What to do with large cash gift

ShinyStarlight1

jimjames said:

ShinyStarlight1 said:

If it was me, I would use the biggest chunk I was allowed by the mortgage company to reduce that mortgage amount.

That doesn't seem very sensible from an MSE viewpoint when the rate is 1.4% and you can get 5% on savings. If you wait until the rate expires then it's likely that your mortgage rate will be higher and at that point worth paying extra off it.

I was responding to the imminent end of their low mortgage rate. 

ShinyStarlight1

Emmia said:

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.

I'd pay down the mortgage at the end of the current fix, to be clear.

That’s what I was intending to say too.

Bigwheels1111

I would pay off as much mortgage as possible, one thing is most mortgage lenders have a minimum ie 35k.
I wanted to change mortgage company but only had a 30k mortgage and none were interested.
Pay a lump off, lower the term to what you are paying now.
It’s like nothing would have changed, but a good few years less.
I cleared mine aged 43. Such a great feeling.

Re short term savings. Tax can be an issue.
If two of you I would stick 20k each into Trading212 isa at 4.9% easy access.
Look at money facts compare. It will show the best rates for all types of savings.
Better than on here as MSE does not update rates as often.
Select savings, then isa, fixed etc.
Then rate order for best rates.
https://moneyfactscompare.co.uk/

AlanP_2

Before following any if these suggestions I would think about your plans and ambitions for the next 10 to 20 years for the whole family.

Will you want to move / extend property?

University in the future, would you like to help the children at that stage?

OHs pension, is it as good as your DB one? If not is it worthwhile boosting that with some of the money?

Your pension, particularly if you want to retire before 66/67. Give some thought to how you might approach that. Additional AVC or APC contributions, separate SIPP or ISA to avoid taking DB early.


There is no right answer to this sort of question but it puts you in the fortunate position of having options and with a 1.4% mortgage rate for a few months you don't need to make hasty decisions.

jimjames

Bigwheels1111 said:

I would pay off as much mortgage as possible, one thing is most mortgage lenders have a minimum ie 35k.

That might be the case for a new mortgage but sticking with the same company won't have any minimum. Mine was under £1000 for several years without issues.

MX5huggy

People are too quick to suggest paying off the mortgages. It’s the sub optimal strategy in many cases. We don’t know what rate you will be paying but over the longterm it will probably be below returns on investments and that before considering the tax advantages of pensions. 

Mihhail

If family is young and not in school, I would go to Canaries- or else where it is warm and sunny currently. With one life - it's is clear how to spend it

DjangoUnchained

paying off mortgage early might not seem numerically the best option, but its very satisfying and reassuring to know your home is paid for and you dont owe the bank anything. Then your mortgage payments can be used for saving or investing .