My sis has been advised to invest in property

struggling-breadwinner

hi, not really bout me this one ! I'm no saver - sadly. My sister, age 30 however IS. She lives with my parents, is single and works full time. She pays no rent (jammy devil - must have words!!) so has a lot of money. She's maxed out her ISA's and has a very VERY healthy savings account. I suggested investing in my children or me but that was rejected :mad:

She went to see the bank re: what to do with the money and they said she should take advantage of the property market lull and but a new build. They said she could could get a fantastic deal, it would get her on the property ladder and it would yeild better returns than a bank account! She owuld need a partial mortgage of course but LTV would be sub 70%

Seems an odd thing for a bank to say so thought I would get views, if you had 25k burning a hole in your pocket what would you do with it????

Aegis

Which bank gave her that advice, and what was the role of the person in question? No bank staff member should give any form of advice regarding whether it is a good idea to invest in property or not: none of the staff are are qualified to do so, and this could well represent a cause for complaint regarding that member of staff if they have been advising outside their remit.

If she's looking to buy then it might be a good time, but obviously she's got to be very careful. If property prices fall further following the purchase and mortgage rates rise up further, she could feasibly end up in a position where she can't remortgage to a good deal and is paying a fortune in mortgage interest/repayment. She can choose to take that risk if she wants, but she certainly should not be deciding based on what a bank tells her to do: they're targeted on how many mortgages they can sell.

By the way, a residential property that you live in yields nothing. It's not an investment, it's a home.

project500

If your sister has got cash tell her to hang on to it at the moment as this recession is only just getting started and there will be better bargains to come in future .Don’t let any weasely bank talk her into anything.
Banks cannot be trusted ,just look at the mess most of them are in! , they have all needed bailing out one way or another.
We have entered a severe down wave of economic activity and CASH WILL BE KING
Stay in Cash and resist the temptation to spend it!

EdInvestor

Funny that, I thought the banks were rationing mortgages rather than trying to persuade any Tom !!!!!! or Harriet who walks in the door to take one out

Aegis

project500 wrote: »

If your sister has got cash tell her to hang on to it at the moment as this recession is only just getting started and there will be better bargains to come in future .Don’t let any weasely bank talk her into anything.
Banks cannot be trusted ,just look at the mess most of them are in! , they have all needed bailing out one way or another.
We have entered a severe down wave of economic activity and CASH WILL BE KING
Stay in Cash and resist the temptation to spend it!

Now that I don't agree with. I'm much more optimistic about the future and think that now's a good time to buy in to the market, but that there are a few turbulent times to come. As such, I tend to drip feed into the market to smooth out the volatility.

As for house prices... No idea.

Aegis

EdInvestor wrote: »

Funny that, I thought the banks were rationing mortgages rather than trying to persuade any Tom !!!!!! or Harriet who walks in the door to take one out

The banks want to give out mortgages to people who pass their credit checks. You only have to look at the swap rates to see why... The margins on mortgage lending at the moment are high enough to mitigate the risk, especially if the security is only borrowed against to 75% or less.

gozomark

Presumably that's credit checks not credit cheques, which has an entirely different meaning :-)

DiggerUK

Struggling Bread Winner,
As your sis is sitting safe ask her what she is trying to fix. If it ain't broke.......

Keep an eye on these boards for good savings A/C advice. There was a recent deal paying 5% for 90 day notice, now closed, another one will be along soon.

Remind her of the old adage, "get rich slow or get poor quick"

As it's me, I have to ask if she has ever considered gold for her savings. Far safer than property.

Best of fortune to her.

Aegis

gozomark wrote: »

Presumably that's credit checks not credit cheques, which has an entirely different meaning :-)

Corrected. Many thanks, must remember that it's not always spelt correctly just because it's not underlined in red!

geoffky

The biggest housing boom in history is not going to be followed by the shortest bust...the crash has a long long way to go yet in my opinion..

dunstonh

The banks don't employ anyone authorised to give property investment advice. The business manager may give opinions on commerical decisions (Which an active landlord could fall under) but no-one else.

An experienced property landlord wouldnt typically consider a new build as a good investment opportunity (although some have been able to take advantage of builders requiring quick sales and buying multiple units at heavier than normal discounting to compensate for the typical overpricing that occurs on new builds.