£200k inheritance, property ladder or not?

Herzlos

kempiejon said:

https://www.rightmove.co.uk/house-prices/details/england-150542858-94493745?s=f29bb3f7e4f7537b441942b9a26fd96291074340b7775ff22906c29f2a082b31#/
4 bed detached bungalow, last sold 2024 £460000.
property value is £460,000, loan amount is £420,000, term is 25 years

5 Year Fixed Mortgage Guarantee Scheme.
£2,574.15 (62 months)			5.48% until 31st March 2030	6.74% variable for the remaining term *

The rental at £1600 looks better has ensuite and you're a grand a month better off.
https://www.rightmove.co.uk/properties/154443737#/?channel=RES_LET

Good example. Similar houses on the same street and the mortgage would indeed be more expensive. The mortgaged house is nicer but not enough to justify the difference.

horsewithnoname

ReadySteadyPop said:

horsewithnoname said:

ReadySteadyPop said:

Herzlos said:

But you leave a rental, where are you going?

Are you saying that people can`t, or never leave rentals?

Generally if they are able to get another rental. And that’s a big if for many, or if they are buying a home or if they are moving to a six foot box. 

Unless they fancy living on the streets of course. Doesn’t appeal to me, but horses for courses. 

 This isn`t realistic for many reasons, here is one.

https://www.msn.com/en-gb/health/familyhealth/number-of-youngsters-living-with-parents-rises-by-more-than-a-third/ar-BB1rfNkc

I can see difficult times ahead for landlords to be honest, especially recent entrants to the BTL sector who used large debt to buy properties.

It’s realistic for people who don’t have parents to move back in with!

ReadySteadyPop

horsewithnoname said:

ReadySteadyPop said:

horsewithnoname said:

ReadySteadyPop said:

Herzlos said:

But you leave a rental, where are you going?

Are you saying that people can`t, or never leave rentals?

Generally if they are able to get another rental. And that’s a big if for many, or if they are buying a home or if they are moving to a six foot box. 

Unless they fancy living on the streets of course. Doesn’t appeal to me, but horses for courses. 

 This isn`t realistic for many reasons, here is one.

https://www.msn.com/en-gb/health/familyhealth/number-of-youngsters-living-with-parents-rises-by-more-than-a-third/ar-BB1rfNkc

I can see difficult times ahead for landlords to be honest, especially recent entrants to the BTL sector who used large debt to buy properties.

It’s realistic for people who don’t have parents to move back in with!

 We were discussing reasons that people in general leave rentals though, without parents they might move to a flat share and pay less rent, or live with another relative or friend or find a job that includes accommodation etc.etc. People are not attached to their rental in the same way they are attached to a mortgage debt.

Herzlos

A flat share is still a rental surely? You're just renting a room instead of a whole unit.

People absolutely aren't as attached to a rental than a bought house, that's a given, but it works both ways in that a rental can be taken away from them almost as easily as they can leave it.

There are definitely advantages to rentals, and I've rented before in those cases, but none of them apply to the question being asked in this thread.

ReadySteadyPop

Herzlos said:

A flat share is still a rental surely? You're just renting a room instead of a whole unit.

People absolutely aren't as attached to a rental than a bought house, that's a given, but it works both ways in that a rental can be taken away from them almost as easily as they can leave it.

There are definitely advantages to rentals, and I've rented before in those cases, but none of them apply to the question being asked in this thread.

Not sure about that nowadays. The question is - should the 200k go into the "property ladder", I don`t even think it has been a "ladder" for some time,  debt ladder possibly if rates go up, so I don`t think we will ever agree on this.

[Deleted User]

Five years ago with a 200k deposit I would have been comfortable taking a 5 year fix at a 3x multiple of salary. Interest rates were so low, it was clearly the better option than to rent, a no brainer. That's exactly what I did actually.

By today, in order to "win" financially, bearing in mind the current interest rates, I would either seek to buy outright for 200k, or use it as a deposit with a mortgage that is at most a 2x multiple of salary.

By all means, push to a 5x multiple but I don't like those interest rates applied to max borrowing. Its at that point that renting might be a competitive option.

ReadySteadyPop

[Deleted User] said:

Five years ago with a 200k deposit I would have been comfortable taking a 5 year fix at a 3x multiple of salary. Interest rates were so low, it was clearly the better option than to rent, a no brainer. That's exactly what I did actually.

By today, in order to "win" financially, bearing in mind the current interest rates, I would either seek to buy outright for 200k, or use it as a deposit with a mortgage that is at most a 2x multiple of salary.

By all means, push to a 5x multiple but I don't like those interest rates applied to max borrowing. Its at that point that renting might be a competitive option.

Interesting points, buying outright is another option (I would say save/invest the money now, add to it and buy outright in the future because this market is far too overpriced and volatile) Bond trader just on Bloomberg a few minutes ago saying that the interest rate environment since 2008 was the "Anomaly" not the "Normal", and when he talks to younger financial professionals who say they started in the business in 2007 or later he reminds them that he started in 1979 and rates/yields CAN go much higher. Tread carefully OP, 200k is not an insignificant amount of money, even in the easy credit age where people have got used to excessive borrowing and spending way above their real means.

ReadySteadyPop

jem1276 said:

Hi, 
We are incredibly fortunate and are about to inherit £200k.
We are a married couple in our late 40's, 2 kids. No debt, but no savings either.
Currently renting, no assets.

1 side of us says use a large amount for a deposit, get a mortgage and buy a house.
Other side says stay as you are, invest it and make it make a much bigger amount for the future.

What would you do? 
Thank you

This turned into a long thread, have you made a decision yet, was any of the discussion helpful?

Herzlos

ReadySteadyPop said:

jem1276 said:

Hi, 
We are incredibly fortunate and are about to inherit £200k.
We are a married couple in our late 40's, 2 kids. No debt, but no savings either.
Currently renting, no assets.

1 side of us says use a large amount for a deposit, get a mortgage and buy a house.
Other side says stay as you are, invest it and make it make a much bigger amount for the future.

What would you do? 
Thank you

This turned into a long thread, have you made a decision yet, was any of the discussion helpful?

You chased them off 21 pages ago.

ReadySteadyPop

[Deleted User] said:

Five years ago with a 200k deposit I would have been comfortable taking a 5 year fix at a 3x multiple of salary. Interest rates were so low, it was clearly the better option than to rent, a no brainer. That's exactly what I did actually.

By today, in order to "win" financially, bearing in mind the current interest rates, I would either seek to buy outright for 200k, or use it as a deposit with a mortgage that is at most a 2x multiple of salary.

By all means, push to a 5x multiple but I don't like those interest rates applied to max borrowing. Its at that point that renting might be a competitive option.

Interesting points.