23year old with £290,000

zerog

Being in a sort of similar position myself, I agree that a house should be purchased, but with only £300K, certainly do not spend £250K UNLESS you can easily rent it out for something like £1500 per month. I would continue to live with my parents and only move out after getting married. House prices in outer London are still at least 100% overvalued though they probably won't drop and may even rise.

There is no point getting a mortgage if you don't need one. Keep £50K liquid and maybe £75K in medium investments. An IFA may be helpful for that but there is also plenty of time to learn things yourself - but not at the expense of your job (yet).

Personally I bought a freehold for £150K on the edge of the M25 and rented it out for £800 a month 2 days after the sale completed. I probably paid too much but the conditions were that I had to complete by the end of 2012 or £50K would be taken away.

System

buy a 4 bedroom house and get some tenants......you will be getting £500+ in rent from each person so £1500 a month in income...more if you chose to stay at home.

I live in a house with a guy that is 30+, he owns it and is getting over £500 from 4 tenants. He has it easy.....you could do the same.

Your mortgage would probably be under £500 a month. You could have your own house.....live with your mates who are paying you money......extra income! save the extra income and you are sorted.

Jegersmart

£290k = Lamborghini Aventador (more or less).

But I would have to go with the suggestion of buying a place outright with some left over.

J

Nicholas-bloody-Parsons

Being mortgage free is a huge saving and takes huge worry, uncertainty and stress out of your life..

Remember, most the cost of the mortgage is actually interest charges.

As for the rest of it....

If you get a windfall, you are always well advised to enjoy some of it. So you should consider buying a new car or going on a dream holiday.

marathonic

Nicholas-bloody-Parsons wrote: »

Being mortgage free is a huge saving and takes huge worry, uncertainty and stress out of your life..

I'd argue that this is the case for a large mortgage that just about meets the banks affordability criteria. For someone in London, living in a £350,000 house with a £60,000 mortgage, I'd consider the mortgage to be no more, or less, worrying than the council tax and other household bills.

At the end of the day, if you lose your job, council tax and mortgage payments would both be affordable by simply taking in a lodger or two. I'm not saying that the OP should take in lodgers, I'm just saying that the option is always there should future changes in circumstances deem it necessary.

With such a small mortgage, the OP could then concentrate on maximising ISA allowances every year. If you average £12,000 a year in ISA deposits and this grows at 7% per year, and consider the dividend yield to be 3%, then the mortgage could be covered by dividends on investments alone in 6-7 years (and the capital on the mortgage could be paid off by liquidating investments after 4-5 years if the OP preferred that option).

marathonic

Again, I re-iterate my previous point, why do so many people see being mortgage-free as a necessity?

Someone renting a room in a house in London has no security of tenure and can be kicked out at any time. I would consider this to be a worrying position to be in.

For someone having a mortgage of two times their salary on a house worth 11-12 times their salary and mortgage payments of about half of what people in the area are renting rooms for, where is the worry?

Forever

marathonic wrote: »

Again, I re-iterate my previous point, why do so many people see being mortgage-free as a necessity?

Someone renting a room in a house in London has no security of tenure and can be kicked out at any time. I would consider this to be a worrying position to be in.

For someone having a mortgage of two times their salary on a house worth 11-12 times their salary and mortgage payments of about half of what people in the area are renting rooms for, where is the worry?

Because for most people, being mortgage free is the dream. For a start, it means no more stress and hassle of having a mortgage.

It means you don't need to worry quite so much about how much you earn to meet monthly mortgage repayments. It also means you don't need to have strangers move into your home if for some reason ie. job losses, ill health etc, you become financially stuck.

But we are all different and have different priorities. It would be a boring world if we all did exactly the same thing.

I noticed someone mentioned using a bit of money for a holiday and that sounds pretty good too. After all, you only live once so it's good to make the best out of the time you have.

Good luck OP whatever you decide to do.

marathonic

Forever wrote: »

Because for most people, being mortgage free is the dream. For a start, it means no more stress and hassle of having a mortgage.

It means you don't need to worry quite so much about how much you earn to meet monthly mortgage repayments. It also means you don't need to have strangers move into your home if for some reason ie. job losses, ill health etc, you become financially stuck.

I see where you're coming from, and most people for that matter, but an extended job loss would require significant changes anyway, possibly in the form of lodgers.

The mortgage is only one bill and you are equally likely to be in big trouble if you cannot meet your council tax, electricity or gas bill.

My argument is that, for most people, the dream should be adjusted. I'd much rather be in a position where, if I were to lose my job, an emergency fund of 6 months expenses would keep me in survival mode and, should the job-loss last longer, I have enough income from investments to cover the council tax and the interest portion of the mortgage. With this amount of income, you would expect to have some negotiating power with the banks to switch to interest-only temporarily.

In other words, being mortgage free isn't much good if I can't pay my council tax or put food on the table.

WorkSavePartayy

Buy commercial property with a long lease.. 75% commercial mortgage should be able to buy a property for ~£1.1mill. Yield of 10-15% not uncommon with years of rent contractually agreed.

Income appx £110k to £165kpa repayments of appx £40k pa plus tax... Still big money.

Live with parents for a couple more years then ball hard haha. Flame away.

gkerr4

seriously 23 with £290k sloshing around - it would probably be a porsche 911 - a great car, more economical and lower running costs than you'd imagine - better depreciation than most in its class (used BMW M6 anyone?).
Buy a lightly used 1-2yr old model and it won't even dent it that much.

i'm even being serious - your are in a unique cash position - you cannot take it with you.