what's the best way - lump sum +regular savings

A

AngelaT

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I'm looking for advice about organising a lump sum and regular savings. We currently have about 50K sitting in current account and BOI savings account (the continuation of SSIA account). We are also trying to put aside around 2-2.5K each month.

We have outstanding mortgage of 160K with AIB (at 5.4% tracker; apprx 25 years left, apprx 1100 a month repayment) and no other loans. We will be moving house in a year (and selling current house) so will probably need the money for renovation/furniture of the new house but most likely won't need it until then.

What would be the best way to save it? Should we put it towards the mortgage or in savings accounts (RaboDirect?) If we are to put it in savings acc should we split it into few different accounts with 20K each, or it doesn't matter (remember reading somewhere that in case of the bank having financil problems the first 20K are protected but could be wrong) Which savings accounts would have best interest?

Thank you for taking the time to read this!
 
Check out the financial for the accounts with the best interest rates.

A decent demand deposit account such as Anglo's 5.3% will give you a better rate than Rabo's anemic 4.3%. There are also a few term deposit accounts that you could put some of the money into (Anglo are reported to be introducing a 6% 1 year rate on Monday). If you want to get the maximum possible interest you could also try drip feeding a few regular saver accounts over the year but it would be a lot of effort for a small return.

Be aware that some foreign/UK banks have better guarantees than the 20k. Northern Rock 5.0% currently has a 100% capital guarantee courtesy of HRH's government.
 
Thank you GeneralZod, will look at that link again (I checked it out before but the financial information is changing so rapidly these days I wasn't sure if it was up to date)

So, I take it, it doesn't make sense to put it towards the mortgage and I should put it into savings account.;)
 
When comparing the savings you'd make from early repayment against putting the money in the best available savings accounts you'd gain about equally from each. I think the main benefit of the savings route is having the flexibility of having cash to do with as you please when you do decide to move. If your plans to move aren't definite I'd recommend paying it off the mortgage. If you had any personal loans it would make sense to pay those off.
 
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