20k in Santander, where next?

Fusion said:
I know you said he's not too interested in mortgages (who is at that age?), but there are strong incentives to take one on early, or at least save for a deposit. It's one of those things where once you take one on, you think "damn, just wish I'd have done this earlier!"
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Couldn't agree more, I'm 28 :(
 
Santander have a 5% regular saver for 123 account holders. Max £200 a month, but thats a decent chunk (runs for 12 months)
Virgin money have a regular saver at 2.23%, max £250 a month, again 12 month term

Above 2 would pretty much cover the £500, well £50 short
 
MrB said:
You know you can have two Santander accounts, I think you need two direct debits for each, and would need to pay £500 from a non-Santander account into it every month.
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Just remember, if you're doing this, transfer some of the existing account into the new one so that you're above the threshold to be earning the 1.5% interest. Otherwise it's a lower amount.
 
Wish I'd been this sensible at that age instead of frittering it away on girls and getting smashed. Top effort! :p
 
TSB for 5% on £2k, just needs £500 a month going in, I use a standing order.

Lloyds do 3% on 5k and a monthly saver of £400 pcm for I think 3-5%. This needs two DDs and I think £1,500 in, I moved away as they let me down on insurance, otherwise they were faultless.
 
Kermit said:
LISA sounds like the thing for a young person saving for a home.
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To be honest, I was unsure whether or not to get a LISA (I'm 32). The only downside is the £450k limit on the price of a house. I doubt I'd find anything under that by the time I'm ready to buy, so I'm gambling that it will go up. If not, it'll just go into my pension as you don't get charged for that.

I'm really surprised this isn't a cut and dry decision for a LISA. He's undoubtably going to want to buy a house at some point in the future and that is going to use most of his savings. So should be taking advantage of it. Why faff around with a piddly 2-3% when there's 25% up for grabs.
 
WantoN said:
TSB for 5% on £2k, just needs £500 a month going in, I use a standing order.

Lloyds do 3% on 5k and a monthly saver of £400 pcm for I think 3-5%. This needs two DDs and I think £1,500 in, I moved away as they let me down on insurance, otherwise they were faultless.
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Tsb don't do 5% anymore on £2k. Well they don't for me as a current customer. Only 3% on £1500
 
Uther said:
My son is just about to get to the magic 20k mark in his Santander account, which means he will be looking for somewhere else for the £500 a month he sticks in it. He'll still cycle the money through Santander to trigger the interest obviously, but what options does he have for the money now?
He's 20, lives at home, and will do for a while yet I think. No debts. Sorting out a pension through work.I don't think he wants to think to much about mortgages at the moment either.
Any (sensible) ideas?
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Credit union
 
Liquid_Entity said:
Tsb don't do 5% anymore on £2k. Well they don't for me as a current customer. Only 3% on £1500
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Christ, I didn't even know! Shall move my money out thanks!

I use the Santander all in one credit card (full repayment on direct debit) for 0.5% cash back, as long as you're spending over a grand it's worth using. I pay for everything on it.
 
Moses said:
By 25% penalty, are you referring to how you lose the bonus which is given to you to put towards a house or retirement if you take your money out because you don't use it for a house or retirement? What a shock :p.
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Withdrawals for other reasons have a 25% penalty, equivalent to a loss of just over 6%. At first glance the fact you've had a 25% bonus added and then a 25% penalty would leave you back where you started. Yet unfortunately the maths doesn't work like that...

https://www.moneysavingexpert.com/savings/lifetime-ISAs

... Imagine you saved £1,000 in April 2017. At the end of year one (so April 2018), you'll get a £250 bonus, so you've £1,250 total (ignoring interest, for ease). If you withdrew it, and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back.

The way the maths works out is withdrawing for reasons other than LISA purposes loses you 6.25% of what you contributed.
 
Moses said:
Well, he could save and buy without a mortgage, using a help to buy ISAs and a Lifetime ISA... but it's basically a stupid view to have. You need to explain that there's nothing wrong with getting an affordable mortgage, etc, etc... I mean, mortgages are cheaper than rent. Unless he's just planning on living at home forever or something.
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Yeah I missed this part of the OP actually. He probably needs educating on rent versus mortgages to be honest. Just tell him how I live round the corner from an ex-colleague of mine who is older than me. He bought a 4 bed house probably 15-20yrs ago, whereas I've been renting in the area for nearly 8 years. He pays less than half on his 4 bed house's mortgage than I do for my 2 bed flat :) An extreme example, but mortgages go down over time, whereas rent always goes up.

VincentHanna said:
Withdrawals for other reasons have a 25% penalty, equivalent to a loss of just over 6%. At first glance the fact you've had a 25% bonus added and then a 25% penalty would leave you back where you started. Yet unfortunately the maths doesn't work like that...

https://www.moneysavingexpert.com/savings/lifetime-ISAs

... Imagine you saved £1,000 in April 2017. At the end of year one (so April 2018), you'll get a £250 bonus, so you've £1,250 total (ignoring interest, for ease). If you withdrew it, and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back.

The way the maths works out is withdrawing for reasons other than LISA purposes loses you 6.25% of what you contributed.
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Yeah it's very cheeky this. But like I say I just accepted the fact that I put in £4k a year which will hopefully be towards a house, if not it'll still be £4k well-saved for my pension. I have other savings going into an easy-access ISA anyway, so it's not the end of the world.
 
It's been a while since i set up my current accounts, but if he doesn't mind a bit of effort setting them up and sorting out the cycling payments, then as follows:
Nationwide, iirc was 5% on upto 2.5k, 1k pay in, no D/D (only lasts 12 months though)
TSB, iirc was 5% on upto 2k, 500 pay in, no D/D
Tesco, iirc was 3% on upto 3k, no pay in, no D/D (Can open two of these)

Think there was a BoS account with 3% on upto 5k, but i think that required some D/Ds.
 
Uther said:
Yep, whilst working for McD's too! I would suggest the ISA, but he seems to have zero interest in a mortgage.
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Seriously just get him to open one of these help to buy ISA's, he doesn't need a mortgage to use the help to buy ISA! if he saves enough to buy outright a new build he can still use the help to buy ISA and get 25% free extra money. No savings account will give anything close to this.
 
Uther said:
Yep, whilst working for McD's too! I would suggest the ISA, but he seems to have zero interest in a mortgage.
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Might not want a mortgage now, but taking £1200 out of 20k isn't exactly going to cause any issues. I'd open one with the max £1200, then split the £500, so £200 a month goes into that, then put the £300 elsewhere. If he stays at home for 3 years and saves the full £200 each month then came to buy a house, he would have a extra £2000 added on top which the government adds on. Obviously, might be able to make more elsewhere, but the bigger picture would be following that he would have close to 30k at 23, which in the current housing market would at least allow you to have a good 10% depending on the area of course :)

Another option, buy a house/flat then rent it out. If you choose wisely, you could easily be making more money than the mortgage costs while having someone else pay yours off.
 
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