been given 100K

wannaberich84

So I had a phone call out of the blue and was told I have been given £100,000, Its not fully sunk in. I have been saving for years and me and my partner have £40,000 in an ISA's. We are currently renting and wanting to buy a house, of course this means we can look at more expensive houses but I don't wish for it all to be spent on this. I haven't got a pension and feel maybe buying a flat to rent out could also be an option. I'm not going to rush any decision but would be grateful for advise on how I can make this money work the most for me.

I am also unsure as to what to do with the money for now!! I never rush anything so where do I put it. Me and my partner both have ISA's and have not added any money this year as we were waiting for the help to buy ISA that starts in Dec but I don't feel we need to worry about this now. Do I max out both ISA, then do what with the rest? Also will I get taxed on all this money?

xylophone

So I had a phone call out of the blue and was told I have been given £100,000,

A legacy? A gift from a parent/relative?

Does your employer/your partner's employer not provide a pension scheme?

For the moment you could hold the whole amount in NS&I Income Bonds
http://www.nsandi.com/income-bonds

Or you might prefer for each of you to contribute the maximum to your cash ISAs and hold the balance in NS&I while you look for a home to purchase.

Or you could consider opening high interest sole/joint accounts and cycling the money around them while you look for a home to buy.

You might prefer to take advice from an Independent Financial Adviser who could look at all your circumstances.

https://www.unbiased.co.uk/

dunstonh

I haven't got a pension and feel maybe buying a flat to rent out could also be an option.

It would be a start but typically you need multiple properties if you are going to do that. Around 6 for an average retirement income (by the time you have to sell some to repay the mortgage and pay capital gains tax).

The days of anyone being able to make money on being a landlord are largely gone. It takes knowledge and experience or being a builder or very good at DIY. Plus, you have the new landlords tax coming in which will hit rental yields.

Rental properties can also impact on your affordability on your own mortgage.

I am also unsure as to what to do with the money for now!!

You can only do savings with your criteria as you are undecided and probably need a good chunk of it in the short term.

You should also look at your pension as retirement creeps up on you and every year you delay costs you more in making up the missed years. Does your employer offer a scheme?

Linton

There is no tax on gifts, so no problem there. There are some risks if the gift was made to avoid tax or care charges. You can ask about these if it applies in your circumstances.

From what you have said the best use of some of the money could well be a pension, unless you can live happily on £150/week for quite possibly 30 years or more following retirement, and you wont have any wish to retire early. If you are employed your employer should have a pension scheme to which they contribute - so not not being in the scheme is throwing away free money.

Then you could well consider putting more into a house. But I suggest you dont go wild. Perhaps use some of the money to buy the sort of house only slightly better than you would have been happy with if you hadnt received the gift, or to provide a higher deposit and get a better deal on the nortgage.

If after a pension and an allocation to a house and the many expenses a house could entail there is significant money left, I suggest you talk to an IFA about longer term investments. I am assuming that your ISAs are cash, that you know little about investments, and that there will be several months living expenses continuing to be held in cash ISAs for emergencies.

Unless you have house maintenance skills and a desire to run a small business I wouldnt suggest buying a property to let. Investing is a lot less hassle.

Kernow666

was the phonecall from a guy in nigeria ?

bigfreddiel

It's good that you take time to think it through.

Put the money for now into ns&i income bonds, I the name of the person with the lowest income. £100k will pay about £75/month, and it's paid gross so you may have some tax to pay, but you have to declare it. Next year it will be tax free!

Second DON'T go down the rental route. It's not as easy as you would think.

Too many regulations to worry about, income is taxable, and then you get to the tenants who will be a nightmare at some time or another.

Finally maintaining the property, and periods without tenants. Each month without tenants you're losing 1/12fh of your annual income and then there's the problem of nightmare neighbours or developments that will devalue your property.

Go for a nice balanced simple portfolio of equities and bonds.

Read up about passive portfolios. The monevator web is a good start.

Good luck fj

wannaberich84

Hi All,

Thank you so much for the replies. Yes the money has been a gift from a family member.

I was thinking of buying a 2 bed flat for around 95K I would need to put down around 25K. The mortgage would be really low around £380, the rent I would get would be £650, I would want to go through a letting agent as I don't want the hassle of dealing with the tenants on a day to day. I'm not wanting to get an income each money from this, so what i'm taxed as long as its not a lose and its covering the mortgage i'm happy. I'm just thinking as I don't have a pension, in 35 years time i'll just sell it and have a big chunk of money that I haven't saved. I'm ok with a few months it not being let out I always have a just in case fund.
But you lot have kind of put me off. I guess i have always rented and get annoyed I'm paying someones mortgage.

I'm in a low paid job and haven't been there long enough to start a pension fund, when this changes i will start paying in. I'm years behind and ill never be able to save much due to the amount of money I earn.

I am now looking at houses that are only a little more, I was going to have a 20% deposit before but will be able to up this now.

I shall go and speak to a Financial Adviser so thanks for the links. I shall look into the NS&I Income Bonds also.

kidmugsy

My own rule of thumb for BTL would be to buy only a property that I'd be prepared to live in myself, because that might be the fall-back option if the letting market sours. The forthcoming changes to the taxation of BTLs might well sour the market.

"never be able to save much due to the amount of money I earn": then this gift could be life-changing, adding enormously to your financial security. Take your time: caution is the order of the day. Happily inflation is low so there is no great harm in keeping it in cash at the moment. Best of luck!

xylophone

Yes the money has been a gift from a family member.

The family member should make a note of the gift and keep it with his will just in case of IHT implications.

http://taxaid.org.uk/guides/information/other-taxes-you-may-need-to-know-about/inheritance-tax/828-2/lifetime-gifts

justme111

How much do you have left from your monthly pay after paying for accommodation? What is the mortgage rate on the house you were going to buy as yr main residence ? I take it you are about 30, am I right ?
Congratulations on your gift by the way.

atush

Buy a house to live in, not to rent. If you dont have a pension yet, it is too early to think of BTL.

Keep back enough cash to cover a min of 3 months outgoings.

start paying into a pension, your work one is the best place to start (not BTL- that is for later on when you have lots of investments).

Buy a house to live in.