To think not to invest in property ?

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We have recently come into some inheritance not tons but circa 150k. We have 200k mortgage up for renewal in november currently on low interest rate. We need a new bathroom and some other bits on garden. Two DC. One secondary one primary.
DH hasn't really thought about what to do but initially invest a chunk in short term high interest savings for 6 months till mortgage renewal pay a chunk off. I suggested some for children rest for house and a holiday.

We are mid forties, i work in public sector with 18 years pension part time for 12 due children. But due to a chronic health condition currently unlikely to return full time. DH for same company for 25 years good pension.

My parents have property which they rent and have continually stated don't invest its aggro, tax, capital gains tax etc etc.

DH friend is now pressuring him stating its best thing for investment , buy small place with small mortgage rent out etc etc.

We are going to see a financial advisor but I am very against the idea. I feel lowering the mortgage and any extra can go toward investments ?

Give yourself some time put the whole lot in a 12 month bond

I’d give being a LL a swerve returns are minimal and hassle maximum

You have a gigantic debt. You'd probably make something from a second property over the years and will be able to sell it in time ... at which point, you'll use the income to pay your mortgage. Which has been accruing interest all the time.

The most sensible thing to do with a windfall is to pay your debt down, as it's is also your home and you're always going to need one of those. You'll then be giving less to the bank as interest.

New bathroom and holiday are worth having, they'll improve your life and you should have some enjoyment.

We can't really we have a very low interest rate on mortgage due for renewal in November so 6 month bond is better we don't want to refix on currently massive rates

Now is not the time to buy to let out, look at the changes, many small landlords are selling up.

You just need one bad tenant to wipe out years of profit.

Plus never tell friends your financial situation, apart from unsolicited advice they may want to borrow.

We haven't the friend knows we have inheritance just not all the figures

Being a landlord is complicated, costly and now, no longer the tax efficient dream it was when BTL mania was at its peak. Even with good tenants it's a lot of work. With bad ones it can be a nightmare.

You will probably get a better return for literally zero hassle if you invest the money elsewhere.

I think your instincts are right. Great that you're seeing an advisor - they can understand your goals, risk appetite, how to get the right balance between paying off mortgage and investments (and what kind of investment).

Buy 50k of premium bonds each while you have a think. Ignore the friend.

Example:

£200,000 mortgage at 4.5%, 15 years remaining, repayment.
£1,530 monthly repayments,
£75,327 total interest.

£100,000 mortgage, same conditions.
£765 monthly repayments,
£37,663 total interest.

So on this mortgage, you pay £37,664 less for your house.
And you get £765 extra money EVERY MONTH.

You can put that extra, or some of it, into a long-term savings account.

Say you pay £500 a month into a 5% interest account for 15 years:
Your total return would be £133,644.

This is interesting because, under current conditions, you might be able to get a better interest rate on savings than you have to pay on mortgage.

Technically, this means it's more efficient to save than to pay down the mortgage. However, for the small difference, I'd choose to have a little more spending money every month and the security of knowing I'd be paid off AND have a tidy nest egg at the end of the 15 years.

You can do these calculations for your real numbers.
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/
https://www.moneysavingexpert.com/savings/savings-calculator/

Invest in your own property.

Mortgage rates are at their highest in years and you're thinking of taking on another (or buying an absolute shithole?). It's complete madness to be honest.

Please take a step back from thinking this money has to immediately start earning money for you, it should largely be spent paying down the mortgage with any you want for "fun" such as holidays put into short term savings.

Agree with laclochette · Today 15:11. Property used to be a good investment but currently the tide has swung against the LL.
See an IFA. Hopefully they will advise against putting all your eggs in one basket, which is what property is for small-ish investors (which is what you are).

I would split it, but how much where you need the financial advise for. But something like...

£15k each junior isa for the kids
£10k for bathroom
£10k for holidays

Then I would probably take £75k off the mortgage in November, and look at the term of the mortgage but don't reduce it fully, set it for maybe ten years

Then put 50k into a SIPP or stocks and shares isa, and with the extra money that was going to the mortgage each month, invest into this instead as it will increase in value leaving you the option to drawn down and pay off the mortgage and potentially have a little extra.

So the point is to increase what you are investing in the shorter term to maximise the outcomes.

Property is a no go. U less you can afffoed a significant portfolio )you can't) then don't go there.

I'm Not a financial adviser and these are just some of the options that could be considered with and adviser who understands your circumstances

See an IFA, whole of market. Discuss all options, mortgage and investing. They may come up with various products which mean your money earns more than the mortgage is costing you meaning the money works for you. But an IFA will be able to advise better than us randoms!

I would be tempted to set aside a sum of now money - eg to get the bathroom done/ holiday. This way you both get what you ultimately want - investments that earn you income (your dh) and some security plus immediate fun/benefits (you).

I agree with everyone about being a LL - it’s not worth the hassle and one iffy tenant ..

Why do you trust some random 'friend' over your parents? He sounds like a LL hater who's just read about how it's easy money on Reddit.
I also fail to understand how a friend can 'pressure' you into anything just shut them down with 'it's none of your business'.
Are they hoping to get a freebie by living in this house for a low rent or something? Are they a property agent?

It doesnt make sense to pay the overpayment on our mortgage currently at 2%. We are better of short term bond at least with interest at 5.25 and pay the tax. We will pay down on renewal

I would also favour putting some aside for home improvement and a small amount for a nice family holiday, or a few nice outings but use the bulk of it to reduce your existing debt.

You will reduce your monthly outgoings as a result. You can invest the extra available money for the kids future if you want.

Put your money away the rates of Interest are very good.

Property will be a nightmare trying to rent it out that's why many landlords are selling up.

Do you really want the hassle of tenants who don't pay the rent and damage the property etc.
Plus all the repairs and maintenance.
It's a gambling.

Personally I'd go mortgage free.

Invest what you don't spend each month on the mortgage payments in pension / high interest rate savings.

Stress free and easy.

Ask your bank to calculate the breakage fee if you were to lodge the lumpsum now.

It may be nil given you are so close to the end of term and current rates.

Lodge 125k to mortgage.
25k to renovations.

The save the difference between the old mortgage payment and the new mortgage payment in a monthly high yielding savings account.

”DH friend is now pressuring him” - well he needs to back off! It’s none of his business. Fine to make a suggestion but then leave it there. Personally in your position I’d do the bathroom etc on your house, maybe go on a slightly nicer holiday than usual this year, then pay off your mortgage (or as much as possible, once the time comes that you won’t have the repayment penalty). Re any excess and the extra money each month as you won’t have a big chunk going towards the mortgage, this is where the financial advisor can help you look at options.

Put max (£100k) into premium bonds until Nov
Do bathroom, garden & have a lovely holiday
Put remainder in a 6 month high interest account

In Nov, pay £125k off your mortgage

Up your pension contributions & pay into a regular saver account with the difference in your mortgage payments

Tell DH's friend it's none of his business

Don't invest in property - it's a nightmare now. I'm a landlord (for 17 years) and aiming to get out of it as soon as possible; every time a tenant leaves a property I'm selling

My DH is taking early retirement and will get a lump sum in September. We already have 11 btl including 5 in a limited company. He will be buying another 2 btl houses in September with some of his lump sum. They will go into the Ltd company. If you invest in a lucrative area with a decent yield there is still money to be made. You would need to be on top of current legislation though and only buy a property with an EPC C rating in case incoming legislation only allows property to be let with an EPC C rating. It's easier if you have experience and a good maintenance person.

Remember to put savings in an ISA or the greedy bastard government will tax the interest.

Especially if your DH earns over 50k. Allowance is £500 then lol, did I mention they are bastards.

Pay the mortgage off!!!!!!!!

I know right 🙈

If you have a low mortgage rate, there’s no need to pay that all off with your inheritance.

It's only low until Nov can't see them dropping to 2% again