23year old with £290,000

magnolias

Hello,

This is my first post - so sorry if I am in the wrong section.

I am a 23year old earning £30,000. I work for the NHS and have a pension with them. I have £10,000 in savings and no debt. I live with my parents in the outskirts of london, and save a lot of my money. Therefore getting my own place is important to me.

I have recently been given £280,000 due to an unexpected death in the family. So this combined with my savings are £290,000. I realise I am really fortunate, but now feel a bit of a loss as to what to do now. I never expected to be in this position.

Should I:

1) Buy a house for myself for £290,000 and live mortgage free
2) Buy a bigger house for myself for say £350000 - taking out a small mortgage (I plan on having kids in six or so years...So with this option I could get 3bedrooms not 2bedrooms - and then wouldn't need to move house again for ten or more years or so)
3) Buy one house for myself for say £250,000 to live in mortgage free,
- With the £40,000 left I could - use the money as a deposit and use it to purchase a 'buy to let' property. I would use the rent to pay the mortgage off on this property.
- Or, with the £40,000 I could save it in savings account/stocks and shares (I don't know much about any of these options).


What would you all advise?

Thanks for your time

Southend1

magnolias wrote: »

Hello,

This is my first post - so sorry if I am in the wrong section.

I am a 23year old earning £30,000. I work for the NHS and have a pension with them. I have £10,000 in savings and no debt. I live with my parents in the outskirts of london, and save a lot of my money. Therefore getting my own place is important to me.

I have recently been given £280,000 due to an unexpected death in the family. So this combined with my savings are £290,000. I realise I am really fortunate, but now feel a bit of a loss as to what to do now. I never expected to be in this position.

Should I:

1) Buy a house for myself for £290,000 and live mortgage free
2) Buy a bigger house for myself for say £350000 - taking out a small mortgage
3) Buy one house for myself for say £250,000 to live in mortgage free,
- With the £40,000 left I could - use the money as a deposit and use it to purchase a 'buy to let' property. I would use the rent to pay the mortgage off on this property.
- Or, with the £40,000 I could save it in savings account/stocks and shares (I don't know much about any of these options).


What would you all advise?

Thanks for your time

Personally I would take option 1 and live mortgage free.

jungle_jane

It depends whereabouts you want to live - £250,000 will buy you a mansion in some parts but a small flat in others.

Personally I would buy a cheaper place and also go for the buy-to-let so that you have additional income later in life.

Lokolo

Why buy a bigger place than you need? Unless you are in a stable relationship and planning on having kids in the nearish future then it would be pointless buying a 4 bedroom house.

Denzuccino

I was left a property at a similar age and live mortgage free I have invested savings in a stocks and shares isa, take a look at hargreaves lansdwon and invest in wealth 150, which is a fund. So option 3 for me as long as you are not in London you can get a nice property for 250k.

spacey2012

Or buy a leasehold flat, the "new endowment" and lose most of the money in ten years.

You had it right at first, House, no leases, no flats, either live mortgage free or rent it out to professionals only and stay at home, safe in the Knowledge you have a house waiting.
Where else can return £1000 PCM on the investment + appreciation .

atush

I would go for option 3, buy a place for 250K and have some savings and investments. You still need a cash float, plus to furnish a house/flat so you would not be able to buy a 290K place anyway.

Forever

magnolias wrote: »

Hello,

This is my first post - so sorry if I am in the wrong section.

I am a 23year old earning £30,000. I work for the NHS and have a pension with them. I have £10,000 in savings and no debt. I live with my parents in the outskirts of london, and save a lot of my money. Therefore getting my own place is important to me.

I have recently been given £280,000 due to an unexpected death in the family. So this combined with my savings are £290,000. I realise I am really fortunate, but now feel a bit of a loss as to what to do now. I never expected to be in this position.

Should I:

1) Buy a house for myself for £290,000 and live mortgage free
2) Buy a bigger house for myself for say £350000 - taking out a small mortgage
3) Buy one house for myself for say £250,000 to live in mortgage free,
- With the £40,000 left I could - use the money as a deposit and use it to purchase a 'buy to let' property. I would use the rent to pay the mortgage off on this property.
- Or, with the £40,000 I could save it in savings account/stocks and shares (I don't know much about any of these options).


What would you all advise?

Thanks for your time

I'm sorry to hear about the the death in your family.

However, I would recommend buying a property outright and then have a small sum of money left over for maintenance, for any nasty life surprises and stocks and shares (so all your money isn't only in one basket).

Financially, this is a windfall though. So if you don't spend it all on something wreckless, you will be fine IMHO

marathonic

As others have said, it depends on location. Have a look at Rightmove to see the cost of properties of the type you desire in an area you could see yourself living in for 5-10 years (any less than this and buying a property becomes too expensive due to transaction costs).

With these transaction costs in mind, you’re better to buy in as nice an area as you can afford (think ahead to potential partner/children and try to match the house size/type to the expectation).

If the type of house you could see yourself living in for 10+ years requires you to take out a small mortgage in addition to the £290,000, so be it.

If you were to take a £60,000 mortgage, your outgoings for this would still be minimal.

When the above is complete, you want to set up a budget so that you maximize your ISA allowances every year (Cash until you have 6 months living expenses, then S&S ISA’s). This should be easily done if you have no debt and a mortgage of 2 * Salary.

I’d even go so far as to advise you to take the mortgage out over 30 years – it’s the cheapest debt you’ll ever have and your investments are likely to outperform it over the long-term.


I don't get peoples obsession with being mortgage free. If a 30 year repayment mortgage of £60,000 is only costing you £250 per month and is at a very low interest rate, where is the panic in paying it off? You are likely to be paying 3% interest on the mortgage and gaining 7%+ on investments (you could revisit your options as rates rise in the future).

magnolias

Thank you - you have all been so helpful! I better get property searching then...! x

beckysbobbles1

First of all, I am sorry for your loss.

I am in a fairly similar situation so hopefully I can help a little. My difference is I have a mortgage at a interest rate of 2.5% so it made sense to me to keep my mortgage and invest.

You don't have to make any hard and fast decisions with this money. Please also try not to let too many other people influence your decisions.

If I were you and you want to move out then I would look for a property within the £250k mark. If you can find a suitable flat/house for below this then even better, just because you have the money doesn't mean you need to spend it.

But please only move out into your own home if you are ready.

I have investment most of my money with Brewin Dolphin. They are a well established (125 years) wealth management firm and have over 40 offices in the UK.

Being a new investor I would be cautious of anything too high risk such as structured products, leveraged products like spread betting and contracts for differences.

First start is an ISA, tax efficent savings.

This money can open so opportunities for the future. But also remember this is a tough time and you should give yourself some 'fun money'. Maybe a nice car or go on a lovely holiday.