How best to use this money

UserX

I've been living a bit hand-to-mouth for a while after a difficult marriage break up.

I've about £9000 on interest free credit cards at present. Everything I receive at the beginning of the month is spent by the end.

I have a mortgage. House is in reasonable nick except the bathroom, which will cost about £5K. This can be done via B&Q on interest free credit.

In the next month I am going to receive just over £10K from a small inheritance.

I have no savings, one dependent teenager, no pension.

I would like to use this opportunity to start turning my financial situation around a little. I do need to sort the bathroom in order to avoid water damage which wil be inevitable if I leave it in the current situation for much longer. I am not able to do it myself.

How can I best make this modest lump sum work for me?

diamonds

I would pay your debts off and remortgage 5K over mortgage term for the repair given it is in the interest of the mortgage provider the repair be done due to the property on future security should you default.


You then start saving off the freed up cash off your salary.


Why make it more complex or risky for some interest tarting accounts with debts, anything in life could change and a mortgage and a credit card bill of 9K is not manageable should unforseen circumstances happen.


A mortgage and savings and no other debt are a better place to be short and long term.

UserX

Aaaaah I probably should have mentioned I am tied in to current mortgage for about 19 (?) months.

Is the advice still to pay off debts even though they are interest-free? Rather than park some/all of the lump sum to gain a bit of interest on it, albeit small?

diamonds

UserX wrote: »

Aaaaah I probably should have mentioned I am tied in to current mortgage for about 19 (?) months.

Is the advice still to pay off debts even though they are interest-free? Rather than park some/all of the lump sum to gain a bit of interest on it, albeit small?

Small interest is nothing from experience to debts, unless you have payment protection in place on mortgage and other credit agreements t

You probably never thought at one point as you said a separation would happen, plan way ahead not just here, now and the immediate future. Lay off, disability etc...


Is your mortgage with fees for the next 19 months if you leave ? Provider ?


Clearing debts means less hand to mouth and savings start.

UserX

Provider is Virgin & yes, fees if I leave.

diamonds

UserX wrote: »

Provider is Virgin & yes, fees if I leave.

May I ask fees amount, LTV, mortgage amount, time left ?

Sometimes adding a fee to a change of mortgage provider to a mortgage reduces your monthly payment. Individual circumstances apply though, your APR could be after the market crash and much lower or before equalling higher etc etc


See if you cannot reduce monthly mortgage payment with the extra 5K, a mortgage fixed for say 10 years at 3.2% then banking savings in Regular Savings accounts every month at 6%.


MSE parent company has a mortgage comparison https://www.moneysupermarket.com/mortgages/

UserX

Thanks - we're away staying with mum for a few days so I don't have access to the paperwork but I'll have a look when I get back. I'd be surprised if they'll increase my mortgage though as my parents gave me a small lump sum in order to enable me to get enough funds together to buy the ex out.....I can see what you have said seems sensible though. Unfortunately I am not naturally astute when it comes to making financial decisions :-( (or choosing men lol)

Ballard

diamonds wrote: »

Sometimes adding a fee to a change of mortgage provider to a mortgage reduces your monthly payment. Individual circumstances apply though, your APR could be after the market crash and much lower or before equalling higher etc etc

What on earth does this mean?

diamonds

Ballard wrote: »

What on earth does this mean?

Change/redemption mortgage fee added to mortgage with new provider.

Ballard

diamonds wrote: »

Change/redemption mortgage fee added to mortgage with new provider.

I sort of got the first sentence but I can't get my head around the second. Not to worry.

diamonds

UserX wrote: »

Thanks - we're away staying with mum for a few days so I don't have access to the paperwork but I'll have a look when I get back. I'd be surprised if they'll increase my mortgage though as my parents gave me a small lump sum in order to enable me to get enough funds together to buy the ex out.....I can see what you have said seems sensible though. Unfortunately I am not naturally astute when it comes to making financial decisions :-( (or choosing men lol)

We all learn finance and woman/men with experience like many other things ongoing, life is a forever evolving education