What To Do With Β£100k??

What To Do With Β£100k??

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Discussion

SiT

Original Poster:

682 posts

145 months

Friday 19th July
quotequote all
So first off this is currently a hypothetical situation although In the next few months has the potential to become a reality!

We currently live in a small house in the countryside in Somerset, an opportunity has come up through work for me which might see us move out of the UK. In our new place of residence we would be renting which would leave us with our house in Somerset.

Now neither of us have a pension or any particular savings of our own, we have bonds and trusts set up for our daughter. After fees we would come out of the house with about £100k equity which we would want to use wisely.

I am not after ‘financial advice’ perse, but in my mind we would do well to put down say £20k on two buy to let new builds and rent them out and put the remaining £60k away somewhere?

Is this a sensible line of thinking or does anyone out there think we should use it a different way? We feel we would like to keep a foot in the UK housing market ‘just in case’ but not fussed if that’s a little two up two down that’s been rented out for a few years.

Always suffered ribbing from my father in law for my view of ‘live for the moment’ ethos on life, so would like to throw him a curve ball and do sometning sensible for once that would be beneficial for us. I did wondered about buying a place and putting it in trustc for our daughter later on in life (she is 8 now) 10 years down the line this could prove a shrewd move?!?

Si

JulianPH

4,205 posts

58 months

Friday 19th July
quotequote all
Given that taxation is going to be an issue, which country would you be moving to and have you explored the tax implications on any investment you may continue to hold within the UK whilst living there?

I (and other here) can let you know your options, but not without more information.


bristolbaron

1,194 posts

156 months

Friday 19th July
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What price new builds are you looking at with 20k deposits on each?

RizzoTheRat

18,139 posts

136 months

Friday 19th July
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Is your current house in a location where it would rent reasonably easily? My plan on moving to the Netherlands in the next few months is to keep my current UK house but rent it out as it's in an area with a reasonable rental market.

supercommuter

2,014 posts

46 months

Friday 19th July
quotequote all
20k on a BTL mortgage would get you a 50k property?

I would spread some on funds, some in cash and some premium bonds probably. Or rent your existing house out.

red_slr

8,962 posts

133 months

Friday 19th July
quotequote all
How old are you?

SiT

Original Poster:

682 posts

145 months

Friday 19th July
quotequote all
Thanks all, appreciate the ideas and suggestions. In terms of where we are going it will be Jersey if we go, not sure if their tax implications on UK held investments?? Something to look into.

The house we currently live in is in a desirable village however I wondered if the £100k could work better elsewhere, if it’s just as useful staying where it is then that has to be a strong contender, after all to get that £100k we will have to pay almost £20k in fees to sell the house.

Just want it to be as productive for us as it can be.

Si

SiT

Original Poster:

682 posts

145 months

Friday 19th July
quotequote all
red_slr said:
How old are you?
Assuming this was a fact finding question - 37

Si

bogie

14,125 posts

216 months

Friday 19th July
quotequote all
I would do something safe and boring with your £100k for a year or so and see how you settle in your new life first.

£50k each in premium bonds, at least you get a small return

I wouldnt be investing in property right now which is not a very liquid asset, and small scale buy to let taxation is not as good as it used to be.

red_slr

8,962 posts

133 months

Friday 19th July
quotequote all
SiT said:
red_slr said:
How old are you?
Assuming this was a fact finding question - 37

Si
Err, what else would it be?

Anyway... at that age I would be considering your future retirement plans. You say you have no savings or pension.

I would consider splitting the £100k 3 ways.

1.Emergency fund. 3-6 months outgoings. Easy access something like NS&I is ok. 123 account might be suitable but you would need to have the minimum activity levels to get the 1.5%.

2.SIPP. You can invest the cash into a low cost SIPP one for you and one for your wife. This would lock the money away till you are 55. If it were me I would do £25k each so using another £50k. I would also set up a small contribution each month to keep it growing.

3. S&S ISA. With the last c.£40k I would full your 19/20 ISA which is £20k each. Low cost fund like VLS.
The ISA would grow tax free. In 20/21 if you had some spare money you could stick it in there and keep it growing.

If you were not happy with locking money away till 55 then you could do £40k into ISA now and £40k in April.

As for buying houses to rent out, its possible but from the sounds of things being a remote landlord with high LTV might not work out well.

UpTheIron

3,711 posts

212 months

Friday 19th July
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Just let your current property, at least in the short/medium term? Avoids exit/sale costs and gives you flexibility to return relatively easily should it all go wrong.

JulianPH

4,205 posts

58 months

Friday 19th July
quotequote all
Both of the above points are very sensible, IMHO

EddieSteadyGo

3,972 posts

147 months

Friday 19th July
quotequote all
JulianPH said:
Both of the above points are very sensible, IMHO
+1

SiT

Original Poster:

682 posts

145 months

Saturday 20th July
quotequote all
red_slr said:
Err, what else would it be?

Anyway... at that age I would be considering your future retirement plans. You say you have no savings or pension.

I would consider splitting the £100k 3 ways.

1.Emergency fund. 3-6 months outgoings. Easy access something like NS&I is ok. 123 account might be suitable but you would need to have the minimum activity levels to get the 1.5%.

2.SIPP. You can invest the cash into a low cost SIPP one for you and one for your wife. This would lock the money away till you are 55. If it were me I would do £25k each so using another £50k. I would also set up a small contribution each month to keep it growing.

3. S&S ISA. With the last c.£40k I would full your 19/20 ISA which is £20k each. Low cost fund like VLS.
The ISA would grow tax free. In 20/21 if you had some spare money you could stick it in there and keep it growing.

If you were not happy with locking money away till 55 then you could do £40k into ISA now and £40k in April.

As for buying houses to rent out, its possible but from the sounds of things being a remote landlord with high LTV might not work out well.
Thats really helpful thank you, some great suggestions worth exploring and I am not averse to locking my money away till later on in life.

The people who have also made the point of letting our current property out until we have settled is a really good point, it also gets past Oct 31st as I am not really sure how that is going to affect things.

Si

Testaburger

2,514 posts

142 months

Saturday 20th July
quotequote all
SiT said:
Thats really helpful thank you, some great suggestions worth exploring and I am not averse to locking my money away till later on in life.

The people who have also made the point of letting our current property out until we have settled is a really good point, it also gets past Oct 31st as I am not really sure how that is going to affect things.

Si
It certainly seems prudent to sit on your hands for a while until you have a definite plan. Flushing 20k down the toilet seems a bit foolhardy otherwise.

If you do sell now and house prices take a dive, then yes, you’ve sold high and can buy low. But, the general notion that your screwed because house has lost value is something of a misnomer, because broadly speaking, the whole market will be down.

Of course, you want to avoid negative equity if possible, but if you have 100k built up, I’d say that’s highly unlikely unless you’re in a seven-figure property already.


Joey Deacon

1,581 posts

120 months

Saturday 20th July
quotequote all
supercommuter said:
20k on a BTL mortgage would get you a 50k property?

I would spread some on funds, some in cash and some premium bonds probably. Or rent your existing house out.
I would personally just rent your house out, at least that way if/when you want to come back to the UK you will have somewhere to live. For me it would too risky to be out of the UK property market just incase prices did go up while you are away. Also don't underestimate how difficult it will be to get a mortgage when you come back without having lived in the UK for the previous two years.

Rule of thumb is you require a 30% deposit for a BTL, plus it is very difficult to get a BTL mortgage if you don't own a property you currently live in (which you won't as you will have sold it)

£100k is not enough to make you any real money and any gains are far outweighed by the risk of UK property rising while you are away. You already have you money invested in the best possible place, why risk taking it out.

h0bbsy

33 posts

132 months

Sunday 21st July
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Stating the obvious here but if you're considering letting your existing house check with your lender if they will give you consent to let. It's almost always cheaper than a BTL product. If not then do a bit if research on what would work and how it would affect things. Bearing in mind getting all this in place before you leave the UK will be much easier than after (this part from experience)

Macneil

209 posts

24 months

Sunday 21st July
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Speaking as an all my life renter who looks with envy at people my age with no mortgage or rent... I think you'd be mad to sell your house! Are you seeing £££ signs that aren't really there? If and when you return to UK you will need somewhere to live, so you'll either rent - not good for a middle aged person - or haveto start from scratch in the housing market using some or all of your 100k as a deposit. Seems like you'll be buttering the bread of solicitors and estate agnts on each transaction while your money bleeds away.


NorthDave

1,560 posts

176 months

Sunday 21st July
quotequote all
As others have said - keep the house and let it out. Otherwise getting back on the market could be very difficult after a few years.

Unless you are going to be making a packet then I wouldn't be putting any of the money in a SIPP. This will tie all the profit you have made up until you are 55. That could be a massive blow if you do want to buy another house in the UK in the future - no capital and rising house prices = huge amounts of pain.

Testaburger

2,514 posts

142 months

Monday 22nd July
quotequote all
The OP didn’t mention if there is any plan to eventually return to the U.K.

If there is, then again, sitting on the house makes the most sense, because he will effectively tracking the U.K. housing market in his housing demographic so can jump back in where he left off.