What dshould I do with the profit??

jovcry

Have recently sold (STC) and made a good profit. Can't find anything I like and am going to have to rent. However I don't want to commit to a 6 month tenancy incase I find the house of my dreams in the next few weeks. I'm toying with the idea of buying a smaller house outright, rather than wasting money on renting, and then sell it on after 6 months or so. Is this a mad idea? Should I just put the profit in a savings account and rent? I'd really appreciate any thoughts...

Alan_M_2

The amounts of money money matter so a meaningful answer can be given, you might find the associated costs of a purchase are more than 6 months rent (particualrly if stamp duty is involved) - hence the need to know the sums involved.

jovcry

Made a proft of 171,000 and would probably buy for 165,000, with the rest set aside for fees,stamp duty and work needed on house. would expect to pay 700 pcm rent.

F_T_Buyer

jovcry wrote:

rather than wasting money on renting

I'm sorry, but I really think people would think before spouting cliches.

If you bought any property, you would lose your income from your savings.

From £171k you would get £805.125 interest a month in ICICI before tax. Note, interest rates are likely to go up, so this will increase by over £35 for each quarter point rise (a rise next month is very likely).

If you bought a smaller house, you will be wasting money on stamp duty (est £1,650), solicitors & searches (est £1000), agent fees (when selling) (est from £2475), especially if it's only six months.

You don't have to sign up for 6 months, you could get an AST where you have to give one months notice. But remember, it may take 3months to actually buy a house when you find it.


When you look at it logically, you are in an envious position!

Nenen

We are in a similar position to OP but stand to have a profit of around £80,000 (obviously not enough to buy a small house with while we search for what we actually want).
Therefore, I'd be really grateful for any advice on what is the best place to invest 80K for what is likely to be 6-12 months? We did think of premium bonds but I seem to remember a post from Martin showing that this was not a good idea as we don't get any interest and winnings (if any) were unlikely to beat interest! Any ideas gratefully received :beer:

F_T_Buyer

Nenen wrote:

We are in a similar position to OP but stand to have a profit of around £80,000 (obviously not enough to buy a small house with while we search for what we actually want).
Therefore, I'd be really grateful for any advice on what is the best place to invest 80K for what is likely to be 6-12 months? We did think of premium bonds but I seem to remember a post from Martin showing that this was not a good idea as we don't get any interest and winnings (if any) were unlikely to beat interest! Any ideas gratefully received :beer:

If you're looking at only 6-12 months, you only real option is a savings account. hassel free, no fees, and guaranteed.

If you shop around, you can get some very good deals (5.85% fixed with ICICI).

fivemice

Why is a rise next month "very likely"?

F_T_Buyer

fivemice wrote:

Why is a rise next month "very likely"?

Because inflation is higher than it should be? Also, the inflation forecast is in February, so interest rates usually change during these months (Feb, May, Aug and Nov).

The markets have priced in a full rise by May, and about 50% chance of a rise to 5.75% by June. So, a rise may not come in Feb, but it's virtually guaranteed to come before May.

fivemice

Ok, thankyou.
I have quickly become fascinated by all this financial stuff, having never taken any notice of it before I'm struggling to get to grips with it all. I appreciate you explaining it to me