Using my deposit wisely ...?

CatFlap1_2

Hi all,

Would really appreciate advice!

I have recently discovered that my Grandpa; a real property wiz has provided a deposit for all of his 20 grandchildren to buy a house and added to that my parents contribution to avoid the tax man (on inheritance) I now have in the region of 150,000 deposit for a house.
I would like to invest in a property and I am looking at a 4 bedroom house. To purchase this I need additional borrowings of around 110,000: I will rent out two of the rooms to make the repayments very affordable. I am a first time buyer.
- Do you think it is wise to tie up this generous deposit in one property?
...I don't want to misuse my Grandpas investments?
- I will have to pay 8,000 stamp duty - should I add this to the mortgage loan or simply take out a short term flexable loan and pay this of as soon as I can?

Any advice would be greatly appreciated - has anyone been in a similar situation?

JoeK_3

CatFlap1 wrote: »

hmmmm, maybe I do need a IFA I am looking carefully at this website and I thought my own research would be enough...

My income is 24500 annually.... If that helps! I get bonus last year I earned 30K all together.

Thanks!

In my opinion you have a wonderful opportunity to use your inheritance wisely and secure your future (which no doubt your grandfather intended)

Do not fritter this chance away without a competent adviser being by your side.

You did the correct thing in coming to this website to get a balanced view but where would you go to if you had £150,000 lump sum to invest?

JoeK

CatFlap1_2

My Uncle has now had my Grandparents trust valued and I have more deposit than I thought. He suggested I take out an Offset mortgage as we still have properties my Grandma looks after but listed in our names. So when sadly my Grandma passes away she will still be providing for us as there will be more money available and I could put this into paying off my mortgage.

I am considering the folllowing: buying a 260K property (Asking price £279,950 so stamp duty pretty unavoidable cant get them down to 250 000) with a 5 year fixed rate at 6%. I am borrowing 91K where repayments are managable and 10% extra can be paid off each year if I have the funds without getting hit with a penelty.

Do you think a 3 year fixed rate would be a better option so I can get to the money sooner if I need to (for example) put down a deposit for another property. OR should I seriously consider an Offset mortgage. My mortgage advisor is worried that the interest on an Offset is too variable and might be too risky......????? :rolleyes:

I am looking to speak to an IFA too thanks to all your advice! :T

Lipstick_2

Five years is a long time.

Have you looked at a fixed offset?

Lipstick

silvercar

My Uncle has now had my Grandparents trust valued and I have more deposit than I thought. He suggested I take out an Offset mortgage as we still have properties my Grandma looks after but listed in our names. So when sadly my Grandma passes away she will still be providing for us as there will be more money available and I could put this into paying off my mortgage.

I presume the properties are currently rented out with some deed that gives your gramdma the rental from the properties. When she passes it could well be sensible to continue to rent them out and enjoy the income.

An offset is only worthwhile if you have savings that can be used to offset your interest payments. As this doesn't apply to you (at least at the moment) I would have thought that an offset isn't ideal.

Clearly your grandparents had many investments and I wonder if there is a family accountant who could now be advising the grandchildren on their inheritance.

thelawnet

you do need to speak to a professional on inheritance tax liabilities, as depending on circumstances this may still be payable if you die within 7 years of the gift.

JoeK_3

The estate is in trust and not subject to inheritance tax.

JoeK

herbiesjp

JoeK wrote: »

The estate is in trust and not subject to inheritance tax.

JoeK

Hi Joe

Can you explain what you mean by this?

JoeK_3

herbiesjp wrote: »

Hi Joe

Can you explain what you mean by this?

My Uncle has now had my Grandparents trust valued and I have more deposit than I thought. He suggested I take out an Offset mortgage as we still have properties my Grandma looks after but listed in our names. So when sadly my Grandma passes away she will still be providing for us as there will be more money available and I could put this into paying off my mortgage.

I was reading the words in the thread, that it is in trust and therefore outside the estate for inheritance tax.

JoeK

CatFlap1_2

silvercar wrote: »

An offset is only worthwhile if you have savings that can be used to offset your interest payments. As this doesn't apply to you (at least at the moment) I would have thought that an offset isn't ideal.

- I am using all the money given to me/savings within my deposit - Is it sensible to hold some of that amount back for a savings account and use an offset mortgage?

Maybe I could change mortgages after the end of my fixed rate term to an offset if my Grandma's properties are paying out by then into my savings account?

- Would you guys advocate paying off as much of the mortage as I can yearly i.e up to 10% of the mortgage (flex repayments). Someone recently said I was being too cautious and I shouldn't worry about paying the max I can a year I should save extra money for a second house deposit.

herbiesjp

HI Joe

Thanks for that

So the deposit is in trust - not the estate

If the estate was in trust he'd be well covered;)