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Paying off (most of) my mortgage with inheritance

BenG1
BenG1 Posts: 41 Forumite
in Mortgages & endowments
Hi all

I am due to inherit a significant amount of money (around maybe £120,000) fairly soon and was thinking about paying off as much as 90% of my £137,000 mortgage with it.

The obvious benefits of this are massively reduced mortgage repayments and sooner rather than later owning my own home.

What I'm wondering is, though, is:

Is 90% (or thereabouts) too much - could I do more with my money?
What sort of deal would I get remortgaging - it should be good, yes?
Should I MAYBE instead invest in another property to let? (It's just something I've considered)

All views, advice and opinions welcome, as I never expected to be in this position!
«13

Comments

  • beecher2
    beecher2 Posts: 3,677 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    Are there any penalties for overpaying? Do you already have a savings fund/topped up ISA? I don't know that now is a good time for investing in a property to let - particularly when you could be practically mortgage free instead.
  • BenG1
    BenG1 Posts: 41 Forumite
    beecher2 wrote: »
    Are there any penalties for overpaying? Do you already have a savings fund/topped up ISA? I don't know that now is a good time for investing in a property to let - particularly when you could be practically mortgage free instead.

    Not sure on the penalties of overpaying on the current mortgage to be honest, that's why I asked about remortgaging - is it even possible to do that with a near 90% deposit, as it were??

    I do have a topped up Cash ISA yes, and will have for the next tax year too without touching this money, so that's covered.

    I know what you mean about buy to let...dodgy at the moment.
  • Cannon_Fodder
    Cannon_Fodder Posts: 3,980 Forumite
    Stick a year's salary in the bank, in ISAs or Fixed term savings accounts.

    Subject to penalties/fees, reduce the mortgage.
  • beecher2
    beecher2 Posts: 3,677 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    If there are penalties for repaying, the same penalties would apply to remortgaging. Are you in a deal at the moment with an Early Repayment Charge?
  • BenG1
    BenG1 Posts: 41 Forumite
    Nope, I'm out of the Early Repayment period. And the current mortgage is interest only - hence I want to switch to a repayment mortgage whatever I do.
  • beecher2
    beecher2 Posts: 3,677 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    Maybe you should make an appointment with a financial adviser to go through your options. I think if you're remortgaging the minimum would be about £25k so maybe overpaying £100,000 and then looking elsewhere would be a plan, saving the rest? Why don't you phone your present lender to see what your options would be if you stayed with them?
  • BenG1
    BenG1 Posts: 41 Forumite
    Thanks beecher (and Cannon Fodder). Much appreciated.
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You have not said who your lender is and what rate you are paying on your interest only mortgage.Your SVR could be 2.5% or 5.5% so big difference.Contact your lender and ask can you pay a lump sum off your mortgage.Then consider paying off as much as you can afford and changing the outstanding balance to repayment.Keep an emergency fund of 3/6 months of income but little point in having say £20K in ISA,s earning 3% and paying 5% on small mortgage.Not worth moving lender but if you have been paying £600 a month on IO mortgage you could keep the same figure and overpay the remaining balance left on the mortgage
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 24 March 2010 at 9:29AM
    Whats the mortgage rate?

    If not really sure then an offset mortgage keeps your options open.

    Minimal costs to move to First direct fee free oprions at base + 2.39% 65% LTV

    Also covers the emergency fund.

    Barclays allow ISAs to be offset as well, so that might be another option to look at although fees have been higher.
  • BenG1
    BenG1 Posts: 41 Forumite
    I'm with the Abbey at the moment on some kind of tracker (as it stands I THINK it's 1% above base rate until later this year when I'll move to the standard variable). The IO repayments are only just over £200 a month AT THE MOMENT.

    My ideal would be to be mortgage free as soon as possible. I need to speak to a mortgage advisor with all the details don't I!
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