help with savings

lochness

ok so my mum is selling her house and has a large amount of equity and i was thinking of putting it in a savings account and using the monthly interest towards a rental property. Thing is i'm not sure how to accuratly find out how much interest my mum will actually get if she takes that money out of the account every month as i know it affects the interest she will eventually get.
question is when i look at the saving interest rate which gives me the actual amount she will get? Which is the highest and how do i figure out how much she will get if she takes the interest away.

Hope that makes sense any help is welcome as i'm getting quite confused over the APR,AER, Gross and Net!!

Lochness

Liz_the_Whizz

hi lochness,

Moneyfacts has a list of best monthly interest paying accounts:

http://www.moneyfacts.co.uk/savings/bestbuys/monthly-income-savings-accounts.aspx

For monthly income, you need to look at the gross interest column to work out what she would get before tax - AER only applies if the interest is paid into the account and compounded.

With the sums you are talking about, your mum is presumably a basic rate taxpayer, so she would receive her monthly interest payments net of tax. Tiscali Money Channel has a handy calculator to work out net from gross rates at the foot of its Savings page:

http://www.tiscali.co.uk/money/savings/

Depends how long the arrangement is intended to last, but your mum will also need to think about the erosion of her capital sum by inflation, especially over a prolonged period.