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What to do with inheritance

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
5 replies 740 views
coconutaddictcoconutaddict Forumite
14 Posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
I’m looking to receive £60k inheritance or there abouts. I have a property in my sole name worth £220k and mortgage is £75k remaining (overpaying over the next 13 years to be mortgage free when im 55)

Thing is.... I have £4K savings and wondered what to do with the £60k.... do I put it all off the mortgage (and save the mortgage equivalent in a savings account to further my retirement nest egg....)
Or pay a smaller amount off maybe?

I know savings aren’t making much interest.... and the mortgage interest I will save over the next 13 years will be significant (about £13k maybe...)

I’m not that knowledgeable about pensions and mortgages and the likes...

Thanks for any advice you guys scan give :)

Replies

  • TropicallyTropically Forumite
    427 Posts
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    If I were you, I would keep it in a safe place for 6 months for some perspective. It's a big amount and the loss of a loved one can change your way of thinking and change what you want in life. There isn't a need to rush a decision and potentially make the wrong one.
    Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
    2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
    Total OPs: £29529
  • tacpot12tacpot12 Forumite
    5.1K Posts
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    Good advice from Tropically. Ultimately, I think you would benefit from having a bit more cash savings that you currently have, but clearing your mortgage will save you interest. If your pension needs topping up, you could consider splitting the money between cash savings, mortgage and pension. You should probably also spend a bit of it on yourself as well; buy yourself something you have always wanted. Who knows when you will have such a large amount of money again.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • katsoocamkatsoocam Forumite
    135 Posts
    Sixth Anniversary 100 Posts Name Dropper
    About to be in this position - though with a smaller inheritance. Hub and I have debated it and the plan is: a) top up our emergency fund until it is 6 months of living expenses b) put some money towards a holiday (not a big flashy expensive one, just one we wouldn't have been able to have without the inheritance) and c) pay off a chunk of mortgage. Even a small chunk can spare you so much interest, so once you have a decent rainy day fund, I would be tempted to pay some of it off, as then you will gain much more financially. A lovely dilemma though! Agree while you are thinking about it you should drop it in a high interest easy access account - the Post Office are doing 1.33% for a year at the moment.
    Mortgage Balance: - £285861.3
    ISA: £181693.13
    3-6 Month Emergency Fund: £30600/£30600 100%
    Mat Leave Fund: £8686.01/£20000 43.4%
    Car Fund: £6000/£6000 100%
    Slush Fund: £10000/£10000 100%
    10th Anniversary Holiday Fund
    £10000/£10000 100%
    Holiday Fund: £0/£10000 0%
    Mortgage Overpayment Fund:
    £9533.26/£30000 31.8%
    Child 1 Uni Fund: £0/£30000 0%
    Child 2 Uni Fund: £0/£30000 0%
    Total Savings Target: £73151/£176800 43.9%
  • DalradianDalradian Forumite
    161 Posts
    Fifth Anniversary 100 Posts Combo Breaker Mortgage-free Glee!
    if you have any debt such as loans or credit cards, clear those first. When I had some inheritence money, my financial advisor suggested keeping it in cash for a while like tropically suggests.
    You could also put some towards your ISA allowance, get a Santander or bank account with high interest regular savings account attached until you decide what to do with it.
    Mortgage 2020 ~£127,000
  • Terry_TowellingTerry_Towelling Forumite
    2.3K Posts
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    If you ask this question in the Savings & Investments Forum you will get all sorts of advice (probably too much).

    1. 6 - 12 months Emergency fund is a must.

    2. Clear high interest debt.

    3. Ensure you have adequate pension provision.

    4. Overpay mortgage

    Steps 3 and 4 are interchangeable depending on what you feel best doing - sometimes it's about your feelings rather than just the financial impact.

    If you want cash savings for a short while whilst deciding, consider a Paragon 120-day notice account paying 1.66%. Deposit the cash and immediately serve notice to withdraw. Have the interest paid to your nominated account to avoid anything getting trapped in the notice account for another 120 days.

    Others will urge you to invest some of it but you would need to be comfortable with that sort of thing before committing because it does have risks.

    Some might suggest Premium Bonds but I wouldn't - not enough chance of a good win and probable return of about 1.2%.

    Give it a go in the Savings Forum and see what you get. I'm just a duffer, there are many contributors there who will give you chapter and verse far better than I can but I am quite an advocate of reducing mortgage debt more quickly.
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