House deposit partly in Premium Bonds: keep in there or move to other account?

[GoldOnyx]

Hi all,

Looking to buy a house/flat in the next year, and some of my deposit is in Premium Bonds, in which I have the full £50k holding. I’ve had the Premium Bonds for about 10 years now, with the full holding, and generally won something most months.

I’m just wondering if I should put the PBs in another account instead, to get a guaranteed return each month (which I won’t necessarily get with PBs)? I have the rest of my deposit in a couple of other accounts (both cash, with decent-ish returns (4-4.5%), and I’m a basic rate taxpayer.

Thanks!

It all depends on whether you’d rather have a guaranteed return or the chance of winning more. You’ll most likely get more interest if you move the money elsewhere - but that doesn’t mean you definitely will. So it’s really a personal decision!

I had £50k in premium bonds before buying my first house and am building them up again now because I am happy to take the risk of losing guaranteed returns for the possibility of winning big. You may or may not feel the same.

That said, do you have a LISA? It depends on your age and the house price bracket you want to buy in, but that could be worth considering for some of your ££ if you don’t have one. If you put £4k in this tax year and £4k in the next one (so before and after 5 April?) you’d get £2k added on plus any interest.

(Not sure about the tax side of things sorry)

I'm going to be in a similar position later this year and have decided to put the £50K in Premium Bonds for a while to see what wins I get. In all honesty, tax avoidance is part of it as well. You do know you'll have to pay tax on your interest if you move the money to other kinds of savings platforms, right? Unless you put £20K in an ISA and as soon as the tax year ends open up another ISA and put in £20K.

Thanks for your post snowyglobe. Yep I have a LISA, but I’m looking at buying somewhere over the LISA eligibility limit. I agree with you that the decision on whether or not to keep money in PBs depends on appetite for a guaranteed monthly return vs the chance each month of potentially winning big tax-free and, to be honest, I’m swayed by both arguments. As I’m planning to buy a house pretty soon (next year), I’m tempted to keep the money in PBs for now tbh.