What to do with 150k

[Foxglovesandlilacs86]

I bought my house 5 years ago, spent around 100k and have sold it for 995. The house we are buying is 700k so after stamp duty, fees etc, and also buying furniture and doing some work in the new house expect to have about 150k left to do something with.

I own my house outright so this will be cash, and I really want to do something with it so that it’s not just sat there where I can spend it (I’ve been in this position before and squandered a lot of money).

DP says I should buy a flat and rent it out, I’m up for this but does anyone know how easy it is? I do t work at the moment, I had my own business but we closed at Christmas. DP is self employed. The house will be in my name only and so will the flat.

im basically in a position where I have a lot of capital but not a massive income (I get maintenance from older childrens dad, tax credits, child benefit and money from dp).

I will probably see a financial advisor at some point as I know my situations an unusual one but thought I’d ask on here in case anyone has any advice. Thanks 😊

How old are your dc? Old enough that they may benefit from you buying a flat in a uni town/they can rent?

How will dps money to you show in your bank? If its coming in as anything mentioning a mortgage then he may have a claim on your home if you split

I have another house which I rent out. It doesn't generate a lot of income, you pay tax on the income, and you have to think about the cost of unexpected repairs etc, but even taking the mortgage payments into consideration, I make about £400 a month after tax. I put that straight into a stocks and shares ISA as we don't need the money at the minute and it's nice to know that money is slowly building up.

It's in a university town so it's possible the DC may make use of it when they're older, or we may decide to sell it before then.

What other savings do you have?
Do you need to take a monthly income off it?

I'd dump some in a stocks and shares ISA (20k) and some into a pension. Make sure I'd got a cash savings account.

I wouldn't buy more property if all your investments to date are property.

@JurasicPerks I don’t really have any other savings. On paper I get a decent amount of money every year (around 40k) but I have 8 children (5 with ex husband 3 with dp) so that goes on just living really. No mortgage to pay but I have council tax, energy bills, food, a car to run and then everything else kids need so I’m don’t have anything left over at the end of the month.

I would like to make a monthly income just to help what I already get as I know it wouldn’t be much, a one bed flat in our area would £100-150k and rent for about 700-850 a month. So would definitely help.

My home is my main investment really. I would like to put some in an isa regardless of whether I get a flat or not.

DP just gives me half of what he earns every week, sometimes in my bank sometimes in cash and there’s no mortgages on anything so I do t think he would be able to make a claim on anything that’s mine if we split up.

Seek independent financial advice

I would definitely invest it in a rental property. Find something low maintenance with low service charge, keep it in very good condition (set money aside every month for this). Your profits won't be huge, but it's also going up in value every year, so 10 years down the line it will almost certainly be worth more than it is now, and even with capital gains, you will still be able to realise a profit on the capital if you sell it on later.

Surely that 150k, wherever it is invested, will wipe out your tax credits claim.

@daisyjgrey i didn’t think about that! If I bought a flat to rent out surely it would just be the income I got from the rent that would affect it inthink? Will look into it though!

Just had a quick google and it’s treated as normal income, so it’s less than whatever the lowest tax bracket is then I won’t have to pay tax either? As it would be my main income (apart from dp as it’s a joint claim and he’s on it too) it would be less than what I earned when I had my shop so might even get more tax credits not less! Might be wrong though.

The fact that you can have nearly 3/4 of a million of house that you own outright and then voluntarily put a floating 150k into another house and can still claim tax credits (possibly at a higher rate than you are now), is absolutely mind blowing.

That aside; it’s difficult to make much on a single rental property. After insurance, maintenance, contingency funds, dealing with end of tenancies etc, there won’t be much left of the rent pcm on a property that was 150k at purchase, so it’s a long term investment, not something you should rely on as regular income.

The fact that you can have nearly 3/4 of a million of house that you own outright and then voluntarily put a floating 150k into another house and can still claim tax credits (possibly at a higher rate than you are now), is absolutely mind blowing.

i'm gobsmacked! And the fact you have so much equity despite earning a normal amount.

Give it to me!

I'd also argue that unless your partner has other investments/properties, he should also talk to a financial advisor. He's (presumably) unmarried, doesn't have his name on the house he lives in and won't on this hypothetical rental property and is handing you half his wages every month. If the sexes were reversed people would be red flagging all over the place.

You could use it as a deposit on a holiday cottage or flat, rent out and use the income to pay off the remaining, you'll be set for life.

I did say it was an unusual situation, I only have the house outright because my ex husband owns a large business and when we separated he sold some shares and gave me half (it was an amicable split). I’ve been a sahm my whole life apart from the two years I had my shop, so it is a weird situation to be in.

If dp rented or owned a house on his own instead of living with me he’d probably end up with less than half of his wages so I dont see what the problem is tbh.

It's not that it's necessarily a problem, it's that he owns no property, has iffy rights over the one he does have as you're not married/he doesn't pay traceable rent/mortgage contributions and he's giving you half his wages, which unless significant, probably don't leave him with much put aside to build any savings etc. If your split up, or anything happened to you, he'd be in a really shit situation, he's not even legally your next of kin.

You say that you have no savings so I'm assuming he doesn't either, as that would definitely impact your tax credit claim.

You're right in that it's a very odd/unique situation. You do need to be conscious that at some point you'll stop getting child tax credits, child maintenance and child benefit, and then your income will drop significantly - must be getting around £450 per month just in child benefit. What will you do then? Do you have a contingency for for when the youngest child hits 18 and the last of the money that is connected to the children stops? That's what you need to plan for with this 150k.

As far as I know he doesn’t have any rights to the property lives in as it’s mine and all his money goes towards is bills and the children we have together. He would like to get his own house to rent out in the next few years which he should be able to do but with a mortgage. That’s just the way it is and if he wasn’t on with it I don't think he would be here. He does have some savings, I don’t know exactly how much as we keep things quite separate, but not the day to day stuff, he would tell me if I asked but I don’t really need to know (it wouldn’t be more than a few thousand I don’t think).

The reason I’d like to buy a property is exactly because of what you said, all the money I get is because of my children! I am doing a degree with the open university so will work at some point when the youngest goes back to work so I do have a plan (sort of!) plus when the kids all move out I’ll get somewhere smaller (and cheaper) and I suppose that would be my pension. Like I said I’m not good with this stuff so I thought that was a good plan but if you have any other ideas I’d be grateful to hear them!

Do you not claim tax credits jointly as you're a couple who live together? You would have to declare your savings etc in that claim.

I think it's just that going on the information you've given, there are some grey areas and strange anomalies that throw up a few questions. The tax credits being one.

On a different note, I couldn't imagine having that much equity and being with my partner and him having no legal claim to anything. You've had three children with him, he's not a new boyfriend. If something were to happen to you and he was left with the children, he'd have to jump through hoops to stay in that property with them. It's possible to have a set up that ring fences things and makes sure you don't lose all your equity in a break up (for example) but that don't leave him up a creek with three kids if something were to happen to you.

Remember that everyone is being moved to Universal Credit soon so you need to check what having an investment property will mean for UC.

That’s only for new claims I think, I don’t get any tax credits for the younger three but I do for the older 5 as they were born before April 2017 so it would move to uc if I were to make a new claim (if we’re were to split up or I wanted to claim something else aswell). As far as I know anyway!

I don't know but I do know that UC treats investments differently from the way tax credits do.

Yes we do claim jointly, he has cash savings, he’s very much cash based because of his business, not in a dodgy way, he pays tax and stuff.

I know what you mean, you’re right, but I just haven’t looked into that yet. I was thinking of doing a will but I just haven’t got round to it yet. And maybe life insurance would be a good idea.

You’ve got almost a million cash and get tax credits and child benefit?

Surely if the house is sold, the funds go into your bank account which would then trigger a (rightful) end to your benefits?

Then to use them up buying another home/additional homes would be deprivation of assets?

You've have nearly a million pounds in property and 8 children but NO WILL?!?

Fuck everything else off until you've made a will, and don't hang about. You've given me palpitations.