Where to keep money from a house sale until we find a house to buy

[anneofGreenGable]

We sold our house and moving to a rental. I am concerned about keeping all equity from the house sale in one savings account. Would you please let me know what are safe and effective ways of keeping the money until we find a house to buy. We are hoping to buy another house in few months time.

Keep it it in a NS&I account and max out your premium bond allowance. The money is protected up to its full value, banks only protect up to £85k.

You get higher than £85k savings protection if it's from a house sale-up to £1m for 6 months I think?

I'd take advantage of the interest rates and put blocks of £85K into different accounts. Chase easy access is 1.5%, Marcus is about the same, other easy access accounts are on MSE. Check the amount you can transfer per day for when you are buying, I got caught out with HSBC as it's only £25K per day.

Thank you so much to @JasmineIndigo @Salome61 @cowprintsocks

I've split ours into pots to max the interest:

Shawbrook 1.8%
Zopa 1.9%
Chase 1.5%
Tandem 1.6%

The £85k limit doesn't apply for money in this situation. Up to six months you're covered for up to £1 million in a bank account so there's no need to split it into different accounts.
www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

We put the max into premium bonds and the rest into one savings account.

put as much as you can in premium bonds. One account per person including any children.

If it is got just few months, would it make a difference for premium bonds please?

Premium bonds are a bit annoying for a short period as they are entered in the draw from the month after they're purchased so nothing happens at all for the first few weeks! It is however very easy to buy them online and they email/txt if you've won - you can also check on an app.

We've done it as we didn't know how long we'd need to do it for (turned out to be almost six months as took a while to buy a property) and have 'earned' more in prizes than we would have from interest so it was worth it in that respect but of course there are no guarantees with it! We have won multiples of £25, biggest amount was £125 one month.

With premium bonds, you'll lose a little with the bonds not being eligible for the draw until they've been in more than a month, eg if you buy in September, they won't go into the draw until 1st November.

Plus currently, the payout rate for PBs hasn't quite kept up with interest rates, which have increased a little.

And the payout is also down to luck. The closer you get to £50k, the more likely your prizes will be near the stated payout rate, which I think is about 1.4%. But as you're effectively gambling the interest you would receive on a savings account, you could get less, or more, possibly a lot more.

Over the last few years, I've had around £30k of PBs and my return has been just over 2% in 2019, 6% due to winning £1k during one month in 2020, 0.6% in 2021 and so far this year, I've won £200 on a holding of £25k, so overall I've probably had more than I would have had by putting the money in the best instant access savings account.

The £85k limit doesn't apply for money in this situation. Up to six months you're covered for up to £1 million in a bank account

Although this is true, if your bank was to suddenly get into trouble (think Northern Rock, or one of the Icelandic banks), would you want all your eggs in one basket?

I was in this position a while ago, and simply deposited £85k in various savings accounts (including cash & financial ISAs). It gave me peace of mind.

If you have a joint account, the amount protected is doubled

We put ours in NS&I

I suppose it's weighing up the risk and for how long re the eggs all in one basket. It's hassle opening bank accounts and doing all the ID verification etc and you do have to double check they really are different banks rather than different arms of the same thing.

I know I preferred keeping it in as few accounts as possible just from a simplicity POV - the hassle of opening the accounts, remembering different logins, keeping track of what was where and the interest, on top of demanding job and DC was too much. It was a total pain when we did come to buy just having to provide statements to the EA of what we had to verify our offer. But we do have the advantage of being able to have joint accounts so that doubled the amount protected in just one account.

I'd go for NS&I if safety is your priority rather than investment value

Thank you so much, we have decided to go with ns&i since it is for a short time

I typically win £50-75 per month with £40,000. My children tend to get £25-50 with £25,000.

Now you've chosen NS&I, when you are ready to buy, give yourself lots of time to transfer the funds. I got a bit panicky as it was taking two days per transfer, and ended up transferring it all back to my bank account.

Send it to me, I'll look after it for you. 😉