

Bigwheels1111

6 Months if you are lucky and probate is filled correctly.

Do you both work ?

20% tax or 40% etc.

Splist the cash into several acounts.

Whoever pays less tax put the cash in their accounts.

80% is better than 60% after tax.

Have you used your isa this year.

If not Trading 212 easy access isa is 5.1%.

A list of easy access.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/

I would only put 80k in any account.

85k is protected by FSCS.

Any interest over that would not be.

gwapenut

You can of course put £160k excl interest safely into a joint account. And theoretically your entire £400k would be protected for 6 months after your sale, but the FCA are a bit evasive about fine details on this, and 6 months often becomes a year, so it's best to hedge your bets and split your money.

gwapenut

Consider also the time taken to transer the 400k into your savings accounts. Banks have different daily limits, some as low as £25k. We used Nationwide who, if you groom the destination savings accounts a week in advance with about half a dozen test transfers, one a day, eventually up your transfer limit from 25k to £100k per Nationwide current account per day. So for a couple with two sole accounts and a joint account, you can shift £300k per day.  The loss of interest on your proceeds is probsbly about £50 per day currently, so the significance of low transfer limits should not be trivialised. They are currently, I think, the only current account providing high street bank / bs who offer above 4% in a high balance instant access saver (dropping the rate on the 4th withdrawal), which also reduces lost interest while shuffling money.

xylophone

You could put the lot in a joint savings account in NS&I.

https://www.nsandi.com/

1. You're in safe hands

   Most banks only guarantee your savings up to £85,000. We’re the only provider that secures 100% of your savings, however much you invest.

Money_Monkey

Just to keep things in balance and no guarantee you will have the same experience, but we applied for probate on 4th July, and were granted probate on 6th August and received a physical copy on 9th Aug.

boingy

You should definitely plan for probate taking a year or more but be ready to move sooner if it is quicker. Of the three probates I have recent experience of, one was 4 months, one was 9 months and one is 15 months and ongoing. None of them were complicated estates or had any issues. It was just a backlog at the probate office.

It's also worth mentioning that there is a period of time between death and the probate application, which depends on the efficiency of the executors and on how complex the estate is. The estate has to be valued, which means the executors have to track down all of the assets, which might might take some detective work.

You don't say how far into the buying process you are but if you have had an offer accepted it may not be valid after probate. The executors are obliged to get the best price so it might have be revalued and/or go back onto the open market. So it depends how much you want that particular house! 

As for where to put the money your only real option is easy access savings. You could put it all in NS&I Direct Saver @4% (decreasing to 3.75% next month). It's not a market leading rate but it's the simplest, fully protected option. The more complicated one is to open, say, five different accounts at different places and put 80K into each to stay below that £85k protection threshold.

MSE maintain a list of the best ones here:
Best savings accounts: 5% easy access or 5% fixed rates
Make sure you read the "rules" for each one, because there are often some weasel words in there.

That would maximise your interest but increase your admin, and possibly your stress levels when you try to withdraw it all. As mentioned above there is the option to split the money between you and your spouse and then you can each have £85k protection at each institution. It's also worth running some numbers on expected tax on the interest and splitting the money between you to make best use of any tax allowances you have - particularly useful if one of you is a low earner or a non-earner.

So basically to get that extra 1% or so of interest you have to put in quite a bit more effort. With a long probate it could be a significant chunk of money but only you can decide if it's worth it. 

poseidon1

gwapenut said:

Consider also the time taken to transer the 400k into your savings accounts. Banks have different daily limits, some as low as £25k. We used Nationwide who, if you groom the destination savings accounts a week in advance with about half a dozen test transfers, one a day, eventually up your transfer limit from 25k to £100k per Nationwide current account per day. So for a couple with two sole accounts and a joint account, you can shift £300k per day.  The loss of interest on your proceeds is probsbly about £50 per day currently, so the significance of low transfer limits should not be trivialised. They are currently, I think, the only current account providing high street bank / bs who offer above 4% in a high balance instant access saver (dropping the rate on the 4th withdrawal), which also reduces lost interest while shuffling money.

If they are with Lloyds bank, Lloyds permit  very generous fee free in branch faster payment transfers up to £250,000  (daily ) compared to their online line limit of £25,000. I have found the branch limit both convenient and useful. Of course you need to live in an area where Lloyds actually retain a branch (reducing yearly!).

WindfallWendy

As others have said, depending on the situation with the Will and who the Executors are, Probate will take time. A friend of mine had a really easy probate and whilst it was only about 3 weeks from her submitting the application to approval, there is still the practical time it can take to get around to paperwork. The most recent probate I had to put through took 16 weeks before they even looked at the application, and then, because my Dad's Will wasn't stapled they had to find the witnesses to verify that the Will I had sent them was complete. So that was a good 5 months of them mostly sitting on their hands. And also, whilst it's awful to say, we're getting towards the time of year when people pass away so the probate volumes go up.

I disagree with an earlier comment that the Executor would be obliged to get the best price for the house. The obligation it to manage the Estate as effectively and efficiently as possible. I put my parents house for sale through auction in an effort to get a sale through quickly rather than leaving it to the market (which at the time was slowing down as rates had started moving up). 

But - all things considered, unless you are really really set on the house, I'd personally think about looking for another.

And moneywise (the point of your post!!) I'd pop it into National savings if only to make sure it is 100% safe. 

remyroo

Thanks for all your advice. We have opened a Nationwide online flex account and a triple access saver account and have been informed by Nationwide that we can make a same day chaps payment for the whole amount from the flex account to the saver account and vice versa.