50k - pay down mortgage?

(7 Posts)
25BeautifulGnomes Wed 09-Jan-13 13:33:42

I have received £50k inheritance. smile but sad.

Mortgage is £200k on a crap fixed rate for 2 more years.

What would be the most financially savy way of utilising the inheritance, bearing in mind that we would like to do some work on the house, but can also really see the appeal of reducing the monthly mortgage payments.

Income not likely to change in near future but is comfortable (ish) at the moment.

Winterwardrobetime Wed 09-Jan-13 22:26:53

Can you invest half and use half to make a payment on the mortgage? Then with any interest you make on the investment over pay the mortgage? That way you are reducing your mortgage, but keeping some aside for a rainy day /work on the house?

25BeautifulGnomes Thu 10-Jan-13 12:54:56

Good advice winter, hadn't thought of that, Thankyou.

We are in a similar situation. Firstly I would check out what overpayments your mortgage company allows before making decisions. I would pay off as much as you are allowed...reason being that on savings accounts you can only get about 2% at the moment (bit more if you are prepared to tie it up for longer), and so much better use of cash to pay off debts.

Oh and just noticed that you want to get work done on house...how much will that cost? Better to use the inheritance money on that, than having to raise it elsewhere.

Then use up your ISA allowances (money for a rainy day).

Also, can you use a bit for something fun? A holiday or something nice to remember the person who left the cash?

25BeautifulGnomes Mon 14-Jan-13 10:00:10

Thanks fedup - we can make overpayments of 10% of the balance over every 12 month period so will definitely be doing that.

Work on the house if we did what I really wanted would easily be at least £25k so not sure we should do that, as I do want to have a buffer in ISA's etc.

We will definitely be going on holiday too.

Are you doing a combination of all the above?

Tricky, but a good dilemma to have iyswim.

I would do essential work on the house that you're planning to do anyway, fill ISAs and then put the rest in the mortgage.

25BeautifulGnomes Mon 14-Jan-13 15:44:27

Thanks Antoinette smile

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