What to do with the money we have left over after paying off our mortgage?
Q My husband and I are selling our apartment to move to another city. We've accepted an offer but there's nothing currently on the market that we want in the area we want to move to, so we plan to rent there until we find something. What to do with the money we have left over after paying off our mortgage (around £500,000)? I am aware that if a bank collapses only £85,000 is protected. Does that mean we should open five bank accounts? I am very risk averse and afraid of losing our assets if there were another banking disaster - the world seems very turbulent at the moment.DL
A For the first six months after selling your apartment, you don't have to worry about losing your money in the unlikely event of another banking disaster. This is because the £85,000 limit normally set by the Financial Services Compensation Scheme (FSCS) is temporarily raised to £1 million for high balances following the sale of your primary residence and other life events, such as a large inheritance or a payment for voluntary or compulsory departure. After that, if you wanted to keep your money in financial institutions covered by the FSCS, then yes, you would need to split your money between multiple accounts with no more than £85,000 in each one.
Thanks to the reader who pointed out that I forgot to mention this the last time I covered this issue (July 4, 2022), the alternative is to put all your money with National Savings and Investments. The reason NS&I is worth mentioning is that, in their own words, "as we are part of the government, we can guarantee that 100% of your money is safe - we have the unique backing of the Treasury and that's something no one else can offer". . However, what they cannot guarantee are above-market interest rates. You can invest up to £2m in NS&I's Direct Saver account, but it pays a disappointing 1.2% interest. If you were willing to invest in several notice accounts, you could earn up to 2%, but rather 1.5% if you need faster access to your money.
Q My husband and I are selling our apartment to move to another city. We've accepted an offer but there's nothing currently on the market that we want in the area we want to move to, so we plan to rent there until we find something. What to do with the money we have left over after paying off our mortgage (around £500,000)? I am aware that if a bank collapses only £85,000 is protected. Does that mean we should open five bank accounts? I am very risk averse and afraid of losing our assets if there were another banking disaster - the world seems very turbulent at the moment.DL
A For the first six months after selling your apartment, you don't have to worry about losing your money in the unlikely event of another banking disaster. This is because the £85,000 limit normally set by the Financial Services Compensation Scheme (FSCS) is temporarily raised to £1 million for high balances following the sale of your primary residence and other life events, such as a large inheritance or a payment for voluntary or compulsory departure. After that, if you wanted to keep your money in financial institutions covered by the FSCS, then yes, you would need to split your money between multiple accounts with no more than £85,000 in each one.
Thanks to the reader who pointed out that I forgot to mention this the last time I covered this issue (July 4, 2022), the alternative is to put all your money with National Savings and Investments. The reason NS&I is worth mentioning is that, in their own words, "as we are part of the government, we can guarantee that 100% of your money is safe - we have the unique backing of the Treasury and that's something no one else can offer". . However, what they cannot guarantee are above-market interest rates. You can invest up to £2m in NS&I's Direct Saver account, but it pays a disappointing 1.2% interest. If you were willing to invest in several notice accounts, you could earn up to 2%, but rather 1.5% if you need faster access to your money.
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