Lump sum what to do with it?
Three years is too short to go anywhere near the stock market, so you're right to want to keep it on deposit.
You could pay off some of your mortgage. Some mortgages provide the facility to re-draw money previously paid off. It is quite likely that the interest rate on your mortgage is higher than the best savings rates around, so paying off some of the mortgage makes financial sense too, assuming you don't have early repayment charges. If you do move in the future, you will have more equity thanks to the reduced mortgage, so the money would still be available to 'use' at that time.
Do you have another job lined up? If not, you may need to dip into that money so locking it up may not be a good idea. If you want to save for a while but not pay off the mortgage, you could consider West Brom Building Society's 2 and 3 year Escalator Bonds where the interest increases each year. They're about the best of a bad lot at the moment I reckon.
HTH
Pete
Sun, 18/04/2010 - 21:56
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Hi i am being made redundant soon and will be getting a lump sum of 30k im not sure what to do,should i pay of a bit of my mortgage or invest it elsewhere.Knowing that in 3 years i would like to move and increase mortgage needing that money.
I am currently with alliance and leicester on there svr as my tracker mortgage came to its end last november and waiting for a good deal.Will i face early repayment charges?
I just don't want this money sitting in a low interest account for 3 years until i buy a new property.Any help please.