How to stretch 50k

[use257]

We are a family of four. Two dc under 2. We will be receiving 50k. We aren't home owners but we need at least 20k of it to settle debts and get a family car so that leaves 30 for house deposit. In our current situation that could get us a 180k house, but every 3 bed near us for that price is diabolical.

So, we were thinking of getting a buy to let mortgage and buying a 2 bed to rent out. At least then we are homeowners and can decide in the future whether to sell it and hopefully try and make some profit, or just to keep renting it out.

Or we could try and invest the 30k to make more money to pay a bigger deposit and be able to afford a better house.

OH's boss has heavily alluded that he will be getting a promotion in the next 2 years which could add anything between 10-20k to his salary. Then we would be able to afford a larger mortgage (I don't work at the minute). Should we wait for that?

The only problem is that now our rent is about half of our total income so its very expensive. Would be better to get a mortgage ASAP as then monthly payments would be less than half of what they are now.

MN is so good for different perspectives from all kinds of people. Give me your best ideas!

Before you buy anything I'd get married. You currently have no protection if you split up.
Who said you can't be on the mortgage? Not true. You need to make sure you're on the deeds as well.

Defo get on the ladder. Start in a 2 bed and work your way up when you can!

I would really consider if there is anyway to buy a house now. We were very close to staying in renting longer as it was working for us. Three years on I think we would struggle to afford our house. House prices in our area have just increased so fast.
I know it isn't ideal but could you not get a car on finance? That way you have a new car but still the bulk of the 50k left. In a few years time when your deal is up you can reassess if you have cash to buy an older car outright.

Your priorities are all wrong.

Spending high rent on a "nice" house and 15k on a nice car is an insane idea.

Pay off the debt. Put 40k down as a deposit for a house, a 3 bed that you can do up as you go along, and even quicker once your DP gets his promotion.

You don’t think you’re in a vulnerable position because you think you will never separate. No one knows that. As an unmarried SAHM you absolutely are.

If you spend £15k in a car for a treat you don’t deserve any advice as that’s madness.

This is an example of the kind of car I would look at in your situation. You can definitely get a good reliable car that would check your boxes.

www.autotrader.co.uk/car-details/202112140516547

@icedancerlenny

You don’t think you’re in a vulnerable position because you think you will never separate. No one knows that. As an unmarried SAHM you absolutely are.

If you spend £15k in a car for a treat you don’t deserve any advice as that’s madness.

Oh that's mean

Equally shared is fine until it all goes tits up.
You need to secure your finances for your and your children’s future.
And I’d buy that 2 bed and live in it, or a 3 bed and do it up. I’d really be wanting to invest in a home, and be getting on the ladder now.

@icedancerlenny and no it's because my parents would always support me if things failed with my children's father

All really good ideas to think about guys, it's onvious I need to buy a house and make do with my car.

Icedancer's post wasn't mean, it was sensible. You'd be extremely irresponsible to prioritise a nice car and a bedroom each over getting in the property ladder and giving your kids and yourself a secure future.

You're being absolutely ludicrously mad with finances here.

Firstly, being a 'SAHM' when you're unmarried is accepting you could be homeless tomorrow without a penny to your name, madness.

Secondly, if you're getting 50k and have 5k debt then you have 45k for a deposit, your idea of spaffing most of this money on a fancy car is ludicrous. Grow up. Buy the house that you can afford now, you would also be able to work around his hours and leave him the children.

If you buy a house make sure you do it as tenants in common , and make a will.

I agree splurging £15k on a car, when you don't work and rent is madness.

Me and DH jointly earn £80k and we've just done this, for years we spent £5k max but being older, less mortgage and higher earnings means we've upped our car budget.

I'd spend £5k on a car and the rest on the security of a home for your DCs.

Obviously it's up to you, but you have asked the question so you're getting the answers.

@use257

Thank you so much everyone!! Overwhelmed by all the great advice. Much appreciated. I'm reluctant to give my area to maintain anonymity.

No we don't have 20k of debt, around 5k all together but for the car we want (big enough for 2 large car seats, new enough to last us a while and nice enough to make us feel happy) will be about 15k. Car prices have recently shot right up, and well we just want a nice car😬 it's a treat after a hard few years.

I wouldn't be looking to make any profit on a BTL so no, it's not to get rich quick.

I'll have a look at shared ownership, I've had a look at an online mortgage in principle and we won't be able to get anything that we'll be comfortable in I don't think. Of course we can redecorate but with 2 young babies we struggle to do basic improvements in our current house, never mind overhauling the whole thing. We are thinking of just putting it in isa's and assessing the situation again in a couple of years when dps salary will be higher either through promotion or already confirmed pay rise.

Still haven't read everyone's messages properly will have a proper look through later

I'm sorry but getting yourself a 15k 'treat' at the expense of the house you actually need suggests you should not be trusted with money.

[quote use257]@icedancerlenny and no it's because my parents would always support me if things failed with my children's father [/quote]
That’s not really financial planning though, is it? It’s as ludicrous as buying a £15k car and compromising on a house, when there are options available to make sure you’re financially OK if your relationship fails.

If I were you I’d get married. Do as a pp said and invest the max each in a LISA this tax year and next: it’s free money and would be foolish not to. Stick with the car you’ve got and upgrade later if this promotion materialises or when you get a job. And use the most of the £50k you can to get the best house you can, prioritising location over size – you can always extend or improve but you won’t be able to change location without moving, and moving costs money.

Can you get a 2 bed with potential to extend or go into the loft once your DH gets a promotion? Or buy a 2 bed and move.

I wouldn't personally do a buy to let.

@use257

All really good ideas to think about guys, it's onvious I need to buy a house and make do with my car.

That’s probably a good idea! Kids are a menace in the back of cars once the come out of car seats and onto booster seats. Unless you don’t allow them to eat or drink in the car, they would make your 15K car look like it cost less 5K in a matter of weeks.

I would also look at getting an evening/weekend job around your partners work hours. Even if you were only earning 5k a year that would add an extra 20k to what you can borrow.
Our household income is many multiples of yours, we have never spent anywhere close to 15k on a car.

Are the diabolical 3 bedrooms able to have work done to make them less 'diabolical' or is it because they are located in hell?

How does your current rent compare with the mortgage?

What is a reasonable view about housing prices where you live?

Fixing a mortgage for 5 years now might need factoring into your decision compared with rate rises that seem likely?

Depending on the combination of answers to the above, would you save rent compared with a mortgage by buying an upgradeable 3 bedroom and fixing the mortgage?

Why not buy a garden flat just to get on the housing ladder? It's a bit unrealistic for a first time buyer to go straight to a 3 bedroom house.

I wouldn't try and grow the windfall through financial investment unless your DP works in financial services and has the discipline to apply to personal investments. If not then a costly learning curve seems likely.

Honestly OP, your attitude to finances is shocking.

Your attitude towards protecting yourself and your children financially and legally is even worse.

It sounds like you want to spaff this money up the wall when you need it for basics like secure accommodation for you children.

I would say speak to a mortgage broker before you make any decisions.

I would hold off buying the car until after you have bought the house. The money will help more buying the house, and you can buy a new car using the savings you make once you no longer need to pay rent.

Ask the mortgage broker whether paying off the debt is a good idea or not. It depends how much debt you have and what type it is. You say it is £5k ish, and I suspect that you will be better not paying that off before getting the mortgage but using you extra disposable income once you aren't renting.

If you can use the full £50k as a deposit hopefully it will enable you to buy a three bedroom house so you can live in it. Even if you have to buy one that is shabby, needs work or in a less good area buy a house you can live in asap. You can trade up in future when the promotion comes.

Also what about looking at 2 bed properties with scope to convert the loft, extend or divide one bedroom into two?

You could probably sort something as a temporary measure until the work is done so you aren't dealing with the kids sharing a room. Such as keeping the rental on for a month while work is done, using a reception room as a bedroom until work is completed, having one of the kids in with you, or dividing a room with a thick curtain or furniture as a temporary measure.

Dividing one large room into two small ones is not a massive job and could be completed to a livable standard quickly. A loft conversion would take longer and be more disruptive, or an extension more time and work again.