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  • FIRST POST
    • coconutaddict
    • By coconutaddict 8th Jul 18, 9:40 PM
    • 14Posts
    • 10Thanks
    coconutaddict
    What to do with inheritance
    • #1
    • 8th Jul 18, 9:40 PM
    What to do with inheritance 8th Jul 18 at 9:40 PM
    Iím looking to receive £60k inheritance or there abouts. I have a property in my sole name worth £220k and mortgage is £75k remaining (overpaying over the next 13 years to be mortgage free when im 55)

    Thing is.... I have £4K savings and wondered what to do with the £60k.... do I put it all off the mortgage (and save the mortgage equivalent in a savings account to further my retirement nest egg....)
    Or pay a smaller amount off maybe?

    I know savings arenít making much interest.... and the mortgage interest I will save over the next 13 years will be significant (about £13k maybe...)

    Iím not that knowledgeable about pensions and mortgages and the likes...

    Thanks for any advice you guys scan give
Page 1
    • Tropically
    • By Tropically 9th Jul 18, 11:15 AM
    • 306 Posts
    • 1,053 Thanks
    Tropically
    • #2
    • 9th Jul 18, 11:15 AM
    • #2
    • 9th Jul 18, 11:15 AM
    If I were you, I would keep it in a safe place for 6 months for some perspective. It's a big amount and the loss of a loved one can change your way of thinking and change what you want in life. There isn't a need to rush a decision and potentially make the wrong one.
    Mortgage started at £318,000 in June 2016. Original MF - 2041
    2017 OPs: £7000/£7000
    Mortgage in Nov 2017 - £297,808
    • tacpot12
    • By tacpot12 9th Jul 18, 11:44 AM
    • 1,487 Posts
    • 1,268 Thanks
    tacpot12
    • #3
    • 9th Jul 18, 11:44 AM
    • #3
    • 9th Jul 18, 11:44 AM
    Good advice from Tropically. Ultimately, I think you would benefit from having a bit more cash savings that you currently have, but clearing your mortgage will save you interest. If your pension needs topping up, you could consider splitting the money between cash savings, mortgage and pension. You should probably also spend a bit of it on yourself as well; buy yourself something you have always wanted. Who knows when you will have such a large amount of money again.
    • katsoocam
    • By katsoocam 9th Jul 18, 2:29 PM
    • 91 Posts
    • 275 Thanks
    katsoocam
    • #4
    • 9th Jul 18, 2:29 PM
    • #4
    • 9th Jul 18, 2:29 PM
    About to be in this position - though with a smaller inheritance. Hub and I have debated it and the plan is: a) top up our emergency fund until it is 6 months of living expenses b) put some money towards a holiday (not a big flashy expensive one, just one we wouldn't have been able to have without the inheritance) and c) pay off a chunk of mortgage. Even a small chunk can spare you so much interest, so once you have a decent rainy day fund, I would be tempted to pay some of it off, as then you will gain much more financially. A lovely dilemma though! Agree while you are thinking about it you should drop it in a high interest easy access account - the Post Office are doing 1.33% for a year at the moment.
    • Dalradian
    • By Dalradian 9th Jul 18, 3:03 PM
    • 156 Posts
    • 728 Thanks
    Dalradian
    • #5
    • 9th Jul 18, 3:03 PM
    • #5
    • 9th Jul 18, 3:03 PM
    if you have any debt such as loans or credit cards, clear those first. When I had some inheritence money, my financial advisor suggested keeping it in cash for a while like tropically suggests.
    You could also put some towards your ISA allowance, get a Santander or bank account with high interest regular savings account attached until you decide what to do with it.
    Mortgage 1:£128,202 £124,330 £118,330 £113,330 £107,712 £104,047 £100,547 £99,199 £95,849 £85,693.33 £80,172.92 £78,000 £69,708 at 2.49% Original repayment date May 2041 (£144,215 at May 2012)
    Mortgage 2 BTL: £61,701 at 3.49% interest only Original repayment date May 2041 (£70,000 at May 2012). Mortgage free 2018
    • Terry Towelling
    • By Terry Towelling 9th Jul 18, 5:29 PM
    • 704 Posts
    • 563 Thanks
    Terry Towelling
    • #6
    • 9th Jul 18, 5:29 PM
    • #6
    • 9th Jul 18, 5:29 PM
    If you ask this question in the Savings & Investments Forum you will get all sorts of advice (probably too much).

    1. 6 - 12 months Emergency fund is a must.

    2. Clear high interest debt.

    3. Ensure you have adequate pension provision.

    4. Overpay mortgage

    Steps 3 and 4 are interchangeable depending on what you feel best doing - sometimes it's about your feelings rather than just the financial impact.

    If you want cash savings for a short while whilst deciding, consider a Paragon 120-day notice account paying 1.66%. Deposit the cash and immediately serve notice to withdraw. Have the interest paid to your nominated account to avoid anything getting trapped in the notice account for another 120 days.

    Others will urge you to invest some of it but you would need to be comfortable with that sort of thing before committing because it does have risks.

    Some might suggest Premium Bonds but I wouldn't - not enough chance of a good win and probable return of about 1.2%.

    Give it a go in the Savings Forum and see what you get. I'm just a duffer, there are many contributors there who will give you chapter and verse far better than I can but I am quite an advocate of reducing mortgage debt more quickly.
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