25k, what to do with it

[Amichelle84]

We were gifted 25k for a house deposit but sadly we can no longer get a mortgage as our childcare costs basically equates to one of our salaries so we will have to wait a few years.

What would you do with this money so it's not just sitting in our account?

Are there special ISAs? I'm not financially savvy at all.

If you are under age 40 and you are saving towards a first home purchase, you could use a Lifetime ISA. You can only put in £4k per financial year but you get a 25% bonus added. Only use Lifetime ISA if you are a first time home owner as otherwise withdrawal for other reasons before age 60 come with a penalty.

Short term (3 years or less) use a cash ISA, or savings account - whatever you can find paying as high an interest rate as possible. It will deprecate due to inflation.

Look at overall finances, if you have any high interest consumer debt such as credit cards, car finance, then pay that off.

Thank you, I'll look in to that as we are both under 40 and first time buyers. Luckily we don't have any debt to pay off.

£4k each to Lifetime ISA. There are a few providers, look at Beehive, Moneybox.
Then keep rest in an savings account or in NS&I Premium Bonds.
On April 6th 2023, put £4k each in to Lifetime ISA.
At this point the LISA has at least £10,000 each in it, which you can use towards a first home purchase. You put in £16k, it has gone to £20k. Good return on investment.

The rest is an emergency fund to help with unexpected costs, which can happen with a home purchase quite easily.

If you do not buy a home in late 2023 (have to have LISA open for 12 months before it can be used), then April 2024 you can put more in to the LISA.

You will probably need it to pay the energy bill, which is projected to be well over £5k per household by this time next year.

Yup, agree with @nannynick ! Use the fist time buyers ISAs and the rest in premium bonds. You generally win prizes that match the sort of interest rates you would get elsewhere, but there's always that chance of winning big!

Varoty has a good point... given the rising energy costs, having a larger than usual emergency fund may come in handy to pay the energy bill.

I remember my Nan having premium bonds, will look at those.

Thank you so much everyone. Feeling more positive after feeling so down about not getting a mortgage. Everything happens for a reason and we will be better positioned in a few years time.

You can get an ISA that is for saving for propety and the government also deposit money too. But you could buy premium bonds. You can take back the money at any point