Should I Buy Or Invest?

woodstoke

I own a freehold cottage in the grounds of a secure unit development and the developers want to buy my house and have made me a very good offer on it for £180,000 cash. After paying my mortgage this leaves me with £151,000, i don't know whether to invest the money and use the interest to pay rent at £500 per month, food bills etc.....and wait for the property crash to buy another house.....does anyone know of any high interest accounts to invest this sort of money and do i pay tax on the interest..... maybe for one year tie up the money to get a better interest deal i do want to buy another house eventually but would prefer to wait for the crash then buy a bargain.....any advice would be appreciated....thanks

chesky369

Have you accepted this offer? If this is the developers first offer, then you bet your sweet life that, even allowing for the credit crunch, it's worth a whole lot more. Also, £151,000 sounds a lot of money but what can it buy you locally right now - in the end, it's all Monopoly.

woodstoke

I have checked with the local independent agent that valued a year ago and its worth about the same...probably at most 2% more so will negotiate on that as this is the first offer...at the moment locally not a lot for sale that we like.....which is why maybe we should wait a year and the houses we like will have come down to our sort of price...any ideas?

EdInvestor

You can put 3,600 in a cash ISA and 30k in N&SI index linked certificates payable tax free. Also premium bonds.

The rest will be taxable.

chesky369

... a year and the houses we like will have come down to our sort of price ...

I don't know - never seems to work out like that in reality. The houses I like are always a bit more expensive than all the others.

As far as saving goes, I think premium bonds are really a bit of a waste of time. The cash ISAs are good. Either put it in a good one year fixed term saver - there are several around at 7%-ish - or see an IFA. Remember, you only pay tax on the interest, so you're still ahead on points.

MoneyTown

woodstoke wrote: »

I have checked with the local independent agent that valued a year ago and its worth about the same......any ideas?

Chesky had it right. Forget Estate Agent's market value, think what it is worth to the developer and that may get you a better price.

amcluesent

Also, consider asking the developer for a (transferable) right of first refusal on any unit when the plans are agreed.