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We've inherited some money from my grandfather - I've been left £20k, DDs have also been left the same between them and DH and I are trying to figure out how best to use this money. We've never had such a large sum in one go, and want to make sure we make the most of it. I want to spend a little bit on a new greenhouse for the garden, so I can grow tomatoes and dahlias like my grandfather did. But apart from that, we have a number of options and not sure what is best.
For background, we have no significant debts, apart from the mortgage - we moved to our perfect home two years ago, £150k mortgage (about half the house's value if that's relevant) which needs redecoration throughout, including a new bathroom, but nothing extremely urgent. These are changes we had been planning to do over the next few years probably by saving up for things as we went along, but would consider a loan for bigger jobs.
So do we:
1) spend it on the house - new windows, bathroom, redecoration, log burner etc.
2) use it as a holiday fund - a pot we can dip into so that we can do family holidays more regularly (we are crap at doing holidays at the moment - no spare money to organise them)
3) a bit of both
4) invest in property - something we're both thinking might be a good long-term investment; probably a buy-to-let, possibly a holiday let. Either way, is £20 000 enough to get started in this area? It could be a deposit but we'd still need a mortgage - so perhaps that would defeat the purpose?
I would do 3, earmark a bit of 'fun' money then see what you can do to the house with the rest
I don't see the point in using it as a deposit on another property, and taking on another mortgage - if it was more, say £100k it might be
I think your greenhouse idea is beautiful, a real tribute to your grandfather. If it were me personally, I'd use it to do the big jobs in the house (Windows, expensive long lasting things that only a lump sum will enable and will improve the house considerably).
Put it into your mortgage and use the difference in mortgage payments to have a treat each month.
Put the DDs money away for uni bills or for help with their own housing when the time comes (and it will help you get them fledged!).
Get the greenhouse
Spend 75% of your money on the house, because it will be a great investment and you will appreciate it every day. And blow the rest on the holiday of your dreams - you will never forget it!
I would do a bit of both. But don't use it as a holiday fund, use it to have the sort of holiday you would never be able to afford otherwise. Something so you have shared memories together.
You don't say how old your DCs are, but if they are very young then wait until the youngest is over 6 so they have the memories too.
We did this and have never regretted it. They still talk about swimming with dolphins and the other things we did 4 years later.
So Dream Holiday rather than a number of 'smaller' holidays? I'm not even sure what our dream holiday is?! Currently we do a week self-catering in England with family and that's about it!
I forgot about mortgage overpayment option - but I think that's because I'm very unexcited by it Seems like a small drop in a rather large pond IYKWIM?! How can I work out the difference it would make to the monthly payments? If it would reduce our monthly outgoings fairly significantly I might give it more consideration..
Moneysavingexpert have a mortgage payments calculator that you can put over payments into and it will show you how much money you will save in interest and how much faster your mortgage could be paid off. Watch out in case you are only allowed a certain amount in over payments per year
£10k on Windows and bathroom. Then £2.5k a year for four years on holidays, or alternate years if your dcs are small.
It is likely that we will inherit something soon. We've thought about getting life membership for all of us to the national trust, so that there is something long lasting and tangible from the money, rather than 'general' holiday/mortgage payment. Our kids won't appreciate it at 17 but by the time they're 37, hopefully they will...
Love the greenhouse idea.
For the rest, I would Calculate the saving you would make in interest payments if you pay a lump sum off the mortgage. Check whether your current mortgage has any penalties for overpaying. If not, overpay, and then use the money you have saved do have the treats in future.
Above all else, enjoy it.
Sorry meant to add the DDs are 6 and 10.
And I'm really glad to be able to use some of the money for a greenhouse. I'm a keen gardener anyway and it'll remind me of him
I still don't get the mortgage payment thing. I know it's sensible and a Good Thing to Do but I won't 'notice' the use of money until I'm nearly 60 if I manage to save 6 or 7 years' worth of payments. It's kind of an unseen investment, and I think I'd prefer us to use it in a way which will benefit us now and in the short-medium term.
Finding all your comments really helpful though I have to say - it's helping me to see there's no right or wrong way to use it, it's a matter of what's going to benefit us as a family.
We received some inheritance recently which has enabled us to pay off the mortgage and have a foreign holiday for the first time in years. With the money we are saving from not paying the mortgage we are hoping to doing up our awful house which needs a lot of work !
Babyroobs that's the ideal isn't it, paying off your biggest debt and increasing your monthly income - great that you could do that.
Ours is not a 'life-changing' amount of money - we're not going to be able to pay off the mortgage or stop working or buy a whole new property - but it will make a difference and I suppose I'm trying to figure out a way that he difference will be noticeable, that we'll fully appreciate.
Ironically DH is the one gunning for the property idea now - it's strange because usually I'm the one with the ambitious ideas and he's the one being sensible and realistic! But I'm growing more sure that it would be better to invest in our home and family time now...but I'm hopeful the opportunity to buy property will come along later on down the line somehow.
I think studies show that people are happier with small, regular treats rather than big one off ones. So a daily coffee, a magazine once a week, dinner out, weekends away are better than a dream holiday to Florida. In a nutshell, do something with the money that will make you happy every day.
I'm not sure the property idea is sensible or realistic. I think you have to pay extra stamp duty now as a second property and also buy to let mortgages are more expensive. Then there is insurances, letting fees and maintenance. I don't think your £20k is enough. I'd spend 12k on house improvements and the rest in a holiday pot.
That's really interesting Nemesia I like that idea - although I think it could also apply if we end up using some of the money to improve our home. At the moment the decor is dated and bland, and our furniture is a mish-mash of hand-me-downs and random buys. I think having nice decor and some new bits and pieces would be something I'd appreciate every day, and for a long time. I'm not sure DH agrees though - he's totally ambivalent about his surroundings and doesn't really care about replacing something if it's still functional and not mouldy/rotten/totally broken.
He is very keen for us to have holidays though - he's always said he'd rather spend eg £1000 on a holiday instead of a new carpet. So, it seems to me that if I can persuade him that the property idea is not a goer just yet, that a split between home and holiday would be a good idea.
I knew it would be a good idea to start this thread - thinking it through and getting other opinions always helps me to tease out my own thoughts!
I'd put £10k-£12k towards the house, the money you're not then saving to pay for the bathroom/windows and decorating can be used for smaller days out treats over the years and you get the benefit now which is lovely.
For me I'd then use the balance for a couple of amazing holidays. So maybe some shorter ones (Lapland is my dream when dd gets to 6) like a Disney land Paris weekend or European break and then an amazing couple of weeks somewhere in the next 12-18 months.
Imo - our parents and grandad parents went without to leave you that money and I would feel I'm insulting my family if I blow it on extravagance, new car and holidays etc
If iT WM, I would invest yours and the kids money in a buy to let . Money Is safe and secure,
will give you a rental income,
will rise in value and provide a home for your kids if needed.
Also having the assest the kids could borrow against it.
You can afford to pay for your own DIY but the chances of having a large Brucie bonus in cash again, does not come up very often .
Good luck spend wisely
Thanks newshoes, that's an interesting perspective. And exactly the reasons why we are considering the property idea. That's what DH is suggesting - we put the kids' money in with ours to give us a chance to invest in something half decent, maybe with a small mortgage. He's keen on the idea of growing the money, securing more for the DDs when they're older, need uni fees, a place to stay etc. Argh! It's a privilege to have this decision to make, but it is difficult!
I don't think £20k is enough to use for a buy to let. I am astonished at the number of people who see it as a safe, secure place for your money. For starters, you now need to pay an extra 3% stamp duty if you buy a buy to let. So you are 3% (plus any other stamp duty) down on the asset price from day 1. You would need to take out a mortgage, and that would need to be paid whether or not you had tenants. Depending on where you live, rental yields aren't huge and can be eaten up in cash terms by replacements and repairs needed, plus covering void periods. On top of which it is a hassle! Either you pay an agent to manage the property, or you take it all on your self, which is not risk free. Buy all means do your sums but once you include all costs and factor in the hassle and stress of the risk, I don't think it will be worth it!
I don't think there is anything insulting about spending inherited money on living. If there is one thing that losing loved ones teaches you it is that life is short and you can't take it with you when you are gone.
Memories are priceless. Property markets can go up and down but no-one can take away your memories.
I would not risk the DDs money on a buy to let - what would you do if the bottom dropped out of the market and you had tenants who wouldn't pay? You can risk your money but not theirs.
I'd pay off a chunk of the mortgage with yours, and keep the childrens' to go towards their first flats. I know it doesn't sound exciting now, but 6/7 years off the term of your mortgage is huge! You could retire so much earlier then, if you wanted to! Nothing boring about not being saddled with monthly mortgage payments.
Buy to let really isn't a good investment anymore, there have been lots of changes (sdlt, the way you pay tax on rental income, much stricter regulation for landlords) that make it less attractive.
If you don't need most of the money at present I'd look at locked bank accounts. If you commit to leaving the cash there for some years you can get pretty good interest rates and it's totally safe. Would help with a deposit for your children to buy their first homes in future.
You don't give an indication of the amount of savings you have. If you don't have much put by I would save the vast majority of your money, after you have bought the greenhouse. I think you should keep the money for your DDs separate as your grandfather intended. It won't be long before your girls might want driving lessons, money for university / training, travelling, deposit for rental flats etc. Unless you have lots of money already and live in a really cheap area I don't think you have anywhere near enough for a BTL.
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