investing faff-please help

havingaball74

Hello,
I have a joint mortgage with my partner but he put down the 45k deposit. I put down nothing.
I own a terrace house outright which is currently sitting empty and is worth around 110k.
I want to release 45k equity to equal my partner's deposit on the house and bring the mortgage payment down from 1k a month to £600.
I have a regular income and pension.
My question is...do I/would you...
1. Get a BTL mortgage and release 45k equity (I could rent it out for £500 per month)?
2. Sell and, after putting down the 45k, invest the money elsewhere?
I was always keen to sell and then invest, but after much thought and research, I have no idea what I am doing and people have said that paying an IFA to invest the 65k for me, would be a waste of money and would would negate any profits. So, I thought BTL but with that brings tax, law changes and potential problems. I falsely assumed that investing the money through an IFA would be less stressful than being a landlord, but it seems so complicated/less profitable and as stressful. Now, I am thinking BTL as I would get a monthly income as well as hopefully a capital growth.
To add to all this, the house has remained empty whilst I faff, so I am losing cash. Just to do SOMETHING I put the house on the market and an offer was put in by an investor. I accepted it and the balls are now rolling. I am so confused.

dunstonh

people have said that paying an IFA to invest the 65k for me, would be a waste of money and would would negate any profits.

Which is obviously complete rubbish.

I falsely assumed that investing the money through an IFA would be less stressful than being a landlord, but it seems so complicated/less profitable and as stressful.

Investing via a IFA is massively less complicated. You can also DIY. Profitability is unknown as no-one knows the future of the various asset classes.

Frozen_up_north

Please take my thoughts with a pinch of salt...

Firstly, an IFA is in business to primarily earn themselves an income from clients, if they can keep the same clients returning, it's a nice little earner for them. It's not easy to give "reliable" advice, remember all the financial experts that were proven wrong in recent weeks -and they are supposed to be the cream!

Making money from letting a single property is not without risk, see "Can't pay, we'll take it away" on TV for many examples where tenants fail to pay their rent for months and sometimes trash the house as well... An option could be to sell the property, put £45K into the joint house and invest the rest.

Companies such as Fidelity have on-line investment tools that allow you to pick based on risk and time period over which you plan to keep the investment. While share values can go down as well as up, there are some fairly steady managed bundles aimed at small investors. You can invest £15K each year in shares under an ISA wrapper to minimise tax, and move shares to ISA wraps each year too. Over 3 or so years all your investment could be in ISA shares.

I have around £120K in shares, most of which are ISA based, a mortgage free property worth around £100K, a partner who owns a similar value property and some £20K in cash savings. I was looking to move some of the shares into cash, but with cash returns going from bad to worse, I am not moving any shares at the moment...

havingaball74

Thanks! I was looking at Fidelity and came out as low/medium risk when completing the questionnaire. Fidelity recommended a SIPP. What is an ISA wrapper? Is that a stocks and shares ISA? So, which is better: a SIPP or a stocks and shares ISA? How do you make it tax efficient. I am a real worrier so I was hoping to stick the cash somewhere and then come back in 20 years (like my teacher pension) and get a good return (hence initially dismissing renting my house out, even with an agent). I have seen IFAs but the first thing they ask is "Do you want to be a landlord?" Well, I want a worry free investment (as much as I can) and it is hard to calculate the returns/stress factor when weighing up my options. I would never buy a BTL. It just seems bonkers to sell it when it is there.

havingaball74

Frozen_up_north: would you consider BTL?

Frozen_up_north

Take a look at: https://www.fidelity.co.uk/

There is a video or two, and an investment calculator.

I've had shares through them for a number of years and find them very helpful, although they will not give investment advice. My shares are currently mostly Fidelity Money Builder Balanced Fund, although I am looking to move some to the slightly steadier Fidelity Multi Asset Defensive Fund. Both these are actively managed and have an annual service charge of around 1~1.25%. My investments are to provide money for house maintenance, replacement cars, etc. I took early retirement and have final salary company pensions that easily cover day to day costs, hobbies and holidays. Your requirements may differ from mine.

Another company that is highly rated by "Money Which" (from memory their top choice) is Hargreaves Lansdown (http://www.hl.co.uk).

Both companies cater for small investors.

dunstonh

Both these are actively managed and have an annual service charge of around 1~1.25%.

That is getting more expensive than an IFA. All you are doing is transferring the cost to Fidelity. You are also about double what most DIY investors would be looking to pay.

remember all the financial experts that were proven wrong in recent weeks

Which?

jimjames

havingaball74 wrote: »

So, which is better: a SIPP or a stocks and shares ISA?

We can't say which is better.

One is accessible now, the other when you are over 55 (or retirement age set at the time). One has tax relief on money in, other is tax free for all money coming out.
The same investments can be held in both.

Pincher

Interest on up to the initial purchase cost is tax deductible.

So, if you bought the terrace house originally for £60k, and you borrow £80k, only the interest on £60k is tax deductible.
If you pay higher rate tax, the tax deduction is only at basic rate.
Even the basic rate tax relief may disappear in a few years.

The property you are buying jointly is your second property, so you will incur 3% extra stamp duty. If you sell the terrace house in reasonable time, so you end up with one property, you can claim the 3% back.

Frozen_up_north

dunstonh wrote: »

"
remember all the financial experts that were proven wrong in recent weeks"

Which?

Mark Carney for a start with his talk of doom and gloom if we voted to leave the EU for a start. There were plenty of others talking the economy down if we dared to vote leave... Since 24th June shares typically jumped around 7%

dunstonh

Mark Carney for a start with his talk of doom and gloom if we voted to leave the EU for a start.

He isnt wrong.

There were plenty of others talking the economy down if we dared to vote leave... Since 24th June shares typically jumped around 7%

The economy is going downhill fast.
Shares are higher because that is what happens to assets valued on a global stage when sterling falls. Plus, there is some relief that it will only be the British that will suffer with Brexit and not the rest of the world.
Do not mix up share price with the UK economy.