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What to do with large cash gift
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Paintingrainbows
Posts: 29 Forumite

Would appreciate some thoughts and advice please. I’ve been gifted £60k by a family member.
I have an £80k mortgage currently on a low rate (1.4% fixed ending in the summer) then looks like rates will really jump for me.
i have low savings, around £5k as an emergency fund but could add more to make sure we have 3 months. I have a good public sector pension.
I am not sure whether I should put it all into the mortgage in the summer to limit the interest payments then get the rest paid off in 2/3 years or whether to save or invest?
i have low savings, around £5k as an emergency fund but could add more to make sure we have 3 months. I have a good public sector pension.
I am not sure whether I should put it all into the mortgage in the summer to limit the interest payments then get the rest paid off in 2/3 years or whether to save or invest?
I’m 45 years old with a young family. Thank you!!
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Comments
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I'd boost your "emergency fund" - 6 months of expenses, and pay down the mortgage with the rest.
For the emergency fund I'd have some in instant access and the rest tied up in something a bit harder to get at, which offers a better rate.
I would also consider buying "something" that you'll use, or see with the money, to remind yourself of the giver.2 -
I'd get the 60k in savings now, either instant access or short term fix. If you haven't got an ISA for this year then do £20k in that then 20k after April 6th to minimise any tax on interest.
Then look to clear down most of the mortgage when your fix rate ends, but keep an emergency fund set aside.1 -
If you and spouse have not fully used ISA allowance you could do so ( consider flexible ISA), holding the balance elsewhere until April 6 when you could use fresh allowance.
You could then consider the situation re mortgage in the summer.1 -
If it was me, I would use the biggest chunk I was allowed by the mortgage company to reduce that mortgage amount.You will always need a home, for yourself and your young family. Plus less monthly payments towards that equals more monthly savings for you.
Next, I would put the remainder into this year’s ISA and view that as my emergency fund.1 -
High interest savings for now and then pay off as much of the mortgage as possible when your rates change. Personally I wouldn't set aside any more right now in to an allocated emergency fund because you have this chunks available should you need it in the next 6 months. Then if you reduce your mortgage to £20k down from £80k in the summer I'd keep paying then same amount as now to nuke it down as quickly as possible. Once you're rid of the mortgage then I'd keep paying the same amount into your saving account of choice to ensure emergencies are covered. ISA or whatever as long as it's accessible. Most emergencies (new boiler or whatever) may likely be covered by your credit cards with some 0% stoozing if only for the relatively short time.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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If it were me I'd put a bit into JISAs for my kids, so that whatever else happens in the next few years there's a nice present for them on their 18th. I'd probably also put a bit aside for a family holiday in 2025 and a bit aside to replace my ancient car when the time comes. And a chunk off the mortgage when the time comes. Of course, you might already have JISAs and holidays and cars accounted for.Debt Free: 01/01/2020
Mortgage: 11/09/20241 -
If you have any high interest debt pay that off. If your mortgage was above 4% then I'd suggest some extra mortgage payments, but at 1.4% I wouldn't do that now because you can get far more than that in a saving account. So beef up the emergency fund, make extra pension payments and fund a S&S ISA.And so we beat on, boats against the current, borne back ceaselessly into the past.1
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ShinyStarlight1 said:If it was me, I would use the biggest chunk I was allowed by the mortgage company to reduce that mortgage amount.Remember the saying: if it looks too good to be true it almost certainly is.3
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Emmia said:I'd ...pay down the mortgage with the rest.ShinyStarlight1 said:... I would use the biggest chunk I was allowed by the mortgage company to reduce that mortgage amount.... And waste about (pessimistic estimation) £60K*(4.8%-1.4%)*6/12 ≈ £1K possible interest.With regard to suggested cash ISA, a person with £5K of savings is likely not to pay any tax on savings, but it's worth checking - see the Savings section of the main site.
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grumpy_codger said:Emmia said:I'd ...pay down the mortgage with the rest.... And waste about (pessimistic estimation) £60K*(4.8%-1.4%)*6/12 ≈ £1K possible interest.With regard to suggested cash ISA, a person with £5K of savings is likely not to pay any tax on savings, but it's worth checking - see the Savings section of the main site.3
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