What to do with inheritance

duncan48

This must come up so often, I guess it is frustrating for regulars to see, but, I'd like to get a few suggestions relevant to my specific  situation, before finalising my choices and going ahead. Thanks for any help people give ....
I inherited £120,000 last week, paid into my Santander 123 Current Account (not the best now, I know!).
I was made redundant on the 1st of July and have approx. £14,000 due to me at the end of the 3 month redundancy period, so end of September.
I have another job ready to start.
My remaining mortgage balance is currently £88,000 and I am in the redemption period until May 2023.
I have 2 credit cards (zero interest if I pay minimum each month) up to a total of £8,000. 
I plan to try to live off my redundancy (to make up the shortfall between new and previous wage) until the mortgage can be paid off without a penalty.
So, hopefully, I won't have used any of the inheritance money and will be able to clear the mortgage and then decide what to do with what remains.
Just need to decide on the best home for the £120,000 until I can use it.
Then, the best home for what remains.
That's it I think. 
Thanks again for any advice, I appreciate anything that I may be missing in all of this.
Cheers,
Duncan

easterbunni

Probably £50K in Premium Bonds and the rest in their Income Bonds account

Bobziz

What's the interest rate and penalty on your mortgage?

Thrugelmir

Review your pension arrangements. 

duncan48

Bobziz said:

What's the interest rate and penalty on your mortgage?

Hi, It is 1.79% and ends May 2023. Early penalty is £4449.57.

duncan48

easterbunni said:

Probably £50K in Premium Bonds and the rest in their Income Bonds account

Thanks, considering that, but not sure I trust my luck

duncan48

Thrugelmir said:

Review your pension arrangements. 

Yes, that is something I am very keen to do. I have 90,000 in my pension at the moment (I am 48) and one idea is to clear the mortgage and put the remaining amount into my existing pension as a lump sum. Then, I have no way of frittering away the money I inherited! 

enthusiasticsaver

I agree that until you have decided definitively what to do with the inheritance then I would put it in National Savings income bonds and premium bonds.  What you do with it after that depends on your financial objectives.  You can invest up to 100% of your salary into your pension (after deducting the tax relief and existing pension contributions) so topping it up may be an option.  You could open a stocks and shares isa if you want a separate stream of income to pensions in case of early retirement.  You could pay off the mortgage although I would wait until there is no penalty.  Personally I would tackle the £8k of debt as 0% deals may not be as easy to come by in the future so the monthly repayment will increase and you will have interest charges once the deal period expires.  

ZeroSum

duncan48 said:

Bobziz said:

What's the interest rate and penalty on your mortgage?

Hi, It is 1.79% and ends May 2023. Early penalty is £4449.57.

How much can you overpay each year?
Normally, 10% so could chuck £8k a year at it (which will also reduce monthly repayments, which might be useful if new job is less pay) 

MalMonroe

May I just say - when you have your new job and coronavirus is over, spend some on yourself. If you squirrel it all away, well, you can't take it with you. I have friends (we're all retired now) who have portfolios all over the place and savings accounts up the wazoo. But their relatives are going to end up very wealthy. I don't have any of those things but I live comfortably and enjoy myself, plus I've travelled so much already and want to travel again, once it's safe to do so. I don't value material possessions although I used to because I realise now that they'll still be here when I'm not so I've just kept a few sentimental things, jewellery, etc. and treat myself as and when. Because we're not here forever! And what good is a bunch of money if you can't get at it? 

Obviously just my own opinion but as my Mum used to say, there are no pockets in a shroud. Think on. 

PS You're probably wiser just to stick with that mortgage, it'll be over soon and that interest rate is brill. Again, all my own opinion! 

csgohan4

if your under 40, consider LISA as well, give you 25% extra on top until your 50 yrs