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What to do with savings?

edited 30 November -1 at 1:00AM in Savings & Investments
10 replies 1.5K views
gwen80gwen80 Forumite
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edited 30 November -1 at 1:00AM in Savings & Investments
Hi

I have received a lump sum which I'm wondering what to do with. I have a house which requires work doing to it. I saved and saved to get enough to get the work done, but now I'm thinking I'm going to try and sell it to a developer if possible. So I have ~£21k in savings and I've also received a redundancy payment of over £30k.

The £21k is in an ISA, although not the best rate currently so I will be looking to move that.

I think my mortgage rate is about 4.99% (need to check). I've had a quick look at the savings pages on this website. Am I right in thinking the best thing to do may be to overpay what I can on the mortgage (I think I'm allowed to overpay 10%) then look to save the rest?

My mortgage is about £70k, so I could repay £7k which would leave me over £20k to save in addition to the £21k.

Any suggestions?

Thanks

Gwen
Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending

Replies

  • 100saving100saving Forumite
    314 Posts
    I would pay the 7k off the mortgage as this would save more than any saving account would on that amount.

    if you have 20k left to use why not develop the house yourself? whats the work involve? i take it you are out of work now because you said it was redundancy money? by selling it to a developer you are handing the profit over.
    Age: 24 / London/Ireland / Salary €49,000 / 1 London BTL (8% yield) / Total savings pot £12k+
    Lloyds Club CA £5,000 @4% / FD Regular Saver £3,600 @6% (12 of 12) / TSB Classic CA £2,000 @5%
    Clydesdale Direct CA £1,000 @2% / Santander ISA £700 @0.5% / Premium Bonds - £100
    Halifax Reward CA (£5 per month) / Santander 1|2|3 CC (cashback)
  • gwen80gwen80 Forumite
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    100saving wrote: »
    I would pay the 7k off the mortgage as this would save more than any saving account would on that amount.

    if you have 20k left to use why not develop the house yourself? whats the work involve? i take it you are out of work now because you said it was redundancy money? by selling it to a developer you are handing the profit over.

    Thanks 100saving. That's what I thought about the mortgage.

    I'm actually about to start a new job over 3hrs drive from said house. I could possibly ask my Mum to oversee some work, but I'm really not sure about that.
    Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending
  • xylophonexylophone Forumite
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    I'm actually about to start a new job over 3hrs drive from said house.

    Sell the house and move nearer to where you work?
  • 100saving100saving Forumite
    314 Posts
    xylophone wrote: »
    Sell the house and move nearer to where you work?

    i was going to say rent the house out and buy one nearer to the job.

    then you have two that you own out right and rent out paying for the one you live in.
    Age: 24 / London/Ireland / Salary €49,000 / 1 London BTL (8% yield) / Total savings pot £12k+
    Lloyds Club CA £5,000 @4% / FD Regular Saver £3,600 @6% (12 of 12) / TSB Classic CA £2,000 @5%
    Clydesdale Direct CA £1,000 @2% / Santander ISA £700 @0.5% / Premium Bonds - £100
    Halifax Reward CA (£5 per month) / Santander 1|2|3 CC (cashback)
  • gwen80gwen80 Forumite
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    xylophone wrote: »
    Sell the house and move nearer to where you work?

    I'm hoping to sell the house. It needs a lot of work though, so not sure how easy it will be to sell
    100saving wrote: »
    i was going to say rent the house out and buy one nearer to the job.

    then you have two that you own out right and rent out paying for the one you live in.

    The house I have is not in a fit state to be rented out. There's no way I can afford to buy a house at the moment in the area I'm moving to.
    Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending
  • kidmugsykidmugsy Forumite
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    If neither you nor your mother has experience in the building trades, overseeing a major overhaul is rather a gamble. Perhaps your first idea of selling as a doer-upper is the most sensible option: it should save you some heartache.
    Free the dunston one next time too.
  • TottonTotton Forumite
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    Seems to me that you have 51k in cash so why not sell the house and clear the mortgage? Perhaps you have a severe penalty clause preventing that but that should run out on a specific date, can you store the cash in savings until then if that suits better. I'd only get involved in doing the house up if I had the nous and trusted contacts such as plumber, builder etc, otherwise chances are you'll end up with a money pit imho.
  • gwen80gwen80 Forumite
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    Hi all

    I've been thinking a bit further about this. I'm contemplating getting the house done up, but I'm going to look into it a bit further. The roof is pretty sound, the windows are fine. I've had the electrics sorted, I've done the bathroom and the spare bedroom - just a few minor things to finish off in there. I've had new radiators put in all rooms bar the living room. Touchwood - the boiler seems fine. I've been breaking the jobs down as follows:

    Get bathroom window fixed - won't close, I don't foresee this being a large expense
    Get back of house painted - paint is flaking off
    Get main bedroom done up - new floorboards, walls skimmed, new skirting, door frame, door, possibly built in wardrobes
    Get downstairs damproofed, skimmed, new skirting, door frames etc
    Get new kitchen fitted
    New back door
    Fit new flooring throughout

    I've had some very bad experiences with tradesmen in the past. However I have found a plumber who I absolutely trust to do a great job and charge a fair price. When I had the spare bedroom done (new floorboards, skimmed, built in cupboard over stairhead put in, new skirting, door frame and door) I found a local building company who do everything and the guy basically project managed it all. I was thinking of using him again to do the main bedroom.

    Lots to think about...it could be a great little rental property if I could get it done up.

    Thanks

    Gwen
    Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending
  • xylophonexylophone Forumite
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    Remember that you will have responsibilities as a landlord and don't forget the tax considerations.
    You will need to ask your mortgagee for consent to let and will need to advise your insurers.
    https://www.gov.uk/private-renting/your-rights-and-responsibilities
    https://www.gov.uk/renting-out-a-property/paying-tax
    http://www.which.co.uk/money/tax/guides/tax-on-property-and-rental-income/
  • Do you already invest in shares or funds? Could be an idea to get better returns potentially.
This discussion has been closed.
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