Advice on the best plan of action....

[whydontkidscomewithauserguide]

I realise how fortunate I am in these current circumstances but wondered if there were any IFA's who could perhaps offer some advice? I am due to receive an amount of £500k in the New Year owing to some shares being cashed out of a business that I invested in. I know I will pay capital gains tax which currently stands at 20%
We live in a rented house which would cost around £330k to buy (the owners are keen to sell as they are out of the country) and we have some debts to clear too (myself and my husband.) My question is, is it wise to pay off a house in full rather than have a mortgage, even a small one? For context once our debts are paid we will have very little outgoings except utilities, food, normal expenses etc. I have a decent pension in place already.
Many thanks in advance....

If you already had some savings and no debts then having no mortgage is probably a good idea. However you should obviously clear your debts first like you say but then you should look at why you had debts in the first place, if your outgoings are low then why did you have debt?

It’s important to have a decent emergency fund of ready cash and that is IMO more important than having no mortgage. I would rather for example put £300k down on the house and have a mortgage for the remaining £30k and keep £30k in an emergency fund than have no mortgage at all but also no savings. If the shit hits the fan and you have no savings then you are stuck because your house is not a liquid asset. Yes you could then borrow against it but this would take time to organise and do the paperwork etc.

Thats great advice thanks Brobbles. Re our debts these are a culmination of me not working for a while whilst our children were little and still spending like I was! Lesson learnt there.

I think if I was in your situation, if you can clear your debt and be mortgage free and still have like 10k left then that’s good. You can build up more savings from the rent and debt repayments you won’t be paying any more especially if your regular income is not predicted to reduce in the near future (like having more children and paying childcare, etc).
Also, you can see if you can afford some independent financial advice too as the interest rate on savings are so low at the moment so being debt free including mortgage is still a preferred option for many

You really should pay for proper advice from a qualified person with proper insurance. The cost will be a tiny amount of the money you're getting, please don't rely on random interner posts from people you know nothing about.

I'd get two mortgages: one on your rental home, so you can buy it, and the other to buy a buy-to-let investment property. It would be the best way to make that money work hard while keeping the BTL monthly payments small enough so they are more than covered by the rent.

I'd seriously look into the economics of BTL before diving in. You'll pay extra stamp duty and the rent doesn't always cover the mortgage and maintenance costs. Plus do you want to be a landlord?

If you can afford to buy your house outright and like it and where it is, that sounds like a good plan.

There's no advantage in taking out a mortgage unless you need to for the mortgage and any planned work like kitchen etc. You will be able to save quickly when you aren't paying debts and rent payments.

Definitely negotiate hard on the price if you buy the property you are in. You're offering the landlord a quick, easy and cheap sale, so that's definitely worth a good discount. No estate agents fees for a start.

Have you had proper advice from an accountant or tax specialist about the money arising from your shares? Have you checked whether you qualify for any Business Property Relief?

On the question of having a mortgage or not, that rather depends on your future objectives and how much capital you need to have readily available to meet your needs.

Make sure you get a full survey done too. You ok need some money set aside for maintenance.

I have a range of investments and a portfolio of BTLs - no investment has given me the return of the BTLs over the past 20 years. If you do your tenant checks right, being a landlord is no more stressful than many other jobs where you're the boss and manage clients.

Thanks for the advice everyone. I have made an appointment with an IFA for the new year.