Selling Up And Renting???

merlinthehappypig

STRAWB wrote: »

Not really a option as we need 3 bedroom and as we live in somerset we would not get alot for 100k if anything at all. So is 6% the best i am looking at for £200,000

In a similar position (and also in Somerset) I have put £6000 in ISA's (£3000 each myself and my wife) and the rest is spread around a number of savings accounts. 6% is about average, I'm not getting less than that anywhere, but aim for 6.25% (Sainsburys and a few others). 6.41% is the best I have at the moment, 7% on the ISA. These are all instant access accounts - you will get more if you are prepared to tie it up for a year or more, but watch the interest penalties for withdrawals.

As far as spreading it around is concerned it's up to you. You will lose some interest compared with dumping it all in the top paying account, but will at least have it protected in the unlikely event of a bank going bust (£35000 max per person in each account, so £70000 in a joint account).

If you are paying higher rate tax, then I believe some of the National Savings certificates are paying a decent rate, but you need to tie the money up.

Yes you will need to declare any interest as income, but if you are having it paid net of tax, it won't actually cost you any more. Not being self-employed myself though, you will obviously need to check all this out with your accountant. You might be better off paying off any business related or personal debts before saving the money.

That said, you really ought to post this on the savings board if the FAQ's don't answer all your questions (though they will, I think).

PasturesNew

mlz1413 wrote: »

just a thought but if your putting 200k into say a 6% account that's £1000 pm interest gross, less tax at 22% is £780pm nett.

If your going to spend a large chunk on rent, say £500pm, would you not be better to down size? spending say £100k on smaller place no mortgage and then getting £390 pm interest on surplus £100k?

Depends on the reason he's doing it. If it is a straight STR for, say, 4 years...

If that £100k house is worth £75k in 4 years' time, then it's "cost":
loss of interest on £100k = £390/month
loss of equity = £6250/year = £130/month
buying/selling on the downsized house = £4k = £1k/year = £90/month

And: £100k buys pretty much b***** all most places, so might not be an option.

I think I'd rather keep the £200k and just not spend all the £780/month on rent. In fact ... that is what I am doing right now.

merlinthehappypig

PasturesNew wrote: »

I think I'd rather keep the £200k and just not spend all the £780/month on rent. In fact ... that is what I am doing right now.

Me too, with slightly different figures, but the same principle, though sadly not for much longer, I think.

mlz1413

Pasturesnew i agree it does depend on the reason, but with so many people on here saying that they rent and get turfed out 6/8 months later and don't get the deposit back then the 'cost' of renting for 2 years could easily eat into the capital sum.

It does all depends on how highly each person rates different factors in life and thankfully we are all different.

In mine stability is very high (i've done the moving bit), so whilst my mortgage is the same (or less) then renting I really don't care about the price of the house - it will always be worth the 2nd rung on the ladder regardless of if it goes up or down.