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?

[sunbathe]

I think Xenadog has the right idea.

Hope you have a swift recovery.

[whois]

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

Yup!

Maybe worth seeing an IFA or mortgage broker and see what you could borrow. Maybe more of your dad would also guarantee the mortgage.

[CrapBag]

Nationwide take tax credits into account as income. And they have some of the best rates.

[JulietBravoJuliet]

Ooh that's interesting... Would have to swallow my pride to go to Nationwide though as I swore never to darken their door again when I lost my job as a result of them taking over the building society that I worked for, but I'm sure I could make an exception

[Fairylea]

Yes we have a mortgage with nationwide and they took tax credits into account for our income and also the maintenance I receive from my ex which is a private agreement. I just had to send in 6 months bank statements showing it all going in.

[Sidge]

My bank told me that some income, such as tax credits and child maintenance, are taken into account for mortgage purposes, so you might find that you can borrow what you need, especially if you had a £40K deposit.

[JulietBravoJuliet]

Ooh that's interesting... Would have to swallow my pride to go to Nationwide though as I swore never to darken their door again when I lost my job as a result of them taking over the building society that I worked for, but I'm sure I could make an exception

[parentalunit]

+1 for waiting until you are fully recovered from brain injury, then buying a house and getting a mortgage.

Doer-uppers are usually not that much of a bargain, unless you're willing and able to do a lot of the work yourself. It doesn't sound like that's the case (first time buyer, recovering from illness, child, single parent), so I would steer clear of it.

Buy To Let is not a good idea unless you already have your own home. There may be problems (no renters for a while therefore no income to pay mortgage with, tenants trash house and run, refuse to pay rent, etc) and the interest rate is usually higher on a BTL than for a regular mortgage.

Therefore I think you should find a home which is in good condition, and work to repay the mortgage as fast as you can. (hint: try to get mortgage which allows you to pre-pay, as it would save a lot of money on interest payments).

[JulietBravoJuliet]

Oops not sure how I managed to post twice!

[DinoSnores]

There are a few useful calculators on a number of the bank/building society websites that would give you an idea of what you might be offered:

www.nationwide.co.uk/products/mortgages/our-mortgages/mortgage-rates

www.nationwide.co.uk/products/mortgages/our-mortgages/tools-and-calculators/how-much-could-you-borrow

I think I'd try to move. If your children are settled in school, it might be nice to have the security of your own home without ever needing to move.

[HerRoyalNotness]

Try the calculator here www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#result

I put in 55k loan (with 35k down as deposit - i would keep 5k back for fees and the remaineder as an unexpected repair fund in a savings acct). At 3%, repayment is 261 per month.

It is totally worth checking out. What a lovely dad you have.

[specialsubject]

if the OP's dad knows where to find a 'high interest investment or savings plan' then please tell the rest of us!

£40k can fill two Santander 123 accounts and get 3% before tax, which is below most people's inflation. If the OP is thinking long-term, then investment or pension; but there are NO guarantees.

[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.

[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.

[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]

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.

[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.

[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

[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.

[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.

[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!

[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 :)

[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.

[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.

[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.