'Where will my money be safe?'
I’m in the process of buying a new property using money from savings and investments.
Once the purchase is completed, I plan to sell my current home. I’m aware that under the Financial Services Compensation Scheme (FSCS), balances in my current or savings accounts are protected up to £85,000 if a provider fails.
Where can I lodge the money for my house purchase so that it is safe? And how can I protect the proceeds of the sale of my home?
A Which? Money member
'NS&I isn't just useful for Premium Bonds'
Joanne Padilla, Which? money expert, says…
National Savings & Investment (NS&I) is the only institution where deposits are 100% backed by the government. The maximum deposit limit varies by account, but can be as high as £2m (for example, its instant-access Direct Saver account).
I suggest putting your money with NS&I, as unlike many people buying or selling their homes, you won’t be protected by the FSCS temporary high balance rule.
This means that up to £1m is protected for six months in certain circumstances, including where funds are being held for a property purchase or have been received from the sale of your main residence.
Unlike many people buying or selling their homes, you won’t be protected by the FSCS temporary high balance rule
However, as the property that you’re buying won’t be your only home at the time of completion, and the same applies to the home you’re selling, you may not qualify.
Over the long term, NS&I’s Direct Saver isn’t necessarily the best place for the proceeds of your property sale, due to its relatively low interest rate of 3.3%. Depending on your future goals you may want to invest or contribute more to your pension. When moving these funds into other accounts, be mindful not to exceed the £85,000 FSCS limit per person, per financial institution.
- Find out more: FSCS: are my savings safe?
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