Mortgage - Pay off or wait? Invest?

DeeCas

Hi all,

New here, so please be kind! 
I'm useless with money and savings and looking around has my mind very confused to say the least. 
So many factors around ISA, Savings, Interest, Tax etc etc. So I'm playing dumb and hoping for some very simple answers. 

Long story short;
My wife was diagnosed with cancer over 6 years ago. We got a payoff from Critical Illness. 
We saved the money (Didn't invest, stupidly) and paid bits off our mortgage. We wanted to keep a "nest egg" should I need to take time out of work to care for her. We took it from circa £130k to £70k. We had around £60k "cash" left.
When we mortgaged just over 2 years ago we took a 5 year fixed rate over 25 years - Keeps costs down to an affordable monthly payment and locks us in - Again looking to the future, should her cancer progress I could still afford the mortgage on a single wage without worry of the rates rising drastically. 

Fast forward, my wife has now unfortunately passed away. She kept working for as long as possible due to her working at the NHS - Her thought process was having the Pension and Death in Service to help myself and our daughter to have a nice, financially steady future. 

I now have received all the said funds above, so I have enough (More than enough) to pay off the mortgage.

Mortgage: Around £60,000
Redemption Fee: Around £62,500
Mortgage rate: 4.87

With me putting a lump sum into our daughters trust fund, this would still leave me with a decent lump sum. I'm also still working full time. 


So given the above, which I hope I have covered everything, what would you do in my situation? Would you just get the mortgage paid off and live in that happy world we all wish for - MORTGATE FREE!
Or would you look to invest the money whilst still paying the monthly mortgage (With overpayments)?
Or do both - Pay mortgage and put a lump sum in some savings to earn interest on?

Thanks for reading and any contributions

South_coast

Firstly, I'm very sorry to hear of your loss. What a trooper your wife was to keep working as long as she could to secure a future for you and your daughter 🩷

To answer your question, yes I would pay it off. You have learned the hard way that life really is too short, so I'd forget about optimising the best use of the money and focus on living. You're unlikely to be able to match your mortgage rate on savings, investments will generally outperform savings but it's not guaranteed, and you'll have paid out in interest more than the early redemption charge will cost within less than a year. With the mortgage gone, you may find you're able to reduce your working hours, so you can concentrate on supporting your daughter with more family time. Good luck x

DeeCas

South_coast said:

Firstly, I'm very sorry to hear of your loss. What a trooper your wife was to keep working as long as she could to secure a future for you and your daughter 🩷

To answer your question, yes I would pay it off. You have learned the hard way that life really is too short, so I'd forget about optimising the best use of the money and focus on living. You're unlikely to be able to match your mortgage rate on savings, investments will generally outperform savings but it's not guaranteed, and you'll have paid out in interest more than the early redemption charge will cost within less than a year. With the mortgage gone, you may find you're able to reduce your working hours, so you can concentrate on supporting your daughter with more family time. Good luck x

Thank you. She really was a trooper and shows the incredible lady she was, looking out for us both despite what she was going through.

Thank you for the advice and it's pretty much how I'm thinking currently. You hit the nail on the head. We don't know what is around the corner - Live life to the maximum whilst you can.

edinburgher

I'd like to echo what @South_coast with one small addition.

You've been through an incredibly difficult time as a family. If there's spare (and if it suits), why not keep a little back to do something truly relaxing with your daughter? Holiday you've always fancied, a few weeks off doing absolutely nowt but what you feel like, something like that? It sounds like your wife made brave choices so that you'd have more choices when she was gone 🙂

Please check out the savings and investments boards when you get "back" - lots of helpful ideas and you now have the luxury of a bit of time to figure things out.

DeeCas

edinburgher said:

I'd like to echo what @South_coast with one small addition.

You've been through an incredibly difficult time as a family. If there's spare (and if it suits), why not keep a little back to do something truly relaxing with your daughter? Holiday you've always fancied, a few weeks off doing absolutely nowt but what you feel like, something like that? It sounds like your wife made brave choices so that you'd have more choices when she was gone 🙂

Please check out the savings and investments boards when you get "back" - lots of helpful ideas and you now have the luxury of a bit of time to figure things out.

Again, thank you. She was the bravest and strongest person I know.
Obviously I'd give all the money back in a heartbeat to have her back. But I know she will feel a sense of accomplishment knowing her efforts have helped us both have a "comfortable" life.

In regards to the luxuries, I have enough left for these. We're already off on our jollies for a week abroad next week. This was one of my wife's wishes to me, that I take time and have a nice relaxing holiday.

beanielou

So sorry for your loss. 

Nothing to add to the stellar advice that you have already been given.