Investing Inheritance

ajfy2k

Hello,

I have recently lost a family member who has very kindly left me some money which will clear off my large uni debts and a lot left over, first thought was to use it all as a large deposit (still a possibility as I like the idea of having a small mortgage).

The other option is to split it between two, a small house for me and a 'buy to let' flat (I know unethical etc etc etc, although I could lease it to a housing association to ease my conscience).

Wages £21,450
BuyToLet £90,000 (£22,500 Deposit | Approx £350-400 Repayment)
Home £120,000 (£35,000 Deposit | Approx £390-450 Repayment)

The BuyToLet flat should achieve around £450 on a 'Guaranteed Rent Scheme' , little bit less to a housing association. I'm not looking to make lots out of it, its more a long term investment.

1) Does this seem like a reasonable plan?

2) How long after paying my debts do I need to wait before applying? i.e how long will it take to clear my debts of my credit file?

3) How do I go about arranging two mortgages at the same time? Do I have to do one, wait a few months then do the other, if so which one first?

My main priority is getting myself an affordable home, but it would be nice if I could pull off the BuyToLet as well, put this gift to the best use for the future. I will go and get proper financial advise but would appreciate everyone views (a little more balance from people who aren't trying to sell me mortgages!!)

Thanks,

Ash

TrickyDicky

First off - are these large uni debts post 98 student loans? you should not pay these back - currently the interest rate is 1.5%. It will always be the cheapest loan you will ever have and has little effect on credit/loan applications. I still have 8k of student loan (I started at 13k 5 years ago) left and 10 years left until its paid off.

Can you afford to maintain a BTL? could you afford to replace the boiler? repair any damage done by tennants? live whilst the tennants refuse to pay? It would probably end up costing you more than the morgage.

Personally, Id buy myself a nicer house. Less worrying about other people damaging it.

ajfy2k

Uni Debts: I'm doing my degree part time (nights) which I have to mostly fund myself (us part time students still pay the full amount without and financial help), so these are credit card and loan, no getting away from them.

As for the BTL that's why i'm looking at a guaranteed rent scheme (http://www.northwooduk.com/landlords/guaranteed-rent.html), while it would mean less money than on the open market you are effectively leasing your property for a set number of years to an agent or HA who would then sub let it and take on the risk of it being empty etc etc, I would still be responsible for repairs though.

Ash

rinkydinkpanther

Sorry for your loss.

I think people have kind of lost sight of what a small mortgage is. Even if you forgot about the BTL and put both deposits down on a residential home, you'd still need to borrow 2.9 times your income to buy a £120k house. Not very long ago, people used to think that x3 salary was the absolute maximum you should consider. Your salary is pretty low, which means that your other costs of living will take up a much greater proportion of your income. You're also putting all your eggs in one basket investment wise. Property is not the only investment you can make.

I've just sold the house I bought 10 years ago for 1.75 times what I paid for it. I've just sold the shares I bought at the same time for 20 times what I paid for them.