£200k inheritance, property ladder or not?

ReadySteadyPop

https://www.bloomberg.com/news/articles/2024-12-19/uk-10-year-yield-rises-to-highest-in-more-than-a-year-before-boe

I still say money market fund and drip the dividends into U.S/Global trackers while avoiding excessive mortgage debt, talk today of the U.S "Ten Year" going to 6%, VERY difficult for the BOE to keep mortgages low here if that happens.

ReadySteadyPop

Sensible move today by the BOE, they will soon need to be raising rates again though so I would be perfectly comfortable with 200k in a savings account rather than property at the moment.

Herzlos

You're not going to address any of the points, then?

I'm right, aren't I?

Herzlos

ReadySteadyPop said:

Herzlos said:

You're not going to address any of the points, then?

I'm right, aren't I?

You seem VERY emotionally triggered by opinions different to yours, that much is very evident from your posts. It is obvious that the OP isn`t coming back to this though don`t you think? Roll on the rate hikes next year I say, absolutely great news for savers.

I'm not a fan of people posting misinformation and bad advice. Following your advice could cost people a lot of money.

Your unwillingness to address the questions just shows that you know it's bad advice. I'm perfectly happy to see differing opinions, but they need to be backed up with something when they are contrary to everything else. How many other posters on here agree with you vs how many disagree with you?

newsgroupmonkey_

ReadySteadyPop said:

Herzlos said:

ReadySteadyPop said:

200k in a money market fund wouldn`t be a bad idea in my opinion.

https://uk.finance.yahoo.com/news/uk-10-yield-nears-highest-115153550.html

Of course that's your opinion, but your opinion has ruined you financially and no-one else agrees with it.

All I can see in that article is that the base rate is predicted to stay the same and not rise like you claim.

 I said that mortgage rates are going to rise, base rate isn`t really relevant, bond markets dictate the price of debt. I also predict that it is going to kick off in the markets tonight so any traders/investors with 200k not locked in a property, good luck! And for what it`s worth anyone on the internet pretending that they know the financial position of other strangers on the internet would be totally ignored by me regarding any financial advice, I hope newbies are aware.

Newbies need to be aware that in 2003, you persuaded your wife (we've not heard of her since) to sell your house because a huge price crash was about to occur.

Now, in 2003, the Average price of a house was £77k. Today, it's £221k. That's nearly triple a return.

And here's the thing. If you'd invested your £77k in the very best performing fund and let's say it returned £221k, not only would you have paid at least £150k or more in rent, but you'd also be paying 40% CGT on the difference!

Even you have to see that's absolute madness?

ManuelG

ReadySteadyPop said:

ManuelG said:

I would buy, keeping enough back for a new roof if needed etc.

If nothing else chances are your mortgage will be less than rent, so you'll also be able to save!

Early in the thread the OP said this....

"We are currently paying £1400 a month to rent in Devon. We've looked at mortgage options with putting down a deposit of £150k, which leaves us with monthly mortgage repayments of between £1,800 and £2,200 a month, depending on the house price. So not cheaper than renting "

If interest rates spike again for any number of reasons related to an increasingly unstable global outlook buying now could be a total disaster.

I'd start by looking at a smaller house / less desirable area then. If they're not saving at current rental they certainly won't be at that.

horsewithnoname

Murphybear said:

 Devongardener said:

Definitely buy a property, you really don’t want the high cost and insecurity of renting once you reach retirement age and have only pension income.
We didn’t buy until our mid forties, and worked hard to pay off the mortgage before we retired, and feel so thankful that we have the security of a paid off house, not at the whim of a landlord.

If you are living in rented accommodation when retired and only have a pension income you will be eligible for some/all of your rent and council tax to be paid.  It’s not as dire as people make out.  Plus with renting you have no maintenance charges.  

Most landlords want good long term tenants and few tenants have to rely on “the whim of a landlord”.

Having worked in the business for years I had hundreds of landlords/properties and thousands of tenants to deal with so have a lot of experience.  If the new landlord/tenant rules actually come into being tenants will have more security.  

Yes you are at the whim of the landlord. For one thing chucking you out because they want to sell* and not even considering you because of your income, never mind that you have paid rent without fail for twenty years. And god forbid you want some maintenance work done - your rent goes up again.

tenants need more security and landlords need to be better able to get really awful tenants out, but not to just be able to get someone out just because. 

* yes I know only the court can evict someone and all that, just simplifying it. 

ReadySteadyPop

ManuelG said:

ReadySteadyPop said:

ManuelG said:

I would buy, keeping enough back for a new roof if needed etc.

If nothing else chances are your mortgage will be less than rent, so you'll also be able to save!

Early in the thread the OP said this....

"We are currently paying £1400 a month to rent in Devon. We've looked at mortgage options with putting down a deposit of £150k, which leaves us with monthly mortgage repayments of between £1,800 and £2,200 a month, depending on the house price. So not cheaper than renting "

If interest rates spike again for any number of reasons related to an increasingly unstable global outlook buying now could be a total disaster.

I'd start by looking at a smaller house / less desirable area then. If they're not saving at current rental they certainly won't be at that.

The point is that once the 200k goes into property it`s "earning potential" is gone, you are basically gambling on the future being like the past i.e property as a one way bet and easy to sell when you want to, the 200k is money they didn`t have before and should be treated as "Liquid Capital" in my opinion rather than money to tie up in the most illiquid asset there is. The interest on 200k would pay for a rental so therefore you have free living costs (you didn`t have the 200k before remember) and could add more salary to a pension or other savings vehicle. Drip the 200k into a money market fund held in an ISA over a period of years for tax free income.

Stubod

So, 200k might get you £750 a month to rent a (small) property, (possibly even less after tax). 

After 1 year your rent goes up, but your "capital" stays the same assuming you have "wasted" all your interest on paying rent to somebody else, so the next year you now need to find additional money to pay the rent which has now increased, so your £200k is now reduces in value further, (even more considering inflation).

Fast forward a few years and your £200k is slowly wasting away and you have nothing to show for it? 

At least if you use it to buy a property, that property will have increased in value...

..but I accept, each to their own and if you want to give your money to somebody else and have no real security then it's a free country to do as you see fit....

Herzlos

ReadySteadyPop said:

ManuelG said:

ReadySteadyPop said:

ManuelG said:

I would buy, keeping enough back for a new roof if needed etc.

If nothing else chances are your mortgage will be less than rent, so you'll also be able to save!

Early in the thread the OP said this....

"We are currently paying £1400 a month to rent in Devon. We've looked at mortgage options with putting down a deposit of £150k, which leaves us with monthly mortgage repayments of between £1,800 and £2,200 a month, depending on the house price. So not cheaper than renting "

If interest rates spike again for any number of reasons related to an increasingly unstable global outlook buying now could be a total disaster.

I'd start by looking at a smaller house / less desirable area then. If they're not saving at current rental they certainly won't be at that.

The point is that once the 200k goes into property it`s "earning potential" is gone, you are basically gambling on the future being like the past

Only if you don't need to pay rent somewhere else. That £200k into a mortgage could be a saving of £1000/month which you could invest. That's easily double what you'd make on having the £200k in savings by the time you pay tax on it, and that's not factoring in the rent you'd still have to pay.

Gambling on house prices going up is about the safest bet you can make over the long term. Even if the house price doesn't go up any, your borrowing ("rent") will never go up and will eventually stop.

My £250k house could be worth £0 and still save me more than renting would by the time I retire.