Year into mortgage, surprise windfall

Hi I'm looking for some guidance as what to do.

I purchased my first house a year ago £105k with 5% deposit over 25 years, 2 years fixed at 3.78%, not great but all I could get.
My partner and I have around £17k of credit card debt that's mostly on interest free for another 12 months.

Pretty much out the blue, today I've just found out that I'm to receive 100k, tax free in the next few weeks, no inheritance or windfall tax is payable.

I'm trying to get my head around what to do with the money in regards to getting us debt and mortgage free.

If I pay the mortgage off outright I must pay a 3% settlement fee, so £3000.

Do I pay my credit cards off and keep the remainder in the bank and just keep paying 10% extra every year for like 7 years or something until it's paid off, giving me a bit spare to update bits in the house?

I've never had this kind of money before, so I'm kinda lost and don't want to make the wrong decision.

Obviously with the current economic stuff going on, I'd rather have the mortgage out the way faster, as I'm guessing that in 11 months when my fixed term ends, I could be paying way more.
Any advice would be great, I'm still a bit stunned to be honest lol

Comments

  • FtbDreaming
    FtbDreaming Posts: 1,121 Forumite
    First Anniversary First Post Name Dropper
    I’m no mortgage advisor but if it was Me would pay off your debt. Pay the 10% overpayment you’re allowed now then in 11 months time pay off another chunk of the mortgage whether that’s the whole of the cash you have or at least say £70k leaving a small mortgage you can then pay down in a couple of years whilst having a cash emergency fund to fall back on x
    Mortgage started August 2020 £69,700
    Mortgage ends Aug 2050 MFW: Aug 2027 
    Current Balance: £60,200 (59.9% LTV)
    MFW2020 #156 £723.13
    MFW2021 #26 £1184.71
    MFW2022 #11 £197.87
    MFW2023 £785
    MFW 2024 £528.15

    Determined to make it! 
  • James-may
    James-may Posts: 184 Forumite
    First Anniversary First Post Name Dropper
    I’m no mortgage advisor but if it was Me would pay off your debt. Pay the 10% overpayment you’re allowed now then in 11 months time pay off another chunk of the mortgage whether that’s the whole of the cash you have or at least say £70k leaving a small mortgage you can then pay down in a couple of years whilst having a cash emergency fund to fall back on x
    Yeah, that was one of my thoughts, if my interest rates 3.78% then them charging me 3% fee of whatever I over pay by seems the better option to me as the interest saved, by my reckoning would be more than that.
    Think that would be mortgage cleared in 3 years I think.
    Might need to speak to the mortgage advisor who held me get the mortgage.🤣
  • tetrarch
    tetrarch Posts: 247 Forumite
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    Agree with the above recommendation, but check the terms of your mortgage. Definitely credit cards first.

    On the mortgage. You need to check your mortgage terms.

    The allowance MAY be 10% annually which MIGHT mean that you could pay £10K in Dec and another £10K in January

    Regards

    Tet
  • James-may
    James-may Posts: 184 Forumite
    First Anniversary First Post Name Dropper
    Just reading and it says 10% per callander year, so you should be able to put 2x 10% payments in Dec/jan
  • James-may
    James-may Posts: 184 Forumite
    First Anniversary First Post Name Dropper
    I've enailed asking my mortgage broker, who is also a financial advisor advice on wether I'm working things out right.

    At moment I'm doing 1 of 2 things.

    1. Paying credit cards and paying 10% December then puting everything I have left into mortgage January, with the 3% overpayment fee added it will leave around 2.5 years left on mortgage.

    2. Paying credit cards and paying 10% December then puting everything minus 10k into the mortgage, with the 3% overpayment fee added I'd have around 4.5 years left of mortgage.

    Option 2 would give me a £5000 emergency fund and £5000 to do some things I want doing around the house, like decorating, pointing and perhaps tidying up the loft area.

    That if course assumes my workings out are right.

    Thank you to all for responding, I'll wait to hear from advisor, then might also phone lender to double check my workings.
  • And then I re read my paperwork and once my 2 year deal goes I go onto the follow on rate, that apparently lets me overpay an unlimited amount fee free, so I would probs just do 2 10% overpayments , then in Jan 2024, pay off everything I have left, be gone quicker then.
    Yeah, I gonna wait for financial advice.🤣
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