What to do with 16k?

[seismic22]

Hi there,

Long story but the long and the short of it is that my brother will shortly be buying a percentage of my share in a small family business to a total of £16,000.

I have no involvement in the business.
I do not own a house.
I rent/pay half the mortgage of my girlfriends place where I live.
Income is £32,000 a year.
No debts other than student loan.
No savings
27 years old.

I wonder whether anyone could give me some direction on what is best done with this money / things to start doing some research on?

I would like to use it as a building block to improve my income ideally.

Thanks,

Rory

[Crafty_]

Stocks & Shares ISA ?

Depends how soon you might want the money - new car/house move/wedding etc.

[tleefox]

seismic22 said:

I do not own a house.
I rent/pay half the mortgage of my girlfriends place where I live.

So you're paying half of your gf's mortgage? That's nice of you.

Depending on where you live I'd be using it as a deposit for my own place.

[scottri]

Since you have no savings then i'd suggest keeping most of this cash to create savings. Fill up a cash ISA and normal savings account to about £10k and then if you wish to invest, the remaining £6k into stocks of some sort.

[remkingston]

Keep the shares in the family business and collect the dividends?

[CarlosFandango11]

scottri said:

Since you have no savings then i'd suggest keeping most of this cash to create savings. Fill up a cash ISA and normal savings account to about £10k and then if you wish to invest, the remaining £6k into stocks of some sort.

I'd also suggest that you use most/all of this cash to create some savings. The cash ISA annual limit is now £15,240.

[seismic22]

tleefox said:

So you're paying half of your gf's mortgage? That's nice of you.

Depending on where you live I'd be using it as a deposit for my own place.

Im effectively renting half the house off her. We originally hadnt been together long enough for me to want to go half's with her and I didnt have enough for my share of the deposit. Much much cheaper than renting on my own.

Yes a deposit on another place is an idea but buy to let would be difficult for first time buyer.

[seismic22]

remkingston said:

Keep the shares in the family business and collect the dividends?

Not that sort of situation I'm afraid.

Thanks

[seismic22]

Crafty_ said:

Stocks & Shares ISA ?

Depends how soon you might want the money - new car/house move/wedding etc.

Won't be spending it on Car/wedding etc. Need to use it to help set me up for the future in some way.

Thanks

[Dave350]

Can't you just put it in an S&S ISA for now and then use it to go in on the mortgage come re-mortgage time with the mrs so you are no longer renting and actually paying a mortgage off.

[seismic22]

Dave350 said:

Can't you just put it in an S&S ISA for now and then use it to go in on the mortgage come re-mortgage time with the mrs so you are no longer renting and actually paying a mortgage off.

Yes this is the obvious thing to do but I am wondering whether there are other alternatives that could be better in the long run.

For example, invest the money/buy my own place now/soon and convince the Mrs to add me to the mortgage. I would stop renting and start contributing to the mortgage whilst also paying her an amount each month to even up the deposit situation? This situation would leave me with an investment/second income as well as no longer throwing rent money down the drain.

Thanks

Edited by seismic22 on Monday 6th April 20:15

[Mike22233]

Yes, either co own the house or buy your own.

[mike9009]

Have you got a pension? If so, add more into your pension fund (so you will instantly get 20% extra, through the saving in income tax) Put the lump sum (£16k) into a cash ISA, and live off this compensating the extra you put into your pension from your salary.

Depends how long term you are looking?

Mike

[ellroy]

Is there any impact on the student loan repayment piece you should be aware of?

[Leedssurveyor]

I wouldn't condone this sort of thing but I have heard of people taking out an owner occupier mortgage and then letting it out as a buy to let. This then covers the mortgage payment, and if you buy well potentially even an income to put you into a better position when you are ready to buy. So therefore needing only around a 10% deposit!

Or as a first time buyer you will get a BTL mortgage (job security depending) for a circa 25% deposit, but it will be difficult. I did it a few years ago and a broker proved instrumental, but costly!

[tleefox]

seismic22 said:

tleefox said:

So you're paying half of your gf's mortgage? That's nice of you.

Depending on where you live I'd be using it as a deposit for my own place.

Yes a deposit on another place is an idea but buy to let would be difficult for first time buyer.

If you think you'll carry on renting / cohabiting with the GF don't get a buy to let - simples.

[trowelhead]

Leedssurveyor said:

I wouldn't condone this sort of thing but I have heard of people taking out an owner occupier mortgage and then letting it out as a buy to let. This then covers the mortgage payment, and if you buy well potentially even an income to put you into a better position when you are ready to buy. So therefore needing only around a 10% deposit!

Or as a first time buyer you will get a BTL mortgage (job security depending) for a circa 25% deposit, but it will be difficult. I did it a few years ago and a broker proved instrumental, but costly!

But you're f**kd if the house burns down and your buildings insurance is invalidated when they find you let it out!

[Gr44]

trowelhead said:

But you're f**kd if the house burns down and your buildings insurance is invalidated when they find you let it out!

I don't think anything would stop you getting Landlord insurance but keeping the mortgage as a "personal" one?

Again... not something I would condone either.

[Pit Pony]

Leedssurveyor said:

I wouldn't condone this sort of thing but I have heard of people taking out an owner occupier mortgage and then letting it out as a buy to let. This then covers the mortgage payment, and if you buy well potentially even an income to put you into a better position when you are ready to buy. So therefore needing only around a 10% deposit!

Or as a first time buyer you will get a BTL mortgage (job security depending) for a circa 25% deposit, but it will be difficult. I did it a few years ago and a broker proved instrumental, but costly!

I've heard of people renting out 2 double rooms to lodgers and living in the box room, but only being there maybe 1 or 2 nights a week. Which maybe gets around the mortgage T&C's. In the right place you can get £350 to £550 per month room all inclusive,