What to do with inheritance money?

JuniorSherlock

Gadgetmind - investing in our current house is a bit of a risk. It's an ex-council house and our contract means that we have to ask permission from the HA before we make any exterior alterations and we also have to ask ourselves how much value it would add to an ex-council house?

We also have to give the HA first refusal if we do decide to sell and if they want it, they have to pay full market value for it. A house on our row was valued at £145k. Ours is an end terrace, not that this makes that much difference I guess.

Our mortgage interest rates are above 4% so worth paying off some of the mortgage, I guess we don't need an IFA for that one. The mortgage is fixed rate and only a year old, so we are limited as to how much we can pay off until April of next year when we can decide to pay off more and move to a different mortgage provider if needs be.

If we bought a bigger house it would possibly be in a nicer area so I was thinking that in 10/15 years time it would be worth more and we could sell it to downsize to a 2bed house. I am thinking that an ex-council house would not increase in value as much as a private home in suburbia?

We do have Nationwide accounts for the kids and I probably should look at moving them to slightly higher performing accounts. My son also has the Children's Bond the Labour Party brought in. We would want to put some money aside for each of them.

Any car bought would not be new but a decent second hand one. We won't be spending it on luxuries as that's not our style.

I now need to make enquiries as to how best to invest the rest of the money to help give us a little security for the future as you are all quite right, it would be foolhardly to invest all of it into bricks and mortar. Having looked on RightMove we could upgrade to a bigger 3bed with an extra £40k so long as we sold this for around £140k, take away £3k for car, £500 for holiday and an extra £2k each to stick into the ISAs plus £2k each for the kids. That leaves us with £18k to invest into some sort of pension fund.

This is just me thinking out loud by the way and not concrete planning. Equally we could wait until April of next year, lower our mortgage to 10 years and use the savings made on mortgage payments as regular payments into a long term savings account that we don't touch, whilst investing the rest into pension funds so that we have a few funds dotted about, including the ISAs.

JuniorSherlock

Ifts wrote: »

Sorry if you have given the answers already, I couldn't see them.

What type of mortgage is it and what rate are you paying on your mortgage?

Would there be an early repayment charge if you were to pay it off early?

Fixed rate mortgage paying around 4.2%. Fixed for two years with penalties for early repayment. I think we are allowed around £5k excess each year. It'd be too late for this year I reckon by the time anything comes through, so we could only pay an extra £5k on the second year.

getmore4less

JuniorSherlock wrote: »

My father-in-law has offered us some of my husband's inheritance money now as they say they'd rather us have it whilst we need it, which is very thoughtful of them. At the moment it is tied up in bonds and shares.

Looks like the FIL is mistaken you don't NEED the money now it would be a niice to have. tell him what you are thinking and see if this is what he had in mind

Why not let him squander it on a nice car and a holiday after all it is his money.

Ifts

Ok paying off the mortgage is a no go at the moment, the reason I asked is if it was possible then instead of trying to make your savings work for you, pay it off, that way you could have ended up with less out goings with the mortgage out of the way. And you could then drip feed this money into any savings/investments you wanted to make.

JuniorSherlock wrote: »

A house on our row was valued at £145k. Ours is an end terrace, not that this makes that much difference I guess.

Sometimes end terraces are worth a little extra, especially if it has space on the side or a corner plot garden as this would make it more attractive as it could be used to extend (STPP).

gadgetmind

JuniorSherlock wrote: »

Gadgetmind - investing in our current house is a bit of a risk. It's an ex-council house and our contract means that we have to ask permission from the HA before we make any exterior alterations and we also have to ask ourselves how much value it would add to an ex-council house?

In that case, my first priority would be upsizing, getting into a property where you can add value, and doing it without increasing monthly outgoings.

You may be different, but I *hate* anyone dictating what I can/can't do with my own money or possessions. Planners are bad enough but a HA ... !!!

JuniorSherlock

Yes Gadgetmind and it was a MASSIVE bugbear when we bought the place. We had a real fight on our hands just to get it. Unfortunately it doesn't come with a side plot, the HA got that.

Getmoreforless - erm thanks? My parents in law don't need the money as they have made some shrewd investments in their time which means they will never go short. I would quite happily see them spend it all travelling around the world, after all it is THEIR money and they have worked hard all their lives for it, so why should they give it to their children for nothing? But that is what they want to do now and the reason they think we need it (and we probably do) is because neither of us are in well paid jobs, they are aware that neither of us have any future security and we are always scrimping and saving to try to make ends meet. So yes, to have that security would provide a huge comfort for us. Not that we deserve it at all and I would never say otherwise, after all I stand to get perhaps a coffee table from my own folks once they've passed on and wouldn't have it any other way.

We can't do much for the next year due to the fixed rate mortgage so I've a feeling we'll top up our ISAs, put some into the kids accounts, sit tight and see what the situation is next year. It may even be worth leaving them in their current bonds, depending on what they are and how well they are doing.

I'm very appreciate of all advice given. It's so helpful to get such advice from financial people as even a little knowledge puts us in a much better position to start making decisions.

atush

Ex local authority houses can be sought after, as they tend to have larger rooms and are supposedly well built. End of terraces generally have a premium.

Just because you have to ask permission, doens't mean you wont get it. See what other owners have had permission for?

middlepuss

JuniorSherlock wrote: »

My parents in law don't need the money as they have made some shrewd investments in their time which means they will never go short. I would quite happily see them spend it all travelling around the world, after all it is THEIR money and they have worked hard all their lives for it, so why should they give it to their children for nothing? But that is what they want to do now and the reason they think we need it (and we probably do) is because neither of us are in well paid jobs, they are aware that neither of us have any future security and we are always scrimping and saving to try to make ends meet.

You say neither of you is in a well paid job which suggests you feel short of money? So I can't help thinking that if you get the money now it will get spent and won't end up securing your future.

In your situation I'd ask the parents in law to keep it invested for you. That way it won't dribble away and it will be available for its intended purpose - your security in retirement.

gadgetmind

middlepuss wrote: »

You say neither of you is in a well paid job which suggests you feel short of money? So I can't help thinking that if you get the money now it will get spent and won't end up securing your future.

It's worth reading "The millionaire next door" to see how cash from parents can serious harm offspring. The authors refer to it as "Economic Life Support" and cite many cases where it brought misery rather than happiness.

The OP comes across as jolly sensible, and clearly realises that this is probably a once-in-a-lifetime opportunity, which is heartening.

whiteside

middlepuss wrote: »

You say neither of you is in a well paid job which suggests you feel short of money? So I can't help thinking that if you get the money now it will get spent and won't end up securing your future.

In your situation I'd ask the parents in law to keep it invested for you. That way it won't dribble away and it will be available for its intended purpose - your security in retirement.

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I think the op has stated that her parents in law are financially comfortable so this monetary gift should be accepted with thanks. The way care for the elderly is even now I know a lot of middle aged parents who are gifting some money to their offspring in fear of the whole lot being taken from them when older by a ridiculously unfair system.
To the op I would say that if your husband wants a car, he should go ahead and the same for a nice holiday. This will still leave a tidy sum to invest/pay off mortgage/upscale or whatever. The op seems quite sensible to me and is unlikely to blow the rest on drugs and strippers. I think sometimes people on here can be a bit obsessed with the hoarding money aspect and forget that spending some money can sometimes be the right and enjoyable thing to do.
Good luck with the money whatever you do.