Savings/Investments advice
Discussion
Mrs S47 has changed jobs and is keen to squirrel away £200-£400 per month for our next big house deposit (rather than use it to overpay the mortgage). What is the easiest/best way to invest/save this cash that offers interesting returns? We're total amateurs when it comes to this so any advice is welcome! I appreciate that a decent high street bank savings account is very easy, but doesn't necessarily maximise our money over 2-3 years (rough timeline)
Sharted said:
I don't understand your reasons for not wanting to overpay your existing mortgage. Is the mortgage rate very low?
I noted the OP talks of "saving for the next deposit" so I guess paying down the existing mortgage wouldn't help. The next deposit needs to be paid several weeks before the existing mortgage is redeemed. That's my guess anyway. Because you are right, the general rule is "there's no point borrowing money you've already got"!
Claudia
Claudia Skies said:
I noted the OP talks of "saving for the next deposit" so I guess paying down the existing mortgage wouldn't help. The next deposit needs to be paid several weeks before the existing mortgage is redeemed.
That's my guess anyway. Because you are right, the general rule is "there's no point borrowing money you've already got"!
Claudia
I wondered as much but wanted to be sure.That's my guess anyway. Because you are right, the general rule is "there's no point borrowing money you've already got"!
Claudia
I've never paid a deposit other than the equity that I transfer to the new property and wouldn't do so either.
Claudia Skies said:
Sharted said:
I don't understand your reasons for not wanting to overpay your existing mortgage. Is the mortgage rate very low?
I noted the OP talks of "saving for the next deposit" so I guess paying down the existing mortgage wouldn't help. The next deposit needs to be paid several weeks before the existing mortgage is redeemed. CountZero23 said:
+ 1
With most mortages you will be charged more interest than you're savings will accrue. Safest way would be to overpay.
+2With most mortages you will be charged more interest than you're savings will accrue. Safest way would be to overpay.
its also what Martin Lewis would say - the best return on any savings is to pay off current loans, including mortgage payments.
Savings rate circa 1% versus paying down the existing mortgage at around 4%.
OK, what if the OP's missus just got a job and was say, 54? What if she invested say, 8k into a pension over the course of a few years but for safety, invested in a cash fund? Then, having started a new plan when the first got to, say, £9800 gross, what if she got it out in one go using triviality regulation and having got a rather attractive 40% tax relief? Paying off a mortgage still the only option?
Lewis was the genius who advised people to invest in Icelandic banks.
A bird in the hand..?
Lewis was the genius who advised people to invest in Icelandic banks.
A bird in the hand..?
TheHound said:
This doesn't make sense. All OP needs to do is agree that their deposit (at exchange) for their new house is equivelant to that they are receiving from their purchaser. Accordingly, no need to actually put down a separate cash deposit.
That often doesn't work in a chain of transactions where everyone is "trading up". Firstly, you need to agree that a deposit received can be used to pay the next deposit - this is often refused. Secondly, if everyone is "trading up" the deposit at the bottom of the chain may be too small to be acceptable at all by the time it reaches the top.It all depends on the circumstances of the particular transactions. IMO it's prudent to have some "cash in hand" if you know you're going to move house fairly soon. Otherwise my preference is always to pay down debt.
Mortgage overpayment aside, the best return on around £300/month for the first year could be a regular saver account of some kind. First Direct pays 6%.
After the 12 months (£3K) it's 'full' so you need to find another home for it, but you can then open another account with the same bank and keep saving into that.
http://www.moneysavingexpert.com/savings/best-regu...
After the 12 months (£3K) it's 'full' so you need to find another home for it, but you can then open another account with the same bank and keep saving into that.
http://www.moneysavingexpert.com/savings/best-regu...
Claudia Skies said:
That often doesn't work in a chain of transactions where everyone is "trading up". Firstly, you need to agree that a deposit received can be used to pay the next deposit - this is often refused. Secondly, if everyone is "trading up" the deposit at the bottom of the chain may be too small to be acceptable at all by the time it reaches the top.
It all depends on the circumstances of the particular transactions. IMO it's prudent to have some "cash in hand" if you know you're going to move house fairly soon. Otherwise my preference is always to pay down debt.
From my experience a good solicitor/conveyancer should be able to negotiate the chain and make sure the deposit at the bottom is enough to pass all the way up the chain. It all depends on the circumstances of the particular transactions. IMO it's prudent to have some "cash in hand" if you know you're going to move house fairly soon. Otherwise my preference is always to pay down debt.
At the end of the day the solicitors hold onto this money until completion, so no individual buyer benefits from this (apart from peace if mind that some commitment has been made) and if it falls apart after the exchange, you would sue for completion.
However, I must cavaet that I have never been involved in an extreme chain where it starts with a very low value property and eventually ends at a property worth well over 7 figures. I guess I could see the problem in this scenario, however, this sort of thing (again in my experience) is rare.
silentbrown said:
Mortgage overpayment aside, the best return on around £300/month for the first year could be a regular saver account of some kind. First Direct pays 6%.
After the 12 months (£3K) it's 'full' so you need to find another home for it, but you can then open another account with the same bank and keep saving into that.
http://www.moneysavingexpert.com/savings/best-regu...
Don't be fooled by the headline rates on these regular saver accounts, what you actually get back, after a year, is less. The interest in calculated on a daily basis and paid once a year, so the first months £300 will achieve the full rate, but the later months investments will not. I think they're a bit of a con. After the 12 months (£3K) it's 'full' so you need to find another home for it, but you can then open another account with the same bank and keep saving into that.
http://www.moneysavingexpert.com/savings/best-regu...
megaphone said:
Don't be fooled by the headline rates on these regular saver accounts, what you actually get back, after a year, is less. The interest in calculated on a daily basis and paid once a year, so the first months £300 will achieve the full rate, but the later months investments will not. I think they're a bit of a con.
Thats true - but also not.If you have a lump sum of (say) £12k and pay it in in 1-monthly £1k installments, then your not going to get the full rate on the whole balance - it'll work out roughly half the rate. But the OP doesn't have a lump sum.
If you have £1k a month to save, then you'll get the full rate on installment for every full year it's invested - fair enough.
If you have the lump sum, theres nothing to stop you putting it in a good "standard" savings account to earn good interest until it's time to transfer it to the regular savings account to get an even better rate - i.e. the best of both worlds.
megaphone said:
Don't be fooled by the headline rates on these regular saver accounts, what you actually get back, after a year, is less. The interest in calculated on a daily basis and paid once a year, so the first months £300 will achieve the full rate, but the later months investments will not. I think they're a bit of a con.
I think the clue is in the name "Regular Saver". You don't expect them to pay interest on money you haven't yet invested, surely? FWIW, I think the "con" is the way they revert to a near-zero interest rate at the end of 12 months.OP wanted to squirrel away £200-£400 per month. This is perfect for regular saver accounts, but yes, you're left with the challenge of where to invest the 'lump sum' and the end of each year. Multiple regular savers account from multiple banks is possible, but a pain, dribbling the lump sum into each over the course of the year. You'd basically get roughly half the headine rate, which is still a lot better than most savings accounts.
silentbrown said:
megaphone said:
Don't be fooled by the headline rates on these regular saver accounts, what you actually get back, after a year, is less. The interest in calculated on a daily basis and paid once a year, so the first months £300 will achieve the full rate, but the later months investments will not. I think they're a bit of a con.
I think the clue is in the name "Regular Saver". You don't expect them to pay interest on money you haven't yet invested, surely? FWIW, I think the "con" is the way they revert to a near-zero interest rate at the end of 12 months.OP wanted to squirrel away £200-£400 per month. This is perfect for regular saver accounts, but yes, you're left with the challenge of where to invest the 'lump sum' and the end of each year. Multiple regular savers account from multiple banks is possible, but a pain, dribbling the lump sum into each over the course of the year. You'd basically get roughly half the headine rate, which is still a lot better than most savings accounts.
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