£200k inheritance, property ladder or not?

BungalowBel

I can't actually see any negatives in buying a house providing you can pay the mortgage.

kempiejon

BungalowBel said:

I can't actually see any negatives in buying a house providing you can pay the mortgage.

Well it ties the money. I can see that has a downside if you're keen on using it to spread joy and experiences, to upskill, to indulge, for philanthropy.  
It might reduce housing costs though.

ReadySteadyPop

kempiejon said:

BungalowBel said:

I can't actually see any negatives in buying a house providing you can pay the mortgage.

Well it ties the money. I can see that has a downside if you're keen on using it to spread joy and experiences, to upskill, to indulge, for philanthropy.  
It might reduce housing costs though.

Or keeping it to provide a strong financial foundation for yourself?

ReadySteadyPop

BungalowBel said:

I can't actually see any negatives in buying a house providing you can pay the mortgage.

You no longer have a 200k cash cushion is the main negative in this case.

Herzlos

ReadySteadyPop said:

BungalowBel said:

I can't actually see any negatives in buying a house providing you can pay the mortgage.

You no longer have a 200k cash cushion is the main negative in this case.

Assuming you have equity you can remortgage and get the money out just as fast as some savings accounts.

Plus for the best interest rates you'll probably have the money locked away for a while anyway.

I don't think anyone needs 200k cash on hand for rainy days. 25k is more than enough for most emergencies.

kempiejon

ReadySteadyPop said:

kempiejon said:

BungalowBel said:

I can't actually see any negatives in buying a house providing you can pay the mortgage.

Well it ties the money. I can see that has a downside if you're keen on using it to spread joy and experiences, to upskill, to indulge, for philanthropy.  
It might reduce housing costs though.

Or keeping it to provide a strong financial foundation for yourself?

oh yeah, that.

horsewithnoname

horsewithnoname said:

ReadySteadyPop said:

Imagine the future scenario where you maybe have a mortgage, rates have spiked because of some bond market crisis or credit crunch event (like they did after the Truss budget) maybe there is also an economic downturn and you lose your job, would you then have rather kept 200k handy earning interest or dividends, or thrown it into a property that may now be losing value?

So when did you sell your home, how much for, what is your ex-home worth now and how much are your investments worth now?
Not expecting an answer, but it’s something you might want to ponder on.  

You missed commenting on mine. I feel left out 😂

ian1246

ReadySteadyPop said:

Imagine the future scenario where you maybe have a mortgage, rates have spiked because of some bond market crisis or credit crunch event (like they did after the Truss budget) maybe there is also an economic downturn and you lose your job, would you then have rather kept 200k handy earning interest or dividends, or thrown it into a property that may now be losing value?

Your stance is far too narrow in how you are presenting it. What do you think happens to investments in the event of your economic downturn? They are normally the first to dip.

As for increased mortgage rates - its a risk, yes. But do you know what's also a risk? Inflation. Specifically rent inflation - even without *any* extraordinary events like Truss's budget, rent will only ever go up - even if just to match inflation. Your outstanding mortgage amount does NOT increase with inflation - meaning the only impact on the payments will be the interest rate changes themselves.... which also will impact landlords and thus have just as huge an impact on rental payments as it does on mortgage payments.

The difference is mortgage payments are generally lower than rentals for a similar value property. You can also mitigate against future interest rate rises by sensible planning - a larger deposit to reduce loan to value ratios and an good pension/ retirement planning, allowing the mortgage to be extended into retirement if necessary. Overpayment also help mitigate against future risk.

Someone who owns their property will generally be in a superior position to someone who doesn't - especially when they hit retirement. 

strawb_shortcake

Buying a house has been the best financial decision I've ever made. In almost 9 years of home ownership my mortgage payment has gone from £396pm to now £503pm. We were able to take advantage of a decrease in interest rates and knocked 7 years off. Further overpayments have also reduced our mortgage term from 32 years, to now 11 years remaining.

I have a real choice over where I live, unless I choose to move to a more expensive area or house I will be mortgage free in 11 years, 8 years is my goal.
I can decorate my home as I please, if I wanted I could have pets and smoke in my home (I don't smoke).

If I rented, I'd be looking at £1400 minimum rent per month, limited security and a big decrease in my quality of life and ability to save due to paying triple in rent compared to my mortgage.

I've known more people face upheaval to their lives through renting than home ownership. Even on these boards, posts about renters being evicted far outweigh posts about being repossessed.

For many rent vs mortgage payments may be broadly similar, but 10 years time that balance will most likely have shifted and only improve as your mortgage decreases. 

[Deleted User]

strawb_shortcake said:

Buying a house has been the best financial decision I've ever made. In almost 9 years of home ownership my mortgage payment has gone from £396pm to now £503pm. We were able to take advantage of a decrease in interest rates and knocked 7 years off. Further overpayments have also reduced our mortgage term from 32 years, to now 11 years remaining.

I have a real choice over where I live, unless I choose to move to a more expensive area or house I will be mortgage free in 11 years, 8 years is my goal.
I can decorate my home as I please, if I wanted I could have pets and smoke in my home (I don't smoke).

If I rented, I'd be looking at £1400 minimum rent per month, limited security and a big decrease in my quality of life and ability to save due to paying triple in rent compared to my mortgage.

I've known more people face upheaval to their lives through renting than home ownership. Even on these boards, posts about renters being evicted far outweigh posts about being repossessed.

For many rent vs mortgage payments may be broadly similar, but 10 years time that balance will most likely have shifted and only improve as your mortgage decreases. 

Likewise. Someone very prominent on this forum cautioned me against against buying a house in 2016. By 2024 my properties increased in value by £205k at point of sale. Mortgage interest was typically £200 to £300 pcm vs rent of £1500- £1800 in that time. The same person was amongst many who predicted a crash in 2020. My property increased by 20% thereafter. It is an odd experience that the same person thinks I made the wrong decisions. I will just have to live with being wrong and have to content myself with being quarter million better off.