Invest lump sum or pay off mortgage

smiler247

Hello there,

I am about to inherit a lump sum which is very close to the amount I have left on my mortgage. I am looking to relocate in the near future and purchase a new home which will be significantly more than my current one (different part of the UK).

Do I invest the lump sum for the time being or do I use it to clear my current mortgage?

Do you have any suggestions for where to invest it?

Thank you for your time.

webjaved

Which one are you weighing towards? If it was me, I would pay off the mortgage.

DiggerUK

Inheritance is a bitter sweet experience, hope all is well with you.

You can clear the mortgage and have a risk free asset, or you can invest in products with all the risks that come with them.

My money would go in the house. You can gamble with the extra cash you will have from being mortgage free. A no brainier for me..._

username12345678

I over-payed like crazy between 2009 and 2017 when I cleared my mortgage.

During which time the FTSE100 rose something like 60% (exc dividends) and the DJIA rose around 130%.

Was my decision financial optimal...nope, with hindsight definitely not.

Would I do the same again...definitely, the feeling of being mortgage free is fantastic.

steampowered

Have a read of https://forums.moneysavingexpert.com/discussion/5993955/invest-lump-sum-or-pay-off-mortgage

It depends on what your goals are. If you are saving for the long term, you will be much better off investing in stocks and shares. If you are at a reasonable LTV there is no rush to pay off a mortgage given historic low interest rates.

Particularly if you invest by using your ISA allowance or doing it through a pension to get tax relief.

Alexland expressed it perfectly:

We are also in our 30s and could have fully repaid our mortgage if we hadn't made such high pension and ISA contributions. However paying back such a low interest loan seems a waste when we can get both tax advantage and better long term growth from our investments.

foofi22

steampowered wrote: »

Have a read of https://forums.moneysavingexpert.com/discussion/5993955/invest-lump-sum-or-pay-off-mortgage

The link you posted is to this very thread!

Alexland

I believe the link steampowered intended to post was

https://forums.moneysavingexpert.com/discussion/5993308/fully-repay-mortgage-now-yes-or-no

However we don't know enough about Smiler247's circumstances to determine if it is a similar situation and if they will need to use the money towards the new home purchase then investment would be unsuitable. In which case it doesn't really make a big difference if they clear the mortgage now (assuming no early repayment fees) or give it to their solicitor towards the next purchase.

Alex