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Making best use of insurance pay out, advice please.
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TonyCam
Posts: 2 Newbie
I'm looking for advice for a family member, let me explain...
Her husband died last year and the insurance that was tied to the mortgage is due to be paid directly to her I believe. I'm told the insurance pay out will be £40k with £36k remaining to be paid on the mortgage. The current interest rate on the mortgage is 0.94% according to a letter sent recently, it used to be around 5%. The mortgage is now only £350pm. She is not earning at this time and has fairly limited savings.
Can anyone offer advice on the best way to make that £40k work to her advantage? Ie, pay off the mortgage in full, partially, or over paying? Would they (A+L) offer any discount for paying off in full? Or would putting the £40k into a high interest rate savings account (or similar) offer any advantages?
I'm a complete newb in these financial matters, so any advice is great appreciated. Feel free to ask if more detail is needed.
Thank you in advance.
Her husband died last year and the insurance that was tied to the mortgage is due to be paid directly to her I believe. I'm told the insurance pay out will be £40k with £36k remaining to be paid on the mortgage. The current interest rate on the mortgage is 0.94% according to a letter sent recently, it used to be around 5%. The mortgage is now only £350pm. She is not earning at this time and has fairly limited savings.
Can anyone offer advice on the best way to make that £40k work to her advantage? Ie, pay off the mortgage in full, partially, or over paying? Would they (A+L) offer any discount for paying off in full? Or would putting the £40k into a high interest rate savings account (or similar) offer any advantages?
I'm a complete newb in these financial matters, so any advice is great appreciated. Feel free to ask if more detail is needed.
Thank you in advance.
0
Comments
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The first thing to look at is benifits.
£40k may effect what is claimable even if the mortgage is paid off.
Comes under deliberate disposal of assets.0 -
BUMP.
The lender will not offer any discount for early repayment of the mortgage, but neither is there any early settlement fee.
But the question still stands.... what's the best way to make that £40k earn a little extra instead of paying off the mortgage with it?
A big thanks in advance.0 -
The insurance payout is money that was intended to clear the mortgage in the event of either death ( if they had joint cover )
The benefits people could not complain if the money was used to clear the mortgage but if your friend pays it into the bank and does not clear the mortgage then it will effect her entitlement to benefits.
So pay off the mortgage and save the other £4k in ISA,s or regular savers.0
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