What to do with my inheritance ?

bcfclee27

Hi all, just looking for advice on what to do with a sizeable inheritance. My father passed away leaving me a sum that I want to use wisely......

I'm 37 in police and wife is a teacher so we have decent pensions.
We have 2 kids no plans for anymore.

House worth about 460k.
2 year fixed mortgage ending 31 Jan 2018.
Current mortgage left 264k

6k loan paying off £112 a month for next 56 months.
4K loan to father in law £250 a month (interest free)

3k in savings.

Received 160k from dad with a possible 30k to come from his shares.

So what do I do with the money - I imagine the smart move is to...
1) pay loans off at least the 6k one because of the interest.
2) keep 20k emergency savings
3) stick the lot of what's left into my mortgage.

So just looking for advice on what to do with it all.
Many thanks.

martinsurrey

What are your incomes?

DiggerUK

Bitter sweet reasons for you being here, hope everything is levelling off for you.
I suspect your 6K loan is a fixed repayment schedule, check t&c's.
As the honourable thing to do....pay off FIL.

I'm in the school that says get rid of debt.....aim to pay as much off the mortgage as you can. You may be able to negotiate a more favourable deal if your LTV is low. Highest instant access (don't get excited about rates) or even Premium Bonds for fun, till Jan 2018.

As you are both in secure work, 20K emergency fund seems high. Maybe halve that figure.
Best of fortune..._

bcfclee27

martinsurrey wrote: »

What are your incomes?

Mine about 40k (£2,200) a month
Wife part time 20kish (£1,500) a month

bcfclee27

DiggerUK wrote: »

Bitter sweet reasons for you being here, hope everything is levelling off for you.
I suspect your 6K loan is a fixed repayment schedule, check t&c's.
As the honourable thing to do....pay off FIL.

I'm in the school that says get rid of debt.....aim to pay as much off the mortgage as you can. You may be able to negotiate a more favourable deal if your LTV is low. Highest instant access (don't get excited about rates) or even Premium Bonds for fun, till Jan 2018.

As you are both in secure work, 20K emergency fund seems high. Maybe halve that figure.
Best of fortune..._

I can pay loan off no conditions or charges.

The money is sat in NS&I easy access income bonds until I need to change mortgages etc.

Thanks

martinsurrey

Good LTV, not higher rate tax payer, decent pension provisions.

A nice place to be in.

Options I see are (after paying off the loans):

Most tax efficient - start personal pensions, contribute into them and live off the inheritance for a few years, its an instant 20% saving - downside is that you can touch it until you are 55 (currently)

Most flexible - keep it, but put as much as you can in stocks and shares ISA's (£20k per year each per year). You lose the 20% tax saving of a pension, but the income and capital gain is tax free coming out, and you retain the flexibility to access it if your circumstance change, over the long term this could be a plank of early retirement income.

Safest - pay off the mortgage.


I would do a mix of 1 and 2 in your boat.

£10k pay of BOTH loans
£80k in S&S ISA over the next 8 months (£40k now and £40k in April).
£60k to live off and start pension contributions with the aim of having £72k in there before the cash runs out
£10k to have some fun.

xylophone

Repay money borrowed from FIL and other parties.

Do your children have CTF/JISA accounts? You might consider a gift to each.

Are you and your spouse making maximum use of joint and sole interest paying current accounts?

For example You might each open three BOS Vantage Accounts which would give you 2% on £30,000.

DDs are required but no problem if you each set up a couple of Tesco Savings accounts.

This would cover your emergency fund.

If you know that you want to pay off part of the mortgage in 2018 and want to hold money in cash to do it, you and your wife might each consider a fixed rate account.

http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

You might each consider a stocks and shares ISA.

You/ your wife may wish to retire earlier than scheme retirement age.

It may be worth considering opening a personal pension for each of you.

bcfclee27

I'm now thinking of the option of an offset mortgage because of the suns involved ?

Would anyone do this as opposed to paying off a chunk and then a fixed rate deal ?

Anonymous101

bcfclee27 wrote: »

I'm now thinking of the option of an offset mortgage because of the suns involved ?

Would anyone do this as opposed to paying off a chunk and then a fixed rate deal ?

How about doing your own offset? So rather than overpay your mortgage or pay it off in one lump invest the money you would have overpaid by at a higher rate and earn some money rather than just not pay the interest on the mortgage.

The method of investment can range from a straightforward cash savings account to investing via a S&S ISA.

I'm choosing to invest into an index linked tracker fund within my ISA rather than overpay the mortgage. Mortgage rates are very low at the moment so its not worth just offsetting or paying off for me. By investing in my ISA i'm expecting a much better return on my money over a 10 year period and I still have the ability to take money out and pay a chunk off the mortgage when it comes to remortgaging time if that suits.

getmore4less

The first thing to do is sort out your budget.

You have been living with debt something has caused that.

You need budget planning till the kids leave home.

Then you will have a better idea of how much is really surplus.

getmore4less

If looking to invest why not just transfer the shares to yourself into a nominees account.

Most will do this for reduced/zero cost.

That's what I did with my dads holdings.