Lump sum saving with stage payment withdrawals

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ipxl

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This may have been asked before but we are in a position where we have a substantial amount (>150k) which arose out of the sale of a previous property which we will make use of to finance stage payments on a new house build (contracted house build in West of Ireland). We've already taken a chunk out to pay for the land on which we are building.

My question is .. out of the various high interest rate yielding deposit accounts available right now (NR, Rabo, the newer AIB one, BOI Scotland) which would be the most appropriate one which would give flexibility to draw down stage payments and yet benefit from a better than average interest rate (keeping the funds in a standard deposit account seems like lunacy
and I'm sorry I didn't bank the funds to a more appropriate account earlier.. but hows and ever ...)

My father in law recommended NR. AIB (with whom we have our current account and are likely to get mortgage for surplus amount for the new housebuild) say their product is more flexible as regards more frequent withdrawals and smaller/neglible penalties for withdrawing chunks of the funds earlier.

Is there anyone here who has been through this and who can recommend the most suitable product (and who could explain the Terms/Conditions regarding penalties for withdrawing in stages rather than leaving the entire funds site for a full calendar year,etc).

Much appreciated.

ipxl
 
I was in a similar situation and set up an account online with Northern Rock. Withdrawing money is not a problem - the interest is calculated on the balance on a daily basis.
You just nominate your current bank account as the "withdrawl" account - and then you can transfer money there as often as you want. The transfers take maybe 3 or 4 days to get through. You can do same day transfers but they charge (25 euro I think) for that.
 
Hi Irishlinks -

Perhaps this is naive but is it OK just to drop the entire lump sum into the account on day one or is there some stipulation that you need to be making regular deposits ? For example if I have 150k to put in on deposit if I drop it in next week are there conditions that I must continue to supplement by making future lodgements or is it all setup to gain interest immediately with no compulsion to be adding more funds as time goes by. In reality I will be making withdrawals from the slush fund as builders request rather than adding anything into the lump.

~ipl
 
Northern Rock have no rules about monthly deposits - not like Bank Of Scotland. For somewhere to keep your money with instant access it's ideal. You will need online access.
 
Sounds like the business.
I think AIB must have been scaremongering me about NR. Since our funds are on deposit with them at the moment (in a standard ..virtually 0% interest deposit account) they were touting some type of flexible deposit account which had slightly lower interest yield than NR but they were claiming that I'd have to watch out for penalties for early withdrawal with NR.

I am only kicking myself I didn't put into NR , 4-5 months ago as I dithered when hearing this from AIB. In the meantime the funds haven't gained any appreciable interest. Ah well ..!

I think NR it will be so going forward.

thx

~ipxl
 
Hi ipxl,

The main NR condition is €1000 minimum balance to benefit from the full interest rate. There is no monthly lodgement required and no withdrawal restrictions (on their online account). The only AIB account with a comparable interest rate has far more restrictions and requirements.

You can read NR's full T&C at
[broken link removed]
 
Actually one other question (this is all coming back to me now !..)

I see on the NR site there are two products , demand online annual or
demand online monthly. One offers 3.25% car and the other 3.00 %
(I believe the interest rates are being increased later this month.. yippee!)
Anyway - what are the differences between these two account options
for my situation (dumping in a lump sum and making perhaps 3-5 withdrawals over the coming calendar year as the house build progresses)

What is the demand online monthly account all about ?
What flexibility does it give to the consumer at the expense of a lower interest return ?

Thanks in advance,

~ipxl
 
With the monthly option you get the interest added to the account or paid to another account each month. This might be useful for someone with very large amounts whe were using the interest as an income. But for the likes of me and you - the higher rate one is the best option. You don't need to leave it in for the full year - you still get interest on a daily basis . Someone was discussing this recently I'm sure.
 
ipxl said:
Sounds like the business.
I think AIB must have been scaremongering me about NR. Since our funds are on deposit with them at the moment (in a standard ..virtually 0% interest deposit account) they were touting some type of flexible deposit account which had slightly lower interest yield than NR but they were claiming that I'd have to watch out for penalties for early withdrawal with NR.
Click to expand...

Think they were hoping you'd believe them on oath and not investigate the options. The NR account is pretty close to having the least ammount of strings attached (other than the opening balance which is stated quite clearly).
I've never blamed a bank for trying to sell their own products (its up to us to cut the sales pitch from the facts) but passing false statments as fact about others offerings is a tad below whats to be expected.
 
Thanks.. Looks like the NR account (annual option) is what I will go for.
No need for me to pickup the interest as monthly income. I just don't want to miss out on the interest and I want to maximise it especially since I've missed out on 4-5mths of it due to my own procrastination !

~ipxl
 
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