ISA advice

interestedsaver7

Hi, I have 10k in savings and wish to put it in an ISA however I am in the process of buying a new house and although I may not need the money out again there is a chance. So I don't think an ISA that is fixed for 1 year is suitable. What is the best way to handle this 10k that I may or may not need access to before the year is up?

eskbanker

interestedsaver7 said:

Hi, I have 10k in savings and wish to put it in an ISA however I am in the process of buying a new house and although I may not need the money out again there is a chance. So I don't think an ISA that is fixed for 1 year is suitable. What is the best way to handle this 10k that I may or may not need access to before the year is up?

ISAs are unusual in that you can access the funds even if they're in a fixed-term product, albeit there'll generally be a penalty for doing so, whereas non-ISA accounts will typically entail the money being completely locked away.

However, you'd need to make a judgement call as to how likely it would be that you'd need access, in terms of the potential cost of doing so, so it may make more sense just to use an easy access account instead of a fixed term one.

Perhaps also worth bearing in mind that, unless you have substantial other savings, there may not be any advantage in using a tax shelter if you wouldn't be paying any tax on the interest anyway, by virtue of your personal savings allowance?

mebu60

interestedsaver7 said:

Hi, I have 10k in savings and wish to put it in an ISA however I am in the process of buying a new house and although I may not need the money out again there is a chance. So I don't think an ISA that is fixed for 1 year is suitable. What is the best way to handle this 10k that I may or may not need access to before the year is up?

An easy access account, can be ISA or non-ISA, as @eskbanker says the latter may be better option if you are not at risk of breaching your personal savings allowance this tax year. 

LHW99

And if you don't need (all) the money it could always be transferred from the easy access ISA to a fixed rate one later.

Yorkie1

LHW99 said:

And if you don't need (all) the money it could always be transferred from the easy access ISA to a fixed rate one later.

Although I believe it is still the case that if it's funds which were deposited this tax year, you can't do a partial transfer of that amount.

eskbanker

LHW99 said:

And if you don't need (all) the money it could always be transferred from the easy access ISA to a fixed rate one later.

Indeed, although the market-leading easy access ISAs currently have better rates than the fixed ones anyway, although if/when the base rate drops, that's likely to change....