Invest or Buy Property

Flick216

Morning all,

I will soon be inheriting around £170k and I am not entirely sure what to do with it.

I have a £57k mortgage that tracks at 0.9% above base rate so I will not be paying it off. I was planning on investing around £45k in renovating my house, spending a bit and putting about £100k away in investments - probably with St James's Place.

However - I have seen a nice property very close to me for £122k. Could I offer £100K for a quick cash sale? I would probably only need to spend about £10k on mine to get it to decent saleable or rental standard - probably rental.

I have an IVA on my record (all paid off now) for another 4 years so I can't get a decent mortgage (Not that I could get one as good as I already have!).

So - would you invest in property or invest elsewhere? I definitely want to keep some aside to invest in shale gas companies and gold.

gordongekko

Property is always great. It's usually a low risk safe long term investment, providing you get the tenant, then its income for life and house prices typically go up over long periods of time.

I'm a big fan of renting propertys so I would certainly do it. (but not buy the first house i see! research research research!)

And your gold hedge, always a good idea, but i'd wait a little longer to see if there's a dip in prices in the next 6-9 months.

Flick216

Thanks - I do like the idea of owning property but having spent so many years with very little money (apart from the credit cards which resulted in my IVA!) I'm a little scared of having the capital tied up in this way. On the other hand, if it's too easily accessible - I'll just spend it!

Daniel54

If you rent your house you will need to consent to let.This provides your lender with the opportunity to increase the terms of your mortgage or to move you to a BTL mortgage,either now or later.

Becoming a landlord really does not seem a good idea in your position ,and carries no small amount of risk and potential hassle,as well as locking up your capital in one asset that means you can only release the capital by selling the property

You really do have to trust yourself not to blow the money.Surely you have learnt from the mistakes of the past ?

If I were you I would keep an amount at least equivalent to the mortgage in cash ISAs and the best interest accounts around such as santander 123 ( there is plenty of information on these boards on the best deals around).Thsi will give you the security of knowing the mortgage is covered,come what may.

Improve your house and spend a bit

Invest the balance in ISA tax sheltered stocks and shares.

SJP are competent but expensive.You should get better value and more objective advice from using an IFA -but if you are comfortable with SJP then go ahead

atush

Unless you can get a mtg (which is tax deductable against your income) I would not consider a BTL at this time.

So, all debt paid off (apart from the cheap mtg) a rainy day fund of 6 months outgoings then pensions and S&S isas.

So, invest rather than property at least for now- after all you are in property already as you own your own home.

jimjames

Flick216 wrote: »

Morning all,

I will soon be inheriting around £170k and I am not entirely sure what to do with it.

I have a £57k mortgage that tracks at 0.9% above base rate so I will not be paying it off. I was planning on investing around £45k in renovating my house, spending a bit and putting about £100k away in investments - probably with St James's Place.
.

Any reason why you are considering St James Place for your investments? Have you looked at using an IFA instead which may be much cheaper? Or even DIY if you are prepared to read up a bit?

Flick216

jimjames wrote: »

Any reason why you are considering St James Place for your investments? Have you looked at using an IFA instead which may be much cheaper? Or even DIY if you are prepared to read up a bit?

Mostly because my bosses have introduced me to them. They have used them successfully for many years. I would rather go off recommendations.

So much conflicting advice! It was almost easier when I had no money (for the record - I'd much rather have my dad than the money!).

I hadn't initially had any plans to buy a property but having seen this one which is literally a few doors down from me, with much less to be done to it than mine (pretty much nothing), it seemed like providence. I could move and then sell mine and end up with a nice property and no mortgage I suppose.

Or buy the new one, live in it whilst mine is being done up and rent the new one later - as there is no mortgage, I will have no-one to answer to.

Given that my job is a Finance Manager, I should be very good at controlling finances; and I am when it comes to the company money. I'll fight tooth and nail before I spend any of that but I'm afraid I use up all my responsibility points at work.

Thanks for the input folks.

bigadaj

Flick216 wrote: »

Mostly because my bosses have introduced me to them. They have used them successfully for many years. I would rather go off recommendations.

So much conflicting advice! It was almost easier when I had no money (for the record - I'd much rather have my dad than the money!).

I hadn't initially had any plans to buy a property but having seen this one which is literally a few doors down from me, with much less to be done to it than mine (pretty much nothing), it seemed like providence. I could move and then sell mine and end up with a nice property and no mortgage I suppose.

Or buy the new one, live in it whilst mine is being done up and rent the new one later - as there is no mortgage, I will have no-one to answer to.

Given that my job is a Finance Manager, I should be very good at controlling finances; and I am when it comes to the company money. I'll fight tooth and nail before I spend any of that but I'm afraid I use up all my responsibility points at work.

Thanks for the input folks.

St James place are reputedly very slick and good on the customer relations side of things but very costly on charges. If I were you I would potentially meet them but check their fees a nd maybe meet a local ifa for a discussion and indication of charges, just a. Suggestion.

hearth

Would it make more sense to just invest in index fund, like ETF?

pip895

Going down the two property route could make you over exposed to property. Other country's have seen property drop by 50% - it isn't impossible here a few years down the line.

As you are finance savvy I would go DIY - Its not rocket science! The likes of HL make it very easy.

Flick216

I do worry that now may be the wrong time to invest in property. When interest rates finally go up, I am convinced that there will be loads and loads of repossessions and house prices will drop. I'd rather pick up a cheaper one then I think.

I think it is better for me to put some money in my own property and invest the rest.

SJP have said that there is no charge to set up the fund but there are penalties if I want to take out any of the initial capital within 5 years.