Savings & Mortgage Overpayments?

Babooshkas

Hello, I know all the information is readily available on MSE but i'm having a hard time processing everything and coming to a decision about things.

My husband very unfortunately passed away in Dec. I am due to receive in the region of 120k as part of his death in service benefit.

I want to make sure this is used to pay off the mortgage so I will have a property to pass to our children in the long run.

I can overpay the mortgage by 10% a year without penalty and we have in the region of £165,000 outstanding. I am just wondering where I should keep the rest of the money - I was going to set up the mortgage DD to come from this money and maybe make some interest from whatever is left?

I am trying to research but it's all very confusing and I am finding it hard to process everything given the circumstances. if anyone could help I would really appreciate it.

AlanP_2

Sorry to hear your sad news but you have come to the right place to get some advice and guidance.

The first thing to do while you consider your options is make sure the cash is either spread across 2 or more financial institutions or to put it into National Savings & Investments.

Individual institutions have a government backed guarantee of up to £75 per investor so that is why you need 2 or more.

Make sure they are really separate though, for example HSBC and First Direct are under the same "policy".

NS&I is the government arm that deals with savings and premium bonds etc., cover there is not restricted to 75k.

As for what to do next I would suggest that you take a bit of time and provide a fuller explanation of your circumstances.

Working?

Salary?

Pension payments you can expect and when (for both yourself and from your husband's scheme)?

Income need per month?

Mortgage Rate & Term and "Lock in period" until you can re-mortgage?

Life Insurance for yourself - not nice to think about but as you have children it may be important depending on their age and whether they are financially dependant on you.


These sort of things will help you to see the overall situation and will enable others on here to offer suggestions that fit with the overall situation rather than just looking at the mortgage / cash balance in isolation.

littlej0hn

Sorry for your loss.

Definitely look at your mortgage to see if you are locked in as this would appear to be a time to remortgage if you won't get any charges.

As mentioned above, a little more detail on you situation would allow for some sound advice.

Babooshkas

Thank you for your replies.

Alan I've noted what you say about it being spread across two for protection.

We are currently in a 2 year fixed term with Santander, the house was only purchased in February last year so I can remortgage next February.

I work part time currently - after paying childcare I earn £300 or so - but this should hopefully increase a lot come September when my eldest starts school and youngest qualifies for 15 hours free. Not yet in a pension scheme but obviously this is something I should really think about now!

Monthly child benefit: £137

Monthly widow allowance: £450

Which leaves me with just shy of £900 a month for bills/food etc which we can easily live on given the mortgage payments will come out of the money left to me from his DIS.

Life insurance already in place - unfortunately my husband's death was not covered.

Thanks again for replies so far.