What to do with £30k

[Rockmehardplace]

Am in the fortunate position of being about to get £30k and am wondering how best to use it? This is a lot of money to me and don’t want to fritter it away.

i have a mortgage of around £90,000, affordable repayments, no debts. Only about £14,000 in savings.

Where I live, I could potentially buy a 2 bed rental flat for around £60,000, which would rent for around £575 pcm. But am not sure if it could end up being expensive if it stood empty/needed work etc. Never had the opportunity to invest before and wouldn’t know where to start,

I just don’t want to waste this opportunity and would like advise from wiser folk than me!

Don’t buy a rental. It’s getting harder and harder to make a profit. Pension or investments would be better.

Definitely don't buy a rental.

Ignore all the 'pay down your mortgage' comments until you've checked your interest rate and any penalties. It could be an expensive mistake.

I would use a smaller amount, eg £3k so 10% for something like a holiday.

Also consider whether you could benefit from investing in a good sensible, cheap to run car that will serve you well for 10 years or more.

Likewise are there any home improvements that you could benefit from? New windows or boiler?

Boosting your pension could also be a good move and also has the advantage that you can't touch it until you're 55/7. Plus the money will be boosted by tax relief.

Put some in your emergency fund and buy house where cheap

If you have a mortgage of 30k and have been renting it out for £500 previously and then a few months void, of course you aren’t screwed, providing you’ve saved the profits from previous months.

i wasn’t born with property’s so I’ve been at the point of just having the one flat, then another and then another and as long as you are mindful and save all the income in a separate account to the point you have around 5k contingency, you will not be screwed.

The OP has no experience and buy to let mortgages are interest only. There’s little profit on the £30,000 mortgage and she’s no earnings on the £30,000 that make it worthwhile if the property is empty. Never mind agent fees if she’s not competent herself. Many of us don’t want the hassle for one or two rentals. We have sold up. The OP would be foolish to go down this route and tie up virtually all she has. What others did years ago isn’t relevant now for one rental. Plus there could be other charges such as maintenance or a replacement boiler that wi wipe out her profits for months! Then CGT - possibly. It’s not a good idea for the OP when she can get tax free or save for DC.

Thanks for all the guidance. I think the biggest point I’ve taken from it all is a) id forgotten how difficult it has become to evict a tenant and added costs of potential new boilers etc and b) i dont have to decide anything right away. I’m going to stick £20k in an isa, £10k in premium bonds then give myself a few months to think about what I want to do.

Don't buy a flat and rent out, it's alot of hassle today.
Lots of landlords are selling up.

@Rockmehardplace The advice we have always had from our financial advisers down the years is to have a varied portfolio. You are buying a property to live in so the property box is ticked. You can choose various savings methods for the £30,000 and your existing £14,000. Look at the whole picture and what you are aiming to have for the future. Then choose longer or shorter term investments that can grow and meet your needs and that of DC. As many have said, don’t do anything risky or likely to cost you money and angst. To be honest, you don’t have enough spare for this. You can get some decent returns in bonds right now. For a year. I’d rather do that than premium bonds and needing luck.

@TizerorFizz thank you. The last thing I want to do is lose or waste this money. I've recently went back to work full time after 10 years pretty much out of the job market, in a better paying role than previously, so am hoping to be able to save approx £500 per month going forwards (tho maybe less as looking to increase pension) and increase my savings. I know this is all v low figures for Mumsnet but it's a lot of money to me!

£5K to spend on a Great holiday

£15K pay towards ur mortgage

£10K Put into Savings

@Rockmehardplace Be careful about the terms of your mortgage and paying it off. It’s a great idea to save and you need to think whether your mortgage is a burden or not. MN is always keen not to have one at all but at your age, it’s normal to have one.

Well done about work and keep going! Always have a mix of savings so think about what you need from them for both of you.

I've got this at the moment after paying a little of the mortgage and putting £5,000 into Premium Bonds.

I need to do something with it too. One third is in an ISA and the rest is just in a savings account. It will probably stay where it's at while I come to terms with why I have it (bereavement), I focused on keeping it safe for now.

I would do a combination of bonds and ISA. You could do a standard Isa or a stocks and shares Isa with someone like Vanguard.

I've just gone into property but buying very cheap ones outright and there is quite a bit to do even with a letting agent etc so I would veer away from it for now.

I'd put some in savings because if you're a home owner £14k won't go far if you need a new kitchen or bathroom in the future!

Compare the interest rates on your mortgage and ISAs. If the ISA rate is higher, put 20k in there. Otherwise, clear a chunk of your mortgage if the costs aren't prohibitive.

You have the option if you pay down your mortgage of either keeping the term the same and paying less each month, or keeping the payments the same and being mortgage free earlier. Which you do depends on how much you need the money now.

NB Rentals can be pricey to run at times - long void periods mean no income, but you still have the outgoings. A difficult tenant can easily leave you out of pocket even after withholding some/all of the deposit, plus you might find yourself landed with a longish void while you do the place back up to a decent standard again. Friends of mine let their house out while they were working abroad and the tenant managed to break the bath...

ISA 20k, maybe even something like tracker investment ISA, rest into premium bonds or savings until next tax year when u can add to isa.

Don't bother with pension, u better off being in control and not locking it until the old age!

Property too much hassle.

I think being a landlord with 1 property is risky, if your tenant fails to pay and trashes the property can you survive no income / repair bills?

There’s a property nearby which was bought then rented out. Then used it as a cannabis farm. No one knew police raided and it was like breaking bad. Cordons and the pulled out so much stuff from a 3 bed end of terrace cottage. Internally destroyed, electrics, water supply everything needs reinstated. It’s sat crumbling for a few years now.

Not an expensive place so possibly cost of repair is prohibitive.

Premium Bonds

If you buy a flat, you've got to be prepared for difficult tenants and those that don't pay

Also maintenance. I know someone who moved into a flat in May, looks in a decent condition and landlord is good. However, all three heaters have broken at different times, toilet blocked, freeze packed up and now he damp - landlord never had a problem while living there, but looks to be a leaking pipe outside, which landlord will have to get management co to sort, which won't be immediate . He's just had a bad run though.

I'd treat myself to something, whether a holiday, a better car, item of furniture for house, and pay rest off mortgage. You'll save on interest and can continue overpaying or building up your savings.

I have 1 property I rent out and 1 I live in. I now I want to move house, the stamp duty on my new property I am moving in to is considerably higher. Ie. £18500 compared to £2500 if I only had the 1 property that I live in. I make £400 a month on my property and although I have good long term paying tenants; things are starting to go wrong & need fixing/updating and costs generally go up, mortgage rates/service charges. It's barely worth it. I wish I didn't keep it now!
The government doesn't like odd landlords unfortunately, which is why so many are now calling it a day.