What would you do with this amount of money in these circumstances?

(63 Posts)
JulietBravoJuliet Wed 07-May-14 16:08:19

Current situation: single parent, two part time jobs totalling 21 hours, looking for more work but currently claiming some housing benefit and tax credits. Also recovering from a brain injury so limited to just how much I can physically work, but this will hopefully improve in the next few months!

Dad is coming into some inheritance - approx. £40k - and has said he wants to give it me for a house deposit, which, at the moment, would be pointless as I'm not earning enough to get a mortgage for the rest (small terraced property round here is around £90k so would need to borrow around £50k).

Now, I know if he gives me the money, I lose my benefits which is fair enough, but I'd prefer it to be doing something for me, other than just paying my rent each month until it's all gone. My friend, who's a builder, suggested buying a repossessed house to do up and sell. Said he's just renovated one for someone (in a town about 10 miles away) which they bought for £30k, he gutted it; new bathroom, kitchen etc. and they sold it for £90k a few months later. He said he could do a 2 up, 2 down terrace for £10k-£15k providing it doesn't need windows and doors replacing, otherwise add that to the cost. Obviously, if it all went well and within budget, that could make me a nice profit.

Other option is to put it towards a buy to let. Again, these come up dirt cheap sometimes and would bring in a monthly income, although I'm aware that there are lots of other costs involved and I'm not sure how I feel about being a landlord.

Another friend has a few holiday chalets on the coast. Each of these, after ground rent, insurance etc, makes him £3k a year, and he has no trouble filling them over the holiday season. He has suggested buying some of these on the site he's on and getting an income that way. Not sure about this as I know they lose a lot of money once bought.

Whatever I decide to do with it, I either need to turn it into more money towards a house to live in, or I need to make an income to cover some of my rent on where I'm currently living. Alternatively, Dad can keep it and I'll carry on as I am, but I'd prefer to get off housing benefit and do something with this money to better my lifestyle.

So, WWYD?

Normalisavariantofcrazy Wed 07-May-14 16:10:26

Ask him to keep hold of it until you are well enough to work enough hours to get a mortgage.

No point in you having it to use for living costs when your situation is only temporary.

Fairylea Wed 07-May-14 16:12:30

What normal said.

financialwizard Wed 07-May-14 16:14:26

If you can get a 2 up 2 down that needs work within budget can you not do that and live in it? Then you could move up when able. At least you'd have no rent then. Or is it not possible?

Most btl lenders will want you to own yourself prior to offering a btl mortgage just in case you would be moving in yourself.

CrapBag Wed 07-May-14 16:17:04

I thought tax credits weren't affected by savings? Although I don't know about working tax credit and if that's different from child tax credit.

I agree with above posters. I wouldn't get a do-er upper as there could be unforeseen costs, plus there is all the fees on top you need to take into account. I also wouldn't buy to let as I wouldn't want to be a landlord which you will still be responsible for maintainance costs, ditto holiday home.

JulietBravoJuliet Wed 07-May-14 16:18:05

I'd rather not move from the village I live in if at all possible, as ds is settled at the school and both my jobs are within walking distance, so would be a PITA to move away as would mean commuting costs etc. the sensible thing is to probably leave the money with Dad, but I just feel like I should be doing something with it to better my situation if you know what I mean? I hate being reliant on benefits to be able to live!

Lauranda Wed 07-May-14 16:19:29

If you can buy a home and do it up for all that money move in and reduce your burden on tax payers why not do that?

JulietBravoJuliet Wed 07-May-14 16:20:07

Because if I sold it, I could afford somewhere round here smile

grovel Wed 07-May-14 16:21:36

I reckon some banks might lend you £50,000 against a £40,000 deposit.

christinarossetti Wed 07-May-14 16:22:56

By,leaving it with your dad you are doing something to help your situation long term.

Sounds like the best course of action at the moment.

Lauranda Wed 07-May-14 16:23:21

Does sound like benefit fraud.

Housing benefit is for people in need that have less than 6k.

JulietBravoJuliet Wed 07-May-14 16:24:56

That's certainly something I will look into once the money's in Dad's account, as the mortgage repayments would be manageable on my income, as a lot lower than my current rent, so would negate the need for housing benefit. I'm used to living on a shoestring budget anyway!

JulietBravoJuliet Wed 07-May-14 16:26:34

How exactly is it benefit fraud when the money is my dad's? If I take it and don't declare it then yes, but if it's his money, legally, and I'm not benefitting from it, then how is it benefit fraud??

CrapBag Wed 07-May-14 16:27:24

How is it benefit fraud? She doesn't even have the money.

You also aren't a 'burden' on the tax payers OP. You are clearly in need of some help and are perfectly entitled to it.

Would your earnings stretch to a 50k mortgage?

JulietBravoJuliet Wed 07-May-14 16:29:24

CrapBag (love the name BTW!) I could afford the repayments on a £50k mortgage on my earnings, as it have no debt, no expensive hobbies, don't smoke, drink, go out, rarely buy clothes etc., but whether a bank would lend me that amount is another matter!

TheHouseatWhoCorner Wed 07-May-14 16:33:57

I'd steer clear of the do-er up-er.
Have a sensible discussion with your Dad. He must know your situation and won't want you to overstretch yourself.
Might he be happy to keep it for the time being until you are in a better employment situation and therefore better able to access a mortgage?

JulietBravoJuliet Wed 07-May-14 16:37:43

Yes he's happy to keep it, he just doesn't need it and wants to help me out, but I don't think it will be much help at the minute in my current situation. It just seems a shame to have it sat in his bank earning him a pittance in interest when I could possibly do something with it smile

HecatePropylaea Wed 07-May-14 16:41:14

If you really can't do much with it at the moment, have him tie it up in a high interest account or fund or buy shares or something rather than just have it sitting in the bank at 0.diddly squat.

CrapBag Wed 07-May-14 16:44:47

I would seriously look into whether I could get a mortgage now. Its worth a try and they can only say no.

Failing that, your dad will only be holding onto it for a while. I wouldn't worry immediately about interest etc.

CMP69 Wed 07-May-14 16:45:48

Make an appointment to see a free independant financial advisor (Google them locally) They will do a one of appointment for free and are not tied to any bank or company. You will find out if you could get a mortgage or if not how you could use the money most effectively

Swisskissingisbetterthenfrench Wed 07-May-14 16:52:02

Can you do a buy to let but get a house you want to move into at a later date?

UncleT Wed 07-May-14 16:58:09

I love the way that people don't even bother to read the bloody opening post and leap to the benefit fraud conclusion. From what she wrote it's perfectly clear that the OP knows the implications, but NOTHING has bloody happened yet!

5Foot5 Wed 07-May-14 17:03:59

Are you sure you couldn't get a mortgage for the remaining �50K. With an LTV of around 55% I would have thought you were in quite a good position.

JulietBravoJuliet Wed 07-May-14 17:07:22

Thank you UncleT

Just for the record again I have no intention of committing any kind of benefit fraud. This money hasn't even hit my dad's account yet, and when it does it will be in his account, earning him interest, not me. I am simply wondering if there is any way I can take up his generous offer of gifting me the money when I'm not in a position to use it for it's intended purpose (as a house deposit). I have no doubt that my dad would not give me this money so as I could simply pay my rent with it, as he may as well just pay my rent for me.

As far as I'm aware, it's not illegal to claim housing benefit when your parents have savings is it? Bearing in mind I haven't lived in my dad's house for 18 years and am in no way financially dependent on him although he did chuck me a tenner for fuel the other week so maybe I should have declared that to the benefits people

Xenadog Wed 07-May-14 17:09:23

Leave it with your dad and get him to put it into a high interest investment/savings plan. Then focus on making a full recovery from your brain injury and getting more work. Once you are settled and recovered you will have the time and energy to think about the money.

It's a lovely nest egg to have and I think giving yourself some time to decide what to do is probably the right thing in this situation. Good Luck!

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