Savings Advice - £130k

jplayy

Hey all,

New to this forum so please go easy! I'm looking for some advice on what to do with my savings. Current situation:

Age - 29
Salary - £70k
Savings - £130k (following the recent sale of my home)
Outgoings - Not currently paying any rent as moved back with my parents following house sale (they won't accept any rent, before anybody tells me I should be [I've tried, often]). Aside from my studio loan and phone contract, I don't have any other outgoings and usually save around £2k a month.
Future plans - I'll be moving into a rental property around April. Probably be looking at buying a house in 2023 c.£550k with a 10% deposit. By that point I expect to have saved minimum an additional £10k.

Assuming at that point I had £140k, minus the £72k for house deposit I'd be left with around £70k. I'm wondering if somebody could give me any advice on what to do with this money? It's currently sitting in a savings account with 0.6% interest on it. I've been looking into a potential buy to let repayment mortgage to keep for a long while to pay off that mortgage with rental income, though it seems this is more difficult to do until you have your own property. I've also been looking into Nutmeg but with a "moderate" willing for risk, the returns don't really seem to be worth the effort. Do I just put more money into the deposit when I come to buy next year? I'm very new to all of this.

Any advice would be hugely appreciated, thanks!

Robin9

What pension arrangements have you made ?   Do you pay into your employers scheme ?

jplayy

I contribute 3%, company contributes 5%.

jimjames

If you've got £140k would it be better to put a bigger deposit to get a better mortgage rate? 20% deposit should be significantly better rate than 10% deposit

MaxiRobriguez

jplayy said:

Future plans - I'll be moving into a rental property around April. Probably be looking at buying a house in 2023 c.£550k with a 10% deposit. 

Unless you are buying with a partner or friend who earns at least £40k, you're not going to be offered a mortgage on those figures. 

jplayy

MaxiRobriguez said:

jplayy said:

Future plans - I'll be moving into a rental property around April. Probably be looking at buying a house in 2023 c.£550k with a 10% deposit. 

Unless you are buying with a partner or friend who earns at least £40k, you're not going to be offered a mortgage on those figures. 

Yep that's exactly what I'm doing (partner). Nationwide would offer 2 year fixed 1.49% for 10% deposit, 1.09% for 20% deposit. Difference of £230 per month.

MaxiRobriguez

jplayy said:

MaxiRobriguez said:

jplayy said:

Future plans - I'll be moving into a rental property around April. Probably be looking at buying a house in 2023 c.£550k with a 10% deposit. 

Unless you are buying with a partner or friend who earns at least £40k, you're not going to be offered a mortgage on those figures. 

Yep that's exactly what I'm doing (partner). Nationwide would offer 2 year fixed 1.49% for 10% deposit, 1.09% for 20% deposit. Difference of £230 per month.

In that case, if it were me, once you're in your new house then I'd be salary sacrificing (if that's an option for you) as much as possible into my pension, all the way up to the £40k, regardless of whether my employer contributes or not, whilst using the £70k savings as cash-flow for a few years to make up for the lost income if need be.

If you can still live off the adjusted salary then I'd move those savings into a S+S ISA over the next three years instead.

Whatever you do I'd be holding back at least £10k for emergencies, maybe double.

Albermarle

jplayy said:

I contribute 3%, company contributes 5%.

Basically this is too low .
As a higher rate taxpayer , pension contributions are very tax efficient .
Of course you can not access the money until your late Fifties but your future self will thank you .
Whilst you work out exactly what to do, at least increase this 3 % contribution rate .

enthusiasticsaver

Pension contributions and/ or stocks and shares isas after keeping aside a decent emergency fund.  6 months expenses is a suggestion. 

jplayy

No recommendations on a buy to let? Re stocks and shares how would you advise going about this? Any thoughts on Nutmeg?

london21

jplayy said:

No recommendations on a buy to let? Re stocks and shares how would you advise going about this? Any thoughts on Nutmeg?

You are a higher rate earner.
BTL not as favourable nowadays.

Increase your pension contribution.
Long term can invest in lower risk funds using ISA.
I do not have experience with Nutmeg, currently use HL but shop around to find the cheapest and best or maybe others might have experience of Nutmeg.