Left house in will. What to do with proceeds?

grayson

I have been left a share of house in Will. Sale is currently going through. 
My share will be £65,000.
I have decided to pay off credit cards total £15, 000, as monthly payments are around £400. Spread over multiple cards. 
My fixed mortgage runs out in 4 months, I have 13 years left to pay £32,000.
My question. Do I pay off my mortgage or put the £32,000 in a savings account? If I pay off mortgage I will bank £18,000. If I don't I will have £50,000 in savings account.

We have struggled financially most of our lives so I don't want to make the wrong decision and in a few years time be back to square one. 

Rob5342

Could you switch to an offset mortgage, so it saves you the interest but you stil have the money if necessary?

Sncjw

I would pay the mortgage off so that means you have that mortgage payment extra per month. Also your fixed deal ending may mean higher payments a month Espically if rates rise. 

Personally if pay it off. 

kimwp

I'd pay off the mortgage unless you can fix at a lower rate than savings rates are and even then I'd lean towards paying off the mortgage. Not having a mortgage is great, particularly in these uncertain times. You can build the pot up again with your newly freed up income, ideally paying some to your pension as well.

Purplelady65

I would definitely pay off the mortgage as it will give you the security of knowing you own your own home outright. Also as interest rates are likely to increase again and you are coming to the end of a fixed rate mortgage in four months time then that is an ideal time to pay it off. I was in a position to pay my mortgage off a few years ago due to an unexpected inheritance but had just taken out a five year fixed rate mortgage. I ended up paying a penalty of over £5k but it worked out cheaper than the interest charged on the mortgage for 5 years. However I’m glad I paid it off as it’s a nice feeling knowing you own your house outright. If you pay the mortgage off then you will still have £18k to put in the bank and as OP have suggested you could also save the amount each month that you would normally pay on your mortgage and further increase your savings. 

chubsta

definitely get rid of all the debts - no matter how well you will be doing at the moment in clearing debt there is always the chance you will dip into the savings and go a little mad, particularly if you haven't had such an amount before - a few nice holidays, new car etc and the money will be gone and you will be left back at square one.
Once the mortgage is done, whatever happens financially you will have a home to live in so I personally would clear every single debt and mortgage, and then put the remainder in an account where you will get a decent return and can't touch it for a few years - you will have lots more money every month and a nice amount to fall back on in the future if necessary.

RobM99

My suggestion - pay off credit cards. I think most people would say that! Interest rate is probably horrendous.

That'll leave £50,000. Mortgage £32,000 outstanding. When to pay it off - is there an early redemption fee? You might be able to pay some off without penalty straight away, worth a look, I think.

That'll leave £18,000.  If (IF!) a 90 day notice account pays a bigger rate than the mortgage, is it worth putting it in that for now?

Ensure you have an emergency fund (I suggest £5,000) in the highest-paying easy access you can find, budget some of this for winter fuel bills. Then the remaining - £50 for a bottle of champers to celebrate being mortgage free (Yay!) and £12950 in a one-year bond, 4.4% should be easy to find. That'll pay £570-ish in interest in a year. Ching!

Usual caveat - the above does not constitute financial advice, I'm just suggesting a few (what I think are!) sensible ideas but as ever, the choice is yours.

Rob5342

Think about what you might want or need to spend on in the future too. If you have £15k on credit cards then I assume you don't have much in the way of savings.£18k isn't all that much really, buy a new car and you might have a relatively modest £5k left as an emergency fund. You could go somewhere in between and pay a decent chunk off your mortgage and save more to allow you to get your kitchen redone or something too.

It would be good to get rid of the mortgage but I'd be careful of getting into a situation where you need to borrow for something the inheritance could have covered.

enthusiasticsaver

I would clear the credit cards and mortgage.  You will still have £18k and no mortgage.  Can you say why you have financially struggled over the years?  Redundancy, low pay or lack of budgeting? If you have not budgeted in the past I would be wary of keeping large amounts in accessible cash without a plan as you may be tempted into  spending large portions of it and then regretting it in a year or so time. 

thegreenone

Another advocat for paying off both. 

The £400 a month you free up from the cc's should go a long way to help on a day-to-day basis especially in the current climate. £300 to you and £100 increase into your pension.  Cut up the cc's.

The usual mortgage payment could be split: 3 quarters into an emergency fund and 1 quarter into a holiday/entertainment fund.  The £18k into the best paying fix but make it untouchable ie five years.  Check the accounts whether the interest can be added to the account or paid to you.  Re-invest.   Hopefully, you'll end up with a nice nest egg, a decent private pension and made memories (holidays etc) with loved ones.

Edited : sorry just re-read and it sounds a bit bossy.  I received an inheritance a year ago and needed to use it wisely.

Brie

I'm in the pay them off camp.  That's what I did with my redundancy money and I feel relieved to see the back of those debts.  (well I still have some but they are 0% currently so not an issue). 

My goal now is to control the money so that I don't slip backwards and this is something you might want to look at doing too.  Having just £15k on cards and £32k on the mortgage is not a huge amount of debt compared to a lot of us so you should be proud of that.  But if you are concerned about it I would suggest using the SOA link that is on @kimwp's post above and work out your budget for the future.  That's the best way to keep things under control.

As for the other money - I would put an extra bit on the cards for next month's spending and make sure you have a very nice Christmas/Hannukah/Diwalla/soltice just to celebrate your luck on the money coming in when you needed it.  Or get yourself something that the person who died might have liked you to have.  When I got a small inheritance from my dad a portion went towards a new kitchen that was badly needed.  Dad liked renovating so it seemed a good fit.

Then I'd tuck the majority away so it's not frittered.  Maybe £5k in premium bonds?  a bit on your pension(s)?  Check your state pension forecast and see if you should buy some extra years?