My inheritance - what to do with it? HELP!

Iwanttosave75
Iwanttosave75 Posts: 4 Newbie
in Savings & investments
Hi

I have inherited £120k and I’m not sure what to do with it. I’m not sure whether to pay off all my debt, including my mortgage or pay half of the mortgage and save/invest the rest.

I have £103k outstanding in my mortgage and around £9k unsecured credit card/loan debt.

Both my husband I work - husband earns around £33k and I earn £21k(part time due to child care). We have 2 sons who are both at school.

Any advice or alternatives are extremely welcome.

Thanks
«13

Comments

  • Tom99
    Tom99 Posts: 5,371 Forumite
    First Post First Anniversary
    [FONT=Verdana, sans-serif]Park it in two instant access accounts whilst you carefully consider what to do, say Marcus at 1.5%pa and one other so that you keep below £85k in each account.[/FONT]
    [FONT=Verdana, sans-serif]How much are your loans costing? The £9k seems the more obvious one to pay off if interest is high.[/FONT]
    [FONT=Verdana, sans-serif]Is your mortgage restricted on what you can overpay per year? What is the rate on the mortgage? If say it is 2.5% then the amount you would lose my taking longer to decide is not very much but if it is a lot higher or paying off a chunk will get you a lower rate when you come to renew the mortgage then reducing the mortgage may be worthwhile.[/FONT]
    [FONT=Verdana, sans-serif]Pensions – is it worthwhile maying an extra contribution? [/FONT]
  • eskbanker
    eskbanker Posts: 30,883 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Tom99 wrote: »
    Park it in two instant access accounts whilst you carefully consider what to do, say Marcus at 1.5%pa and one other so that you keep below £85k in each account.
    There's no need to split the money up for FSCS protection reasons, as their temporary high balances provision encompasses inheritances and covers up to £1m for up to six months:
    FSCS protects temporary high balances in your bank account of up to £1million for up to six months.

    Certain life events could have caused a temporary high balance in your bank account, including:

    [...]
    • Inheritance.
    • Proceeds of a deceased's estate held by their personal representative.
  • dawyldthing
    dawyldthing Posts: 3,438 Forumite
    I’m one for paying it off. I paid mine off 3 years ago and it’s nice to not have it round the shoulders any more
    :T:T :beer: :beer::beer::beer: to the lil one :) :beer::beer::beer:
  • tacpot12
    tacpot12 Posts: 7,929 Forumite
    First Anniversary Name Dropper First Post
    Do you have an emergency cash fund in an instant access savings account? If not, I would divert 3-6 months living expenses to this purpose.

    Paying off the unsecured debt, then as much of the mortgage as you can would both be sensible. Any remaining money AND the monthly amount of money you save from paying off the mortgage should be used to make sure you are both making adequate pension provision. I would suggest it would be reasonable to put the majority of the excess into your own pension, not your husbands, as he is working fulltime so should be getting (more) pension contributions from his employer.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Whats the pension position for both of you ?
  • Iwanttosave75
    Iwanttosave75 Posts: 4 Newbie
    Thanks for that. My mortgage is 2% interest. I can over pay 10% per year but if I pay it off in full it will cost me £547. (0.5% of the balance). The credit cards are all interest free at the moment and the minimum payments come in at £100 per month approx.
  • Iwanttosave75
    Iwanttosave75 Posts: 4 Newbie
    We have approx £1500 in savings at the moment. My issue is that if I pay everything off that I’ll get used to the additional money every month and not save! Not sure whether to lock some away and pay half the mortgage therefore will still have savings for retirement.
  • xylophone
    xylophone Posts: 44,324 Forumite
    Name Dropper First Anniversary First Post
    Park the money to repay the credit cards in an interest paying account and repay in full once the interest free period ends.

    Would you wish to contribute to your children's CTF/JISA?

    Have you/spouse ever had a Nationwide Flexdirect account? If not, one joint and a sole each could be worth considering.

    Similarly it could be worth considering a TSB Plus joint and sole each.

    My mortgage was paid off in full with a lump sum - it pleased me to be mortgage free but it is an individual decision.

    You could consider pension contributions.

    You might consider a stocks and shares ISA each.

    Savings rates here

    https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html
  • eskbanker
    eskbanker Posts: 30,883 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Iwanttosave75 wrote: »
    Thanks for that. My mortgage is 2% interest. I can over pay 10% per year but if I pay it off in full it will cost me £547. (0.5% of the balance).
    As part of your plan, you could set up a series of fixed-term savings accounts (at a bit over the 2%) that mature in successive years, to allow you to pay off 10% of the mortgage each year without incurring the surcharge?

    https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#fixedsavings
  • Iwanttosave75
    Iwanttosave75 Posts: 4 Newbie
    We both work for local government and are in their pension.
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