What to do with 60k — can’t buy a house

[Schmapples]

Dad has generously put this amount into a pot for me to one day buy a house. The problem is that in London that’s just never going to happen!! We earn ok salaries but London house prices are just mad and I need to be in London for work.

My idea is that dad should get a financial adviser and put the money in a low risk investment fund so that it is safeguarded for the future. It’s been in a bog standard savings account for about 15 years now 😵 so was worth considerably more when ddad acquired it in the first place and now is becoming worth less every year. I’m just aware that even with this money and our own savings it’s going to take us maybe 10 years or more to buy our first place, and i’m worried about the value descreasing so much that home ownership will just be forever out of our reach.

Ddad is a curmudgeonly and risk averse sort so I think will balk massively at the investment idea. But am I right in thinking that this is potentially the only way to future proof this pot?

I have lots of rich mates and they wouldn’t dream of having this amount of money in the bank, it’s all in low risk investment portfolios.

Really clueless about all this stuff so any advice massively appreciated.

Where is that Mayhew?

Bear in mind:

1. If you invest in stocks & shares there's usually an initial investment fee, often up to 5%, so your money would reduce immediately and would take time to make back the 5%, let alone any extra. And of course the value of investments is not guaranteed. When you do come to cash it in you can never be entirely sure of the amount you will receive because prices fluctuate daily.

1. Buy-to-let: if you intended to sell it to release the money, it wouldn't be a quick process.

1. Buying a flat: there may be a monthly service charge, which will reduce the amount you have available for mortgage repayments. The charges are especially high in purpose-built blocks - a new build flat can easily be £100+ per month, some even £200+.

1. Help-to-Buy ISAS: you can only put in £200 per month (£1,200 in the first month) but the interest rates are usually higher than normal ISAs, eg Nationwide which pays 2% plus if you do buy a property with the proceeds you get a bonus of 25% of the final balance.

1. Premium Bonds: not a guaranteed return but if you put in the maximum of £50,000 you'd probably be OK. My parents are averaging £600 a year. Probably not matching inflation but not bad compared with interest rates on savings account.

1. Non-traditional savings accounts: some current accounts offer higher interest rates than savings accounts, eg Santander 123. You usually have to pay in at least £x per month, have 2 direct debits set up and there's a small monthly fee, but if you put in the maximum it often works out better than a savings account. Only good if you have the self-control not to spend the money! Money Saving Expert calculates how much you need to have in the account to make it worthwhile.

1. ISAs: fixed-term accounts (up to 5 years) pay more interest. Unlike a normal fixed-term account, an ISA has to offer you the option of accessing your money before the end of the fixed term. You usually have to close the account and pay a penalty (equivalent to 6-12 months worth of interest) but even that can work out better than having a succession of 1-year fixed terms. But bear in mind that interest rates have started to increase (slightly!) so you wouldn't want to lock into a low rate now.

Forgot to say, if you're paying into a Help-to-Buy ISA you can't pay into another cash ISA with a different provider in the same year. So if you decide to invest in ISAs you might be better off putting in a £20k lump sum in the first year and leaving the Help-to-Buy ISA for when you have less to invest each year.

But if you're under 40, look into Lifetime ISAs (LISAs):
www.moneysavingexpert.com/savings/lifetime-ISAs

It seems you can have one of those (which pays a 25% bonus) and open another cash ISA in the same year.

I used to live in Worcester park. It's a 25 min direct train to Waterloo. You can certainly get a property in your budget there.

Would you consider buying a shared ownership property? We bought our shared ownership house nearly 7 years ago (not quite London prices down here, but still South East so not in a particularly cheap area). We're now selling it and in those 7 years we've made enough equity in our 50% share to be able to put a decent deposit down on our next home (which isn't shared ownership) with a manageable mortgage.

www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=REGION%5E87490&insId=2&radius=0.0&minPrice=&maxPrice=350000&minBedrooms=2&maxBedrooms=&displayPropertyType=&maxDaysSinceAdded=&_includeSSTC=on&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

oops - should have linked but a cute 2 bed

Look at cheshunt - fast train into north London and Liverpool Street
My husband and I bought a small two bed with a 58k deposit near Chingford station so it isn't impossible.

Raving roo there are only a handful of houses in the whole of bedfordshire that are under 200k on rightmove and no houses under 160k unless an auction prooerty then it tends to go higher.

Luton, Mk and bucks are more expensive so not sure where you got those figures from. A 1bed flat or studio is around 100 to 120k.

You will definitely get a £300k offer via a broker on those salaries. Commute wise you are best placed to buy in SE London, Zone 3-4. Someone mentioned Charlton/Kidbrooke earlier - nice areas near to Blackheath/Greenwich with a quick commute to Waterloo/Shoreditch. Or you could buy a two bed house in Plumstead - not fashionable but very good value for money still (but Crossrail is due very soon so prices will rise steadily).

I suspect this money is 'loaded' with all sorts of expectations and you don't want to make the wrong decision. However, owning your own property and the security it will give you would be something your dad would want. Jump in now before it's too late and you waste more money on renting/low interest rates on savings. Just manage your expectations re; area.

Don't forget, your first place isn't your forever home. Besides being your home It's also an investment. Put the £60k into a flat That's not quite perfect and let it make money for you. Also save more money and maybe get pay rises. Do the place up a bit and add value. Then in a few years you'll be in a better position, much better then if you let the £60k lose value in the bank.

Speak to London and Country - large independent brokers who don't charge to talk to them. They might get you a better deal.

We just bought a flat this summer, going through London and Country, and they were talking about us borrowing £525K, even though the MSE website was quoting much less. It's worth talking to them, and free. We actually decided, given the uncertainty of the market right now, to borrow much less and pay more into the mortgage in the end so we'd have a better deposit in a couple of years for something bigger.

You'd have whatever they say they'd lend you, plus the £60K (minus stamp duty, which is worth working out as it's substantial - over £10K for our 2 bed flat in zone 3!). So could easily get something for £350K.