Spend it, Save it or invest it? That is the question?

MoneySaverLog

Makes sense to pay of the mortgage if you cannot get more in interest by saving it.

If you can get more interest in a savings account than what you'd pay on the mortgage in interest I'd keep the mortgage until such point mortgage rates go higher than savings rates.

sabretoothtigger

Spend it?- You only live once, treat the family, enjoy the holidays and buy a nice toy or 2.

I wouldnt pay off the mortgage, reduce it until you qualify for an amazing fixed rate deal. Then sit back and laugh your head off when rates rise and you enjoy the nice car :j

theoretica

Don't make the decision in a hurry - I would suggest not doing anything irreversible until you have had the same plan in mind for a month.

Where do you want to be in ten years time and how can this money help you get there?

FLAPJACK

Having already paid off the expensive debts (CC's etc) then having a lump sum in the bank will provide you with security in these uncertain times.

By this I mean not only would it be sensible to cut a large chunk out of the mortgage.... at least then this will enable you to "own" more of the property then the lender (less chance of repossession if the worst happened) thereby securing a roof over you and your families head...inturn that will reduce any panic if your employment status changed.

As you say though, you could move to a larger/better place and use some of the cash (together with the remainder of your present house sale...minus mortgage pay back)... to enable you to get a new place with a smaller mortgage than you have now.

If the worst happened at least with a chunk of the mortgage (you have now) paid you needn't look for a job paying the same as you are getting now. The same applies with a new place and smaller mortgage.

As you have mentioned having an emergency fund tucked away is also a stress reducer.

I agree... as you say returns on cash in the bank are paltry and are likely to be for the foreseeable....so using some of the cash to strengthen your families security as descibed would be prudent.

However if you are tempted to "blow" a good portion of the cash... don't forget.... what ever you spend now will probably not be replenished by investment interest...in otherwords once it's gone it's gone.

Use this windfall as a tool to change your life for the longterm, particularly in the present economic situation we are all finding ourselves in.

kidmugsy

If you have the sort of mortgage where you can borrow back overpayments when you want to, then by all means pay a large chunk down. Or heed the wisdom of STT "I wouldnt pay off the mortgage, reduce it until you qualify for an amazing fixed rate deal."

Or if you really fancy a bigger house, put your inheritance aside earning interest until your present house is sold and the new one bought, and arrange your new mortgage on one or other of the principles just mentioned. That, plus this tax year's and next year's Cash ISAs times 2, plus a holiday to get some winter sun for the family would all add up to pretty good use of the money. With your newly enlarged disposable income you will then be able to think about such things as pensions, S & S ISAs and so on at your leisure.