Come Into Some Money - Put Into First Property, Buy Another or Combine Two...

dhunter25

Hi Guys,

I am in a situation at the moment and am looking for some advice.

I have come into a sum of money (around £50k) and am looking for advice on where to place this.

I have 1 property at the moment (recently purchased) worth £123k. I still owe £116k on this.

Do I:

• Put the £50k towards this property and reduce the overall debt to £66k?
• Use the £50k as a deposit on another property after selling Property #1?
• Use the £50k for something else - casino, massive holiday etc?

Any input much appreciated!

Thanks,
dhunter25 :beer:

happybroker

lucky you!

you would need to check that you wouldn't be charged early repayment fees if you were to pay the money off your existing mortgage before doing so.

did you take a long term deal on your existing mortgage as high loan to value deals are getting harder to come by and more expensive so a lower mortgage would make it easier to get a competetive rate next time around.

you could do a bit of both, or see a good IFA...or pass some this way failing that, we mortgage brokers are the poorest of the poor at the moment!

good luck

lonestar1

You dont say if your looking to move or not. Want a holiday or not or know of any heavily reduced properties worth buying so I will tell you what I would do and thats use it to pay off some of my debt/mortgage

Bungarm2001

Don't waste it on holidays or fast cars or owt daft like that...seriously...as tempting as it is, don't do it! Once that money is spent on stuff like that, it's spent..gone.

You need to make the money work for you 'cos getting a lump sum like that doesn't happen very often in a lifetime and you have to make the most of it.

Investing in bricks and mortar is still a good way to invest it, even tho we are in a doomy gloomy period at the moment. Paying off part of your existing mortgage is one way if you won't suffer redemption charges. Buying another property is another way to invest, but at this moment in time, you'll be looking at a long term investment here before you saw a good return for your money. Don't get sucked in by the BTL sharks out there who are still unbelievably trying to sell the 'I can make you a property millionaire' dream. There'll always be someone ready and willing to relieve the unwary of their cash.

You could always put it in a high interest savings account if you haven't done so already (and still have a nice holiday on the interest raised) and sit on it until a real bargain house comes up...the possibilities are endless really.

dhunter25

I still have 18 months to go until I face any early repayment charges so I will need to wait until then. Until then (if i were to pay off my existing mortgage somewhat) I will have to wait.

By putting extra down when this 18 months is up, does this make remortgaging / getting a good rate much easier?

Gangstabird

I would check what you can overpay per month without accruing any charges.

In the meantime - the building societies are crying out for people with savings - the rates are really good at some (so I am told).

So - pay what you can for a while and then just enjoy the interest off the money. When your deal is up, put it all on your existing mortgage.

Bit of advice; a friend of ours had an inheritance of 42k. They bought new cars, a motorbike and fab stereo. They are in real financial trouble now as they didn't put a cent towards their mortgage (which admittedly was rather huge)

It really is a once in a lifetime thing. Don't spunk it.:beer:

phil_b_2

I'd be pretty tempted to put it into a high interest account that I cant touch until being able to pay off a big chunk of the mortgage and reduce my debts. Sounds boring and sensible I know but I dont think 50k is enough of a wedge to be splurging on fast cars and holidays as it wont go very far in this day and age really.
I think the feeling of all that equity in my home would be pretty damn good.

linda4767

Get yourself off to Vegas and blow the lot! eat, drink and get wrecked..... :T
No seriously now. Put it in a fixed rate bond for a couple or 3 years till you can pay off some of your morgage.

dean_ham

First things first dont buy another property. Prices will drop 20-30% in my opinion over the next 2 years. Wheres paying off a big chunk of your mortgage will save you thousands in interest payments.

Personally if it was me i would.....

- Pay off your mortgage by £45k. If you got debt, i.e (mortgage) there is no better place to put ur new found money and thats to pay off an expensive debt like that.
- Treat yourself to a tidy holiday £500ish + £500 spending money.
- Put £3600 into tax free isa for a rainy day.

- Give me £400 for the above advice.

neverdespairgirl

I agree with the above - either pay off your mortgage (if you can without penalties) or stick it in a nice, safe high-interest account. You can get 7% at the moment, which is a good rate. And use up your ISA allowance to get tax-free interest on that part of it.

I'd also agree that a nice holiday (not blowing the whole lot, of course!) would also be good.

dhunter25

Another string to add to this is "student loan".

This currently stands at around £11k but I've seen in places that I should not bother paying this off as a lump?