Re: What to do with £125,000

On 4 Oct, 19:45, JakeD <d...@fgfgfgn.com> wrote:
> In article <ce81b619-7e54-481b-8d8f-
> a13c6fed5...@m18g2000vbs.googlegroups.com>, mauzcma...@yahoo.co.uk
> says...
>
>
>
>
>
> > On 2 Oct, 22:00, JakeD <d...@fgfgfgn.com> wrote:
> > > Advice please. I'm 56, unemployed, homeless and have no pension.
> > > However, as of today, I have £125,000 in the bank (from sale of a
> > > house). Should I put the whole amount into a property to live in? It
> > > will buy me a two bedroom flat in the part of England where I live.
> > > However, I'd much rather rather live in a 3-bed house with off-road
> > > parking and my own garden, which would cost me an extra £30K, but I
> > > assume that I wouldn't be able to get a mortgage, even if I could
> > > theoretically make the repayments by taking in a lodger or two, corre
ct?
> > > I guess the days of non-status and status-free mortgages are dead and
> > > gone, are they?
>
> > > JD
>
> > It really depends on what you want to do next, and what sort of income
> > you have (you don't say whether you're receiving any benefits, or any
> > income from any other source).
>
> > Putting the whole £125k into anything probably isn't the best idea.
> > If you spend it all, and then don't manage to get any income for the
> > next few months you're going to be pretty stuffed.
>
> > I suspect you may have recently gone through some sort of life-
> > changing event.  (I apologise for making assumptions, but if somebody
> > is homeless with £125k in the bank it's not that unusual for them to
> > be either divorced or recently bereaved).  If that's the case, you
> > might want to be wary about making any permanent decisions about where
> > you'll live for a while, just until the shock has worn off a bit.
>
> > It might not be completely impossible for you to get a small mortgage,
> > depending on your income.  The loan to value would be fine.  If you
> > want to go down that route, speak to a mortgage broker and see what
> > they say.
>
> > Some other things you might want to think about:
>
> > * What will be the effect on any benefits you are claiming (might be
> > able to claim) if you do (or do not) buy a house?
> > * Are you sure that buying a house is what you want to do?  (If I los
t
> > my job and had £125k, I'd be travelling the world for a bit rather
> > than settling down)
> > * Might you need to move elsewhere in the UK / the world at short
> > notice if you managed to find a job?
> > * Is there anything else you might need capital for in the near
> > future?  A new car?  Some sort of training course to help you get a
> > job?
> > * Assuming you can't find a lodger (they're never guaranteed!) would
> > you have enough money to live if you bought a house?  If not, renting
> > for a while and spending your capital until you get back on your feet
>
> Hi Mouse,
> Thanks for the helpful reply. You are right about the life changing
> event. I sold my house 2 years ago and moved in with my mother who was
> elderly and in failing health. She died 8 months ago. Then my sibling
> (executor of the will) railroaded me out of the house so he could sell
> it. I wasn't ready to move and didn;t know where I wanted to go, so I
> bought a camper van and have been living in that for several months.
>
> Yes, I could book into a hotel or lodgings, but I'll put that off as
> long as possible, because of the expense. What you said about waiting a
> full year before making any big decisions was exactly what a friend of
> mine recommended also. Perhaps I'll do that. Meanwhile, I am almost
> completely sure about where I'd like to live and am looking out for
> property coming on the market. It's only a small town and there isn;t a
> vast amount of choice. I think I'd feel safer with my money in property
> than in the bank where I can fritter it away. Yes, I can afford to run a
> house.
>
> Don;t have any income. Haven't been claiming welfare because of my
> savings.
>
> What you said about travelling is also appealing. It would probably cost
> me less to travel to a warm part of Europe and continue sleeping in the
> van, than it would to take lodgings in the UK. I wonder which European
> country is warm, has a coast, is cheap tp live in, not full of robbers,
> and isn;t heavily taxed (in case I decide to settle there).

As a carer living in your mothers house and providing free care, you
had higher than average rights. I recall helping someone on uk.legal
successfully challenge a will from one third to a half payout on that
basis.

Might be worth contacting Citizens Advice and see if you can enter a
claim for backdated Carers Allowance.

According to data from the Land Registry and National Statistics, the
current house price is 5.0 times the average salary, compared with the
average since 1930 of 3.4. Therefore a 30.6% fall is required merely
to return to the long term trend, ignoring the markets tendency to
overshoot in either direction. As ever, anyone using borrowed money to
purchase above the long term trend is taking on significant risk.
Historically, the property market has taken some time to resume steady
growth after a period of deflation, in 1992 it took 3 years, 1980 2.5
years, 1977 1 year, 1970 1 year, 1955 1 year, 1948 1 year, 1934 4
years, enabling potential purchasers time to wait for a period of
stability before committing to purchase rather than attempting to
guess at a low point.

As an equity investor of two decades and a landlord for one, I think
that Zopa offers the best risk vs. reward. Interest rates of ~7% after
charges and defaults, however you have to loan your money out for 3/5
years, but during that period you are receiving capital repayments as
well as interest every month.

--
Daytona
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