Inheritance and options

lm1981

My wife has inherited 78k just recently and we are planning to put it into a fixed rate saver account for 2 or 3 years. Was looking at one of the high street banks as currently bank with them / mortgage with them (safe name etc).

we are 2 years into a 25 year mortgage (both early 40s in our forever home). Owe 229k of which we have 3 years left on fixed rate of 1.6%. We are currently paying 1k of capital off a month so should be down to £193k when the fixed rate finishes. Realistically I can’t see us doing anything other than using the £78k to make an overpayment at end of the fixed rate and likely reduce the term down to 10 years (from 20 which it will be in 3 years).

my question is am I missing anything here , we don’t have any other debt and as noted long term I can’t see us using the money in any other way other than a capital payment on the mortgage.
thank you 

grumbler

lm1981 said:

...Was looking at one of the high street banks as currently bank with them / mortgage with them (safe name etc).

...
my question is am I missing anything here

Nothing except the fact that you are unlikely to find best savings rates in the high street banks you currently bank with. Why limit your choice?

https://moneyfactscompare.co.uk/savings-accounts/2-year-fixed-rate-bonds/

Also, depending on your tax status the interest can be taxable, in which case a fixed-rate cash ISA can be a better option.

https://moneyfactscompare.co.uk/isa/2-year-fixed-rate-isas/

aroominyork

Tax is certainly an issue and ISAs might be useful depending on your tax status and the comparative ISA/non-ISA rates available. Your personal savings allowance (PSA) is £1000 or £500 (depending on basic or higher rate tax): worse case outside an ISA would be a single three year bond paying all the interest on maturity, since all the interest over the PSA would be taxed. A better option outside ISA would be for you and your wife to each use your PSA (invest half each, assuming no other savings) and ensure you receive interest annually so that you make use of each year's PSA.

AlanP_2

You haven't mentioned your joint pension situations. Is there an opportunity to use the £78k boost your pension provision with all the tax advantages that brings?

On a straight financial basis paying off a mortgage is not always the best thing to do even though it is comforting.

Albermarle

Was looking at one of the high street banks as currently bank with them / mortgage with them (safe name etc).

Every UK registered bank is covered for up to £85K compensation in case of problems.

Every bank in the links provided by @grumbler is covered by this guarantee so are safe, up to that level anyway. Recently the main highst/big name banks have been heavily criticised for not passing on interest rate increases, and ripping off their loyal customers. So don't let that be you .

You haven't mentioned your joint pension situations. Is there an opportunity to use the £78k boost your pension provision with all the tax advantages that brings?

This is a good point, but just think that it is not necessary to put the whole £78K into a pension or into savings. You could split it up.