Investing

BookLady · 6 May 2017 at 4:00PM

Hi - I'm not sure if this is the right part of the forum to post - but would welcome peoples opinions.

Daughter is in Y12, taking A2's next year and planning to go to Uni Sept 2018.
My parents have been saving for her - on the proviso that the money goes to property or education, and is not squandered. The amount will be a significant number - £35-40k.
So - what I'm struggling with is whether she should :
1. Use it to cover her course expenses - of the order of £30k+ - but she could get the standard Uni loan for that part
2. Use it to invest in a rental property - we'd probably have to guarantor the BTL mortgage - so she has a property. hopefully gaining in value over the time. Ideally it would be close to us for management.
3. Invest in something else - that she can access once she's finished Uni - to use as a deposit on her first house after Uni.

Would welcome any ideas or perspectives!! We will probably get an independent advisor in - but I want to be equipped with ideas first!!

Thanks

lr1277 · 6 May 2017 at 5:44PM

Depending on where she is going to Uni, could not a property be bought that she lives in and rents out the other rooms to students?

Depends on many things:
1) Is she mature enough to be the landlord, take care of the money and the property
2) In her first year, needs to find out the areas in which students want to live etc. So looking to be ready to move in by Sep 2019/20. This would include any work that needs to be done to the property including if appropriate making it HMO compliant.
3) Assumes she doesn't drop out or change university.
4) Having said all this, I don't know what kind of mortgage would be applicable in this circumstance.

Just some food for thought.

Mogley · 11 May 2017 at 4:05PM

Have you read the Student Loan Guide on MSE? http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes
As long as she will have enough of a loan and additional money from you to cover her time at university then discount option 1 off your list.

I do not know enough about BTL or house sharing to answer option 2. Hopefully somebody else can share the benefits and drawbacks to this. Maybe start a thread on House Buying and Renting too.

Option 3. I would presume your parents are already invested somewhere where they are making interest/capital growth on the money they've saved. One option would be to leave the money with them to continue to grow the fund until your daughter is ready to use it for a deposit to buy a house after Uni.
If your parents want to gift the money before that time then your daughter could have a Cash ISA*. This would take care of £20k for this tax year (maybe start a LISA with some of this year's allowance). The remainder of the gift maybe best left in a Santander 123 account for simplicity.

*If she is not going to by a house for another 10 years then replace the Cash ISA with a S&S ISA for better potential growth.

Investing

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