AIBU to ask what to do with this money?

[Swapsie]

I am a regular and have name changed.

I was unexpectedly left £10,000 in a relative's will. I realise this is an incredibly fortunate position to be in and I feel quite guilty knowing that others on the boards are having a really tough time of it finacially.

We live in a rented flat and DP has suggested that we use it as a deposit. I don't think it would be enough and our joint income is quite low (about 20k a year, plus some casual work) so we won't get much of a mortgage I'd imagine. 90k-100k would buy a one bedroomed flat round our way. DP seems keen to buy.

Even if we were to buy (somehow) the situation is complicated by the fact that we will probably have to relocate in about three years time due to work.

I am a bit worried that property prices could keep on falling and we'd lose this money and there is no chance of us getting that sort of cash again.

Any advice greatly appreciated and I know this falls under the 'luxury problems' category.

[Bearandcub]

What about an ISA instead whilst you decide?

[BadgerFace]

An ISA is a good idea. If you are already in receipt of the cash then make sure you open one before 5 April to use this year's allowance and you can then put the excess into the ISA after 5 April to use next year's allowance. Moneysupermarket will help you find one with a good interest rate.

If you might want to use the money within the next year then make sure you get one with no penalty withdrawals.

[ohforfoxsake]

I'd stick it away into a 3 year bond or ISA and use it to move in three years.

Utterly boring I know.

[Mondrian]

Interest returns on savings is so low that 10k will not bear any returns of note. Stocks and shares are pretty risky, specially now. So given lack of alternatives investing it in property might be the only viable option. Not sure where you are looking to buy but majority of England bar SE has seen a price decrease over past 3 yrs so don't expect it will fall that much more, not the budget end of the market anyway.

[Molehillmountain]

Mondrian-is that strictly true with isas? She would get 2% or do which is better than nothing while they decide what to do. Op - do an isa but remember to act quickly so you can get all of it into an isa using this years allowance and next.

[NeoMaxiZoomDweebie]

I would buy a caravan so that you can have nice holidays regularly. Like you, I rent and it's going to take a massive pay rise to make buying a house a realistic option. I think a caravan would improve my life a lot.

[LetMeAtTheWine]

I personally would look for advice on moneysavingexpert.com. Will probably be able to direct you to the right type of account based on the amount you have.
Lucky you OP, and don't feel guilty - it was left to you!

[DolomitesDonkey]

Given inflation, over-inflated stocks (or are they given hidden inflation), money grabs, housing uncertainty, pitifully low interest rates and so forth - I'd probably go for physical assets which can be hidden and will retain their value. E.g., diamonds.

Or, I'd have the holiday of a lifetime - I've never regretted travel.

[HollyBerryBush]

I'm the rainy day saver. I'd tuck it away.

[Tabliope]

I'd buy. Negotiate hard to get as much off the property you buy as you can. You can always rent it out in three years time. If you're finding it hard to get on the property ladder now I can't see it being any better in three years time. Properties are still overflated and I thought they'd be down further than they are now but they aren't so how much further could they fall? Check areas that have held up well overall as that is where you want to buy - decent schools etc.

[overmydeadbody]

Put it in an ISA and keep it to go towards a deposit in three years time.

[ArtVandelay]

I would also stick it in ISAs, savings etc. It's not really enough to comfortably buy somewhere. This money could be a wonderful gift in that it provides you with a safety net and some peace of mind. Sweating every month to pay a mortgage and worrying about negative equity would be horrible.

Also, he is a DP not a DH so, IMO, he shouldn't be exerting pressure on you to do this. I mean a DH shouldn't either, but I would worry about losing my investment or legalities should you split up. If you did go down the road of buying property then I'd be drawing up something with a solicitor. Hmmmm maybe I have read relationships board too much lately... Good luck with your windfall!

[overmydeadbody]

Tabliope maybe in three years time their combined income will have gone up enough to make buying easier?

I know mine will have.

The thing with buying is can they afford the monthly mortgage?

[Suzieismyname]

if you're going to be moving in 3 years anyway and are not certain about buying now, don't. It costs a fortune to move so I'd lock it away in a 3 year high interest account or something like that. minus a couple of hundred for a treat for you!

[LadyFlumpalot]

Ok, I don't know your situation, bit if I were given £10k I would:

Pay off all debts (4k)
Put money aside in savings (4k)
Put money in DS's account (1k)
Go on holiday (1k)

Like you, we rent, and barring the obvious setbacks like its not your own house and you could get kicked out, I personally think it's preferable to having a mortgage.

Boiler breaks - landlord pays
Guttering falls down - landlord pays
Oil tank splits - landlord pays

Depreciation in property value - not your issue.

[Swapsie]

Thanks everyone, I had thought about an ISA, something which was difficult to get the money out. so I'm not tempted to spend fritter it.

Whilst I am worried about price falls etc. I am also a bit worried that prices will go up again, which if they went up that would well and truly shut us out forever. I will get a professional qualification in about two years time (fingers crossed) and if the work, mostly short term contracts at first, should lead to a significant income boost. The plan is for DP to stay in our hometown until I get a permanent contract.

I suppose what is going to happen with the property market - nobody knows. ISA would certainly be a safer bet.

[maddening]

I would not buy if you are moving in a few years - the cost of solicitors etc is big then to sell it would be estate agent fees on top of solicitors not to mention possible depreciation, possible costs of upkeep.

Plus if you intend to start a family in a few years you will need more than 1 bedroom -wo ddefinitely save it and keep adding to it if you can.

[Swapsie]

Art no pressure being exerted, I asked, 'what do you think I should do with this money' I was a bit befuddled as I have never had this sort of money. so know nothing of savings and investments really. DP is in the same boat.

[whois]

I agree woth posters who say not worth buying if you are intending to move soon as the costs of moving are huge.

Chuck the money in an ISA and you will get 2.5% which isn't particually good when you consider inflation but it will retain the flexibility to purchase something in 3 years when you will have a better idea of where you want to live.

If you buy with DP then defo get an agreement drawn up about who contributed what capital and how that would be extracted on sale of the house as it gets tricky if the house prices rises (or falls!).

Your joint income is pretty low, doubt you would get more than 4x and with a high LTV (your deposit is small even for a £100k house) rates available to you will be high. Would you be ale to afford a mortgage plus all the other costs of owning a house?

[Swapsie]

Whois I thought the interest rights would be higher, but wasn't sure what the cut off point was.

In addition to earned income (most DPs) I also get a stipendiary payment for my course - it is about 13,000 tax free, but I don't think it would count on any mortgage application (and is only guaranteed for 2 more years) so paying the mortgage won't be as much as a struggle as getting one in the first place.

Just out of interest, what are the costs like associated with moving (aside from hiring a transit)?

[Muser]

Do you have any debts at all? If you owe anything, pay it off as the interest rate you would get on saving this money would be cancelled out by the interest you pay on the debt.

Costs of moving: removal firm/hiring transit, deposits (if renting), solicitor fees/surveys if buying, stamp duty (although I think at your budget you'd skip that). The solicitor fees and surveys is something to think about if you tried to buy now. You would need additional money beyond that 10k to pay for that. You're looking at a few grand.

[Swapsie]

No debts - student loan aside.

Thanks for clearing that up Muser the whole prospect of flat buying sounds even less feasible and appealing!

[Muser]

In current climate I certainly wouldn't be buying if it was likely that you'd move again in 3 years. When house prices were crazy it would probably be worth it as in those 3 years you'd make a profit. At the moment it's probably more advantageous to wait as you might get a better deal as a first time buyer in a few years. Plus if you buy now you then have to sell, which is another chunk of money to an estate agent.

Stick the money in an ISA and if you can start saving every month to top it up so in 3 years you have a bit more or a nest egg to put towards a flat,.

[Lonecatwithkitten]

If you are thinking of an ISA you need to crack on as you only have 10 days left of this years tax year to utilise it and you can only pay into 1 ISA per tax year.

[BaronessBomburst]

I'm inclined to agree with DolomitesDonkey - Diamonds and a holiday. DH and I had a small lump sum when we were first married; it wasn't quite big enough to do anything sensible with. We used it to tour round China, and the following year used the rest to travel in Peru, Bolivia, and the Amazon. We have never regretted it.