What to do with cash from house sale while waiting to buy?

[KobaniDaughters]

Per title really, our house goes on the market next week and we’re looking at either renting or buying something very cheap while we figure things out so what should we do with the cash made from our sale in the meantime? Seems silly for it to just sit in a normal account?

You can buy up to £50000 in premium bonds in each persons name - easy to access and you could win! My husband did this when he sold his house before we bought ours. He averaged out winnings at about 1.4%

It depends if you want the guarantee of the current amount, how much you are talking about, how easily you need to access etc.

Put it in regular accounts, spread across banks just in case (can't rember the £ threshold for bank guarantee) whilst you research options.

How long will it be before you buy? If less than six months I would not worry.

For first 6 months you have High Balance protection when it is just kept in your normal bank account - FSCS protection.

How long a period of time are you thinking it will be until you buy?

With Notice accounts may give some interest, but it will be lower than inflation so the money loses value in real terms.

We put ours in an nsandi direct saver. Interest has dropped a lot since tho and only 0.5%. But at least it’s completely protected and you can get it out whenever you like
www.nsandi.com/products/income-bonds

I’ve no idea how long it could be - in this market nothing is a given but if we rent we are likely to have to put down at least 6months upfront. Money could be sat there for a year or more….

If it’s more than £85k per person then you need to spread it around different institutions. You could put 50k each into NS&I premium bonds. Then 85k each into either 1yr saving bonds or notice accounts if you’re sure you won’t need access and can give the notice period. Money saving expert may have some decent account recommendations.

Leave it in a normal savings account. If you need it for your house purchase you can’t risk losing any money. Investments that return high percentage yields are for the long term.

I'd put it in premium bonds
In fact that's exactly what I did

@candlebra I don’t think anyone has mentioned investments. That’d be crazy. As would leaving it all in a savings account.
In the unlikely event that a bank goes bust you are only covered for the first £85k per person across the accounts you hold with that institution. Leaving the proceeds of a house sale in one bank is risky. I’d definitely spread it around in premium bonds, notice accounts etc. not investments.

[quote NotDonna]@candlebra I don’t think anyone has mentioned investments. That’d be crazy. As would leaving it all in a savings account.
In the unlikely event that a bank goes bust you are only covered for the first £85k per person across the accounts you hold with that institution. Leaving the proceeds of a house sale in one bank is risky. I’d definitely spread it around in premium bonds, notice accounts etc. not investments.[/quote]
Appreciate what you’re saying and yes I’m sure it’s sensible to spread across various banks. I always think if a big bank goes bust then we’ve got bigger problems than the loss of a house deposit.

The OP’s question was what to do with the cash. I only mentioned investments because if you have money invested already it’s easy to get carried away with good returns when the market is favourable. It would be very tempting to think that those returns could translate into a 10% profit in a year. And of course they could. But could also see a big drop if you only invest for a short time.

You can put the whole lot in an NS&I savings account and it will be protected - there is no limit because it’s backed by the Treasury.

So you could max out on premium bonds and put anything left into an NS&I account.

www.nsandi.com/get-to-know-us/security/protect-your-money

We put it in our savings account which can be transferred to our current account on line. We had to be able to prove that the cash was instantly available and had to show bank statements. We then bought a new build and just transferred the money to the seller's solicitor. We paid a deposit and completed in just 13 days.

Thanks for this - will
Check out NS&I it’s likely to be a substantial sum and we have the added complication of being dual US/U.K. citizens so tax implications on investments

I put 50k of my inheritance into premium bonds, it's part of our deposit for moving house which may hopefully happen this year. I made £575 in 12 months from the prize fund so better than my savings account with a 0.1% return for sure.

@nannynick

For first 6 months you have High Balance protection when it is just kept in your normal bank account - FSCS protection.

How long a period of time are you thinking it will be until you buy?

It will be loosing in value from day 1. Inflation is at 7% right now. Most current accounts pay diddly squat interest

Clearly you’ll have to receive monies there, but Avoid holding it there- take it in then move out and spread between banks up to the £80k Protection each.

Look for either NS&I premium bonds or instant access savings accounts
None of them pay great interest…premium bonds works out at about 1% currently with average luck, and there are quite a lot of instant access savers at 1% ….but it is better than nowt! If you know your not going to access it for a few months, then access in one hit you could look at notice accounts, withdrawal limit accounts. But that does tie you into a bank at a time when rates are rising

Then watch the rates…move money fast as soon as you see a better interest rate…move and move again…rates are going up fast right now . I review MSE each month to look at best rates