Do we use our £100K to pay off our mortgage or is there a better use for it?

colsten

Whatever you end up doing, keep a cash float of a good 12 months in reserve, to cover all living costs, incl. insurances and incl. mortgage payments if you decide not to pay off the mortgage, as well as any emergency repairs (car, boiler, uninsured accidental damage etc). With Covid, yet unforeseen restrictions and limitations might get placed on us. 

steampowered

Paying off the mortgage is the "easiest" option. It may not be the best option. If you feel that you are not up to speed with pensions and investments, now is a great time to learn.

You could consider topping up your pension. Due to tax relief that gets added to pension contributions, £100k would become £120k,. That would far exceed the saving you would make from clearing the mortgage.

Furthermore, a pension might be expected to return 6-7% per year on average. Again, that is far higher than the saving you would make from clearing the mortgage. 

You could also consider opening a stocks & shares ISA.  Stocks & shares ISAs do not get the tax relief that pensions get.  However, a bog standard medium risk investment fund might return 6-7% per year on average. That will really add up after a few years.

In your position I would keep some savings aside for emergencies, and would use the rest to top up my pension. 

Albermarle

we have no investments.
Well from your info your husband alone has over Half a Million Pounds in investments .
his pension pot is currently £515K. 
Hopefully it is well invested because this will probably have as much impact on your future finances as how you spend the £100K . I only say that because many people often concentrate on smaller money issues, and neglect what is often their biggest financial asset - their pension.

JamesRobinson48

Candidly, isn't one question to be asked here whether you would ideally like to use the £100k to obtain a little more financial autonomy from your husband?  It seems that effectively the bulk of your household's actual money (i.e. the £515k pension pot) is in your husband's name, from which he could draw down a substantial lump sum in a few years if he wished.  The majority of the household's earned income, and potentially a £30k redundancy payment, are also coming to him. You say that you yourself had no savings or investments prior to this lump sum coming along, which I imagine the testator might have hoped would give a little more financial security to yourself personally. In the first instance, in your shoes (from all that you've stated), I might consider opening a £20k S&S ISA now, another on 6th April, and deposit the remaining £60k in suitable bank or building society savings accounts - all in your own name. Then you'd have a little more personal financial flexibility later on, for example, in case your own employment might cease for any reason. You'd also be in a better position to chip in if, in the worst case, family finances dried up. Repaying the mortgage now would remove that flexibility which the legacy gives you.

blue_max_3

I wouldn't pay off the mortgage myself. You have credit at the moment, but when your husband gets made redundant, you won't have access to it again. Also agree with JamesRobinson48 points about levelling up.

Sea_Shell

Personally, I'd split out the money and pay off some of the mortgage, keep some back as cash savings and invest some (between pensions and ISAs).

It doesn't have to be an "all or nothing" decision!

I also agree with looking at your joint finances as a whole, and trying to balance things out a bit between you.

couriervanman

Pay the mortgage off

Linton

Dont pay off the mortgage at the moment.  Reconsider once your husband's future is clear.

mark55man

In my own circumstances I am investing through my pension to build a mortgage neutral pot - as this gives me tax advantages and some extra company contribution so more of a no brainer.  At 2.1% my rate is higher than yours and I am confident of beating that return over a 5 year period I have left, so you should feel even more confident (eg even premium bonds will about match the interest cost).

In your situation its a bit different as you have less time, and you have the money now whereas mine if from future salary.  However, for me the deciding factor is that with your husbands SIPP you have significantly in excess of the mortgage just in the tax free element, so I wouldn't be in a hurry to pay that off now with your money. 

I think the approach of putting 20K in a SIPP this year and 20K in a SIPP next year and 60K in a bank is good (or £50K in premium bonds (they would return about 1.4% I think currently) and would be roughly neutral against the  mortgage decision and are relatively easy access.  The money in the SIPP you would have to decide to keep in cash (short term use) or invest (if you could cope with losing some value) or both.  There are plenty of very cautious funds that are designed to protect capital and did quite well even during COVID.  That investment decision is something you could ask a separate question on here
 

ZeroSum

If you're only paying 0.6% on the mortgage, then it's pointless paying it off other than the psychological benefit. You can get a 5 year savings  fix for 1.25%. So youd be £390 a year better off sticking it in savings.
Can get 0.5% on instant access savings (keeping it simple, I know theres creative ways of getting more) so youd be effectively just paying 0.1% for having a big pot of cash which might be beneficial if going through redundancy.
And let's face it, in 5 years time interest rates wont be more than 0.5% so youd still be in profit on the 5 year fix