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AIBU to ask what to do with this money?

(35 Posts)
Swapsie Wed 27-Mar-13 06:01:07

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.

cantspel Wed 27-Mar-13 16:49:48

If your income is only £20k and a flat would cost £100k and you have a £10k deposit plus enough to cover buying costs i still dont think you would get a mortgage as your income is too low.

Stick it in an isa and forget about it until you are in a better position to buy.

Swapsie Wed 27-Mar-13 16:30:34

Thanks everyone, great advice all round. I think it will be a fixed term ISA for the money and thanks for helping me pick my way through the house costs/buying forest.

TheCraicDealer Wed 27-Mar-13 13:33:31

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.

Yeah, that's what I'd do. A 10K deposit will probably get you a property of, what, £100K? And at that, you'll be getting a uncompetitive interest rate because of your low level of deposit.

So you might as well save a bit more and get a better deal or smaller mortgage. If your DP is reluctant (or can't) to wait and save then I'd be a bit hmm at committing to a mortgage.

chris481 Wed 27-Mar-13 13:29:42

When I bought my current flat, the total cost of stamp duty, solicitors fees, new carpets and curtains, new furniture, repairs etc was about £20,000 by the end of the first year. That was at 1998 prices.

Don't buy unless you are going to stay for a long time.

myalias Wed 27-Mar-13 13:24:52

Put it in an ISA or a notice account, you won't regret not having holidays when you are sitting in your own home in a few years time.

KellyElly Wed 27-Mar-13 13:21:01

I would take £1000 out of it and treat yourselves to a nice holiday and put the rest in an ISA.

treas Wed 27-Mar-13 12:53:05

Premium Bonds!!

Actually property would be a good way to go

cjel Wed 27-Mar-13 11:47:37

I would buy. If you want to be home owner leaving it in an isa would be waste of time as you will also be wasting three years rent which could have been reducing mortgage, it is never a good time to buy always a better time around the corner and while yo are waiting your life is going. I have been house owner for 33 years and seen it come and go .As long as you are not buying in a boom you won't lose long term

Crawling Wed 27-Mar-13 10:34:24

I would put it into savings until you move then buy a house with it. I would also try to add as much to it as you can.

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.

Lonecatwithkitten Wed 27-Mar-13 08:18:49

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.

Muser Wed 27-Mar-13 08:17:09

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,.

Swapsie Wed 27-Mar-13 08:10:42

No debts - student loan aside.

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

Muser Wed 27-Mar-13 08:06:38

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 Wed 27-Mar-13 07:59:43

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)?

whois Wed 27-Mar-13 07:38:13

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 Wed 27-Mar-13 07:33:35

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.

maddening Wed 27-Mar-13 07:28:36

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 Wed 27-Mar-13 07:27:01

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.

LadyFlumpalot Wed 27-Mar-13 06:55:47

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.

Suzieismyname Wed 27-Mar-13 06:54:24

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!

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?

ArtVandelay Wed 27-Mar-13 06:51:08

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!

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

Tabliope Wed 27-Mar-13 06:50:48

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.

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