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Original poster

200k WWYD?

37 replies

Laurel567 · 20/07/2023 22:46

In rented property, one DC at primary school, we’re a couple mid 30’s, both work full time, no debt and fairly good joint income. What would you do with 200k? Invest, buy properties to rent out (mortgaged but using money for deposits), put a deposit down on our own house?

Im looking for the best way to make this money work for us in the long term, suggestions are very welcomed!

OP posts:

Motnight · 21/07/2023 07:07

I would buy a house. Then save the money freed up every month.

It's a good position to be in, Op!

CatsOnTheChair · 21/07/2023 07:10

How much of a mortgage would £500 a month get you?
I'd buy a house at that plus the £200k.

shelbabab · 21/07/2023 08:06

No brainer for me. It would be buying a house or large deposit towards it.

Fourmagpies · 21/07/2023 10:02

I would buy a house. Definitely don't do buy to let at the moment. The returns aren't worth it. And also think about how you can ring-fence the money. Speak to a solicitor, I speak from experience as I didn't do this and less than a year later split up after 20 years together and having to split it with him.

Jackonary · 21/07/2023 16:09

If would be very inefficient to have a buy to let as you would pay tax on the income and capital gains tax when you sold the house. Much better to invest in housing for yourselves and/or pensions.

ivykaty44 · 21/07/2023 16:13

If you put it in a few high interest accounts and continually topped up ISA for 10 years, you’d have £329000 in 10 years time without touch it or doing a thing. That’s £129000 in interest or just shy of £13000 each year

CornishTiger · 21/07/2023 16:48

Except they’d have paid £10,800 in rent with that money gone and no investment in a property

sonicmum2002 · 21/07/2023 19:20

I'd buy a house, aiming to be mortgage free. Save the money you'd have spent on rent as much as you can, putting it into an investment fund. Keep some of your savings accessible.

Rainbowqueeen · 21/07/2023 19:23

Buy your own home.

Once mortgage paid off pump money into your pensions

ivykaty44 · 21/07/2023 21:37

CornishTiger · 21/07/2023 16:48

Except they’d have paid £10,800 in rent with that money gone and no investment in a property

So less than they'd make in interest and with a housing market that is not great presently.... they'd not be losing out by not rushing to purchase a house.

BarbaraofSeville · 22/07/2023 06:33

Tbh, @ivykaty44 I did wonder about that. We're all that used to thinking 'rent is dead money' and 'buy as soon as you can' that it's easy to automatically say buying is a no brainer.

But if you compare the interest on a mortgage with the cost of renting, what do the numbers look like, especially if you're buying in a falling market and add in the costs that renters don't have, like buildings insurance, boiler servicing etc.

Of course, if you buy, you'll have an asset when you've paid the mortgage off, you should see capital growth over the years, and buying is more stable than renting.

Many renters have to move frequently, which also has costs but I suppose it would depend on how much rent is vs the mortgage, if the rent is cheaper that would free up money to invest which could also produce an asset in the long term.

It would be interesting to make comparisons of various points in history and parts of the UK to see if there are any periods other than very short term blips where renting is financially better than buying.

But in the short term, if the OP puts her money in the highest interest 1 of 2 year fixes and uses both her and her DHs cash ISA allowances she'll make a good amount of interest towards her rent and if prices fall she could be in better position in a couple of years compared with buying now.

ivykaty44 · 22/07/2023 10:03

@BarbaraofSeville

1991-1998 we purchased a house and sold the same house for £6k more than we’d paid for it. Had we put just our deposit (yes we had a deposit!) in a high interest account we would have made 130% instead we made 15% on the house.

if the next 7 years of the housing makers are the same…and interest rates stay at 5% the OP would gain 41% on their money.

I presently have friends in a similar scenario
They have inheritance of £50k
they can buy a property for £250k and put down £50k leaving mortgage repayments at £1300. They rent a similar property worth slightly more for £1000 they know their rental is owned outright. If the purchase presently and the interest rates creep up slowly then life will be tough. Therefore they are going to put £300 they’re saving between renting and mortgage and add to the inheritance. Projection for 7 years would be at 5% approximately £101k

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