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

[JulietBravoJuliet]

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?

[JulietBravoJuliet]

Inheritance tax won't be an issue, even with this money. His house is worth about £150k, savings at the minute about £50k plus his private pension, car (£10k ish) and this money that's on it's way, so well under the threshold. He looked into all this last year when he had an op as he wanted to make sure everything was in order if anything happened.

[TeacupDrama]

if your late mothers inheritance tax allowance was not used when she died ( provided they were married ) it will be 650K altogether

[CrapBag]

Inheritance tax will only be applicable if the estate is worth more than 325k and the OP said even with this money that won't apply.

[TreadSoftlyOnMyDreams]

I think you need to get some financial advice. You will (I think) have to pay inheritance tax on it, if your Dad dies within 7 yrs. So if he is in poor health already, it's in your interests to get in with it.
I'd take Madonna's advice but your situation re benefits is tricky.

[MadonnaKebab]

And live in it while you do so, over 5 years or so

[MadonnaKebab]

You need to buy the right sort of doer-upper
Dated, run down, overgrown yard, but structurally sound and with a usable (although hideous) kitchen & bathroom
That way you can pay a low price and do it up gradually as funds allow

[JulietBravoJuliet]

Oriunda there's no one else the money could go to; I'm an only child and my family consists of dad then me then my 8yo ds, plus a cousin from my late mum's side. Dad's will is up to date and states that his entire estate goes to me. Even with this money, it will still be just under the inheritance tax threshold so I'm not worried about that.

I will certainly look into mortgage options when the time comes. By the time the solicitor has finished doing whatever they are doing with the money, I could well be fighting fit and have another job anyway!

[Oriunda]

Your father needs to ringfence the cash until it is legally yours by putting it in his will/notarized note that he is leaving the money to you. Too much cash for you to potentially lose if he died suddenly.

Next, he needs to keep it in an easy access account earning best interest possible. Moneysavingsexpert is best place for advice. Currently he could earn 3% on the first 20k if he opened the santander 123 current a/c. Then 1.5% in the next best easy access account for the rest.

[WutheringFrights]

Speak to a mortgage broker, they will search the whole market for a mortgage product that suits you. There are many companies who will accept tax credits as income so you don't have to stick with nationwide.
Both times we have organised a mortgage we have done it through London & County. Look at moneysavingexpert...they recommend l&C which is how we found them.

[FullySwindonian]

Buy the house and rent a room out to a lodger for £4.5k tax free income.

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

[MsAspreyDiamonds]

If your dad is going to look after the cash for you while you recuperate, then he should state in a formal document that the money is intended for you. Do you have siblings or other relations who could lay a claim on the money?

Concentrate on getting better & then improving your career prospects.

Get some advice regarding your benefits & income.

www.moneysavingexpert.com/family/

www.hmrc.gov.uk/individuals/index.shtml

[parentalunit]

To the person asking about a high-interest savings account...there aren't any at the moment!

If you have a bit of money spare (after paying into your pension account), prepaying your mortgage is usually the best thing you can do financially. If there is still cash to spare, bonds or mutual funds (low management fees) are probably the best way to go.

[5Foot5]

JulietBravoJuliet Haha - sounds like we have a lot in common with respect to Nationwide! Though TBF it would be more accurate to say they rescued the BS I work for rather than just taking it over for the hell of it so I can't feel to badly towards them.

[Joysmum]

Don't ever take on a buy to let expecting to make an income out of it!

Mine are all considered high yield reruns yet I don't make money to speak of. By the time I add up mortgage, insurance, maintenance, empty months, tax, fees to set up tenancies etc (and I don't use agents) then I actually don't make anything close to an income on them. My returns will come when I eventually sell.

Private LL's with the odd house tend to be in it for the long haul, not monthly income.

[mrscog]

Our outstanding mortgage is 52k and at 2.5%, repayments are £299 per month. I would definitely investigate buying as an option. Good luck, I hope it works out :)

[JulietBravoJuliet]

TeacupDrama at the minute, no, I couldn't manage much renovation work, but I have a good friend who's a builder who could do all that at mates rates and I'm confident wouldn't rip me off! I'm just very cautious by nature, and watch enough property programmes to know that these projects never run to plan or budget!

[JulietBravoJuliet]

My dad's only in his late 60's but not in the best of health and took early retirement. He's got a very good company pension plus his state pension, his house has been mortgage free for about 20 years and he's got plenty in savings, puts the maximum in his ISA every year etc. He's not in a position to go on a mortgage or anything though (we looked into this before) because of his age, as they will generally only consider someone over 65 if the mortgage term is very short. On a slightly morbid note, and as my dad has pointed out to me often, everything he has will be mine once he's gone, as I'm an only child, and, realistically, he's not likely to live years and years (emphysema and liver damage) so one day I will have his house, but I'd rather not think like that as I'd rather struggle along as I am and have my dad, than be financially ok and have no one.

[girlwhowearsglasses]

I second the post saying see an independent financial advisor. They don't charge you , they get paid by mortgage company if and when they find you one. I used one who found very specific deal for us in unusual circumstances - as well as phoning companies and getting quite specific exceptions and clarifications on a couple of financial products. If you can't find one by word of mouth message me, but I think you are in a different part of the country.

[TeacupDrama]

your dad sounds brilliant it is his money so i would suggest he keeps it in cash ISa if he is paying tax until you are better then you would get a mortgage and it would be a great deposit

you sound like a really nice person OP thinking carefully about it, are you sure your Dad can afford to give it you all, does he have a decent pension etc,

do it up can work provided you can do at least some work yourself ( painting decorating gardening getting rid of rubbish) as you are physically unable to work more than 21 hours i think it is wrong for you at the moment, the more trades you have to pay the less profit but there is profit if you buy at auction and check things first you need someone like a builder friend that can suss out whether it just needs nice kitchen bathroom and paint or whether it needs new roof central heating dampdealt with rewiring and new floor joists

[Caterina99]

I don't know your dad's situation, but would he consider buying the house for 90k and renting it to you? You could come to some arrangement to buy it from him once you are in a better financial position.

Otherwise I second getting your dad to keep the money safe until you are able to use it.

[JulietBravoJuliet]

No I wasn't seriously considering that as they lose value and are a bugger to resell; my mum had one years ago and it took us 2 years to sell it after she died, although it did book up easily over summer so paid for itself really.

[oldgrandmama]

Definitely avoid the holiday chalet option ... someone tried to flog one or two to my exH years ago - whole thing was very dodgy.

[JulietBravoJuliet]

specialsubject that's precisely why I wouldn't want to leave it sat for too long, as it will potentially be worth less against house prices in the future and then I would need a bigger loan to value.

[JulietBravoJuliet]

Thank you :) My dad's brilliant! £260 I could manage on my wages; £475 rent I struggle with hence claiming HB. There's a house in my village for sake, about 50 yards from where I currently live, for £90k which I would love. Also know the lady selling it would probably take less as she's desperate to move. I really wouldn't want to move from here as it's the only place I've ever felt "at home" iykwim.