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Original poster

What to do with £150k?

12 replies

Domutin · 26/05/2020 10:03

I recently sold my house owned with ex. Made £150k profit on house and moved into rented property with DC. I was looking at part ownership schemes to buy again. However, quite unexpectedly, I inherited a property from my auntie worth approx £250k. This means I will be able to buy a house again, which I would like to do asap as currently paying a fortune in rent. But it will take some time to sell auntie's property - lawyers still need to get probate then need to sell house etc. It could take up to a year, possibly sooner or later, depending on housing market.

I have the original £150k sitting in the bank. What to do with it? Interest rates are so low. I guess it's not worth investing in a small property and renting it out given I'll be able to buy my own property soonish? What else could I do with £150k?

OP posts:

swimster01 · 26/05/2020 12:35

You get a max of £85k per person FCA savings protection, so first thing to do is to split it across different banks.

I would keep it in ready cash savings until auntie's house had sold and I knew what money was coming to me after taxes paid.

TinCanAlley2 · 26/05/2020 12:42

£50k in premium bonds ?

Janek · 26/05/2020 12:44

Can you live in the aunt's house in the mean time to save on rent?

TinCanAlley2 · 26/05/2020 13:43

I've actually got the exact same dilemma. Going to put it into premiums bonds until we buy a house

Original poster

Domutin · 26/05/2020 15:38

Thanks, I'll look into premium bonds.

@Janek that would be ideal if the house were near us. It's not unfortunately. I could however look into renting it out before it sells. I wouldn't get much but it could pay approx half our rent. However, it might be more hassle than it's worth especially if there are tenants in there and I would like to sell ASAP so we can buy our own house in this area.

OP posts:

Chasingsquirrels · 26/05/2020 15:45

With that sort of short term deposit and interest rates as they are of definately put the maximum £50k into premium bonds. You might ow win but you aren't going to lose a lot in terms of missed interest in a savings account.
Then split the remaining £100k so that you haven't got more than £85k with a single institution (be careful as some are covered by a single licence). I'd probably just go easy access as you aren't likely to get much more in a 1 year fix and don't want it tied up for longer.

Janek · 26/05/2020 16:24

I thought you might say that, but it was worth suggesting!

PlanDeRaccordement · 26/05/2020 16:48

Well, I’m not sure putting the £150k plus the equity from your aunts home into one property is a wise financial move. It puts all your eggs in one basket right as we enter bad recession in which property values will either drop or flat line for awhile.

I’d keep the two chunks of money separate. Use the £150k OR the equity from the inherited house to buy a new home. Whichever one you use depends on how long you want to wait to own a home again.

Then take the other chunk of money and invest it according to priority-
Emergency cash fund of 6 months living expenses
Retirement pension(s)
Additional investments, ie. a stocks and shares ISA.

mencken · 26/05/2020 17:31

savings rates have been terrible for a decade and are now even more pitiful. Grab any fixed rates over 1% while you can, but as others note, no more than £85k per banking licence.

don't go into property rental unless you really know what you are doing. You are very vulnerable to player tenants, especially at the moment. And even if they are not players, you are looking at up to a year for eviction. The priority list in the post above is good.

Original poster

Domutin · 26/05/2020 20:02

@PlanDeRaccordement I wouldn't be able to buy anything in my area for 150k or 250k. I will keep some aside but I would have to put most of it in to buy a house. I'll also be saving a fortune in rent so will be able to save a good chunk each month.

OP posts:

BarbaraofSeville · 28/05/2020 08:30

As well as PBs, the best rate on savings at the moment is the NS&I income bond, at 1.16% and as it's the government, you don't need to worry about the £85k limit, so I'd just put £50k in PBs and £100k in the income bond.

I don't think I'd bother with buying other properties due to hassle, risk of price drops and possible additional stamp duty complications due to owning more than one property.

Mumoftwoyoungkids · 28/05/2020 09:50

I’m not sure that I agree. Now is a very bad time to try and make a profit from property - agreed. But it is a very good time to have security - to have a home. The best thing that the Op can do is buy a house and then..... live in it. With no rent or mortgage her expenses will be relatively low so she can just sit quietly in her house and ride out the recession, depression or whatever we are going to have. And by buying a house that is “future-proof” - ie suddenly won’t seem too small once her kids become strapping teenagers - then she has no need to know what is happening to house prices.

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