What to do with £30-40k?

[Fressia123]

It looks like I might get some family business dividends some time in the next months. We just bought the house we're living in so moving is out of the cards for some time (besides we'd need higher salaries to be able to afford a much nicer house).

Saving for that hypothetical house of the future sounds like the beat option but what to do with it in the meantime?

I'd put it towards the mortgage if you can and if you don't already own outright.

I think I would put half towards your mortgage and save the other half for emergencies, home repairs, etc.

it depends on what else you have, if your current mortgage is easily affordable on your salaries and you have no debt, first make sure you have some in instant access 3 months living expenses if in secure jobs which are unlikely to suffer from future recession ( ie public sector nurse teacher etc0 if there is even a remote possibility of redundancy then 6 months living costs,
do you have a decent pension? are you planning a family it might enable a longer maternity leave or a few years of PT rather than FT
do you want to retrain or do further qualifications? are you likely to need to replace your car in near future?
in the meantime invest the rest in the highest interest account you can find, the longer you are prepared to invest the bigger the pay out ie 2 year bond will get more than instant access savings the most you can hope for is just over 1% interest annually, an investment ISA etc
30-40K might pay a chunk off mortgage meaning lower payments therefore an extra £50 spending money per month or it might be best sitting in bank until you decide, it doesn't have to be spent this year next year or the year after

I've checked and for some reason non of the calculators say an early repayment would decrease our monthly payments.

Most importantly I can't see of it adds to the equity (although I'm sure it should).

Ok so how much can you over pay your mortgage each year? View doing this as super long term savings account.

Let’s assume you get £40k say you can over pay £5k pa without penalty then do that straight away for this year.
Then put another £5k in a years bond / isa for next year plus £10k in a 2yr one for next year and the year after to do the same.
If something huge crops up (Redundancy etc) then you can divert those funds to cover it but otherwise thing of it as locked away for the mortgage which over paying on will dramatically reduce your term.

Then with your remaining £10k, have you got any cars to pay off? Clear debts if you need to as that will leave you better off was h month.
Or do you need / want anything doing on the house? New bathrooms / kitchen? Getting those sorted would Be my priority.

Maybe not the most exciting but I’d want to have the house how I wanted it with some security and knowledge I was taking years off my mortgage

Over paying just decreases your term not the monthly payments. So you could go from having 25 years to 17 or something like that

@MimiSunshine

Over paying just decreases your term not the monthly payments. So you could go from having 25 years to 17 or something like that

This isn't accurate as I used to pay around 650 a month and now it's gone down to 200 a month. So it's worth exploring.

Paying off the mortgage early has never been a very high priority for me. I have a trust worth £300k so that will take care of the house mortgage. I can only fully access it in about 10 years. Buying a bigger house on the other hand is a priority as it will let us have another baby.

The house is in great condition and we have no outstanding debts

OP you need proper independent financial advice. We can't help you and it wouldn't be wise to get help from people that don't have your full economic history.

Personally, I really don't think overpaying the mortgage is worth it, depending on your mortgage deal.
Do you have a stock portfolio?

@Immigrantsong is totally right!

Do up the garden? You could add value and increase your enjoyment.

We don't have a garden (it's a courtyard patio) and we don't think we can build an extension. I basically want to keep the money safe until we can get a bigger mortgage (the £40k adding to the deposit).

I would stick the lot in premium bonds.

See an IFA, invest in a decent fund that tracks the market, nothing too risky.

Give it to me!!😂

Something like the Legal and General Global 100. Low cost safe-ish fund, but do speak to an IFA if you are not confident investing independently. Or speak to whoever manages your existing fund.

@Fressia123

We don't have a garden (it's a courtyard patio) and we don't think we can build an extension. I basically want to keep the money safe until we can get a bigger mortgage (the £40k adding to the deposit).

So do that then 🤷‍♀️

Did you then remortgage or have the amount change when your fixed period ended? Presumably Your lender didn’t just reduce it for you without some decision making on your part?

@Fressia123

I've checked and for some reason non of the calculators say an early repayment would decrease our monthly payments.

Most importantly I can't see of it adds to the equity (although I'm sure it should).

What do you think it would be doing if not increasing the bit you own? What kind of job are you in?

Absolutely no point in seeing an IFA - the commission they’ll make from their percentage fee on £40k will be trifling to them and still be a big chunk to you. Max out your premium bonds allowance and then stick the rest into a cash ISA. I wouldn’t do a stocks/shares ISA if you need the money back in 5 years as the stock market is so volatile.

Everything I've read only says about paying less interest as it reduces the term. Maybe it's too obvious that it goes into the equity but I would have thought they'd clarify it. At the moment we're both know paying jobs although I'll retrain as a psychologist in a few months.

Yes capital sums paid into your mortgage increase your equity. Your monthly mortgage payments stay the same but there are fewer of them, so you clear your mortgage faster, and therefore owe less overall.

Don’t overpay your mortgage unless you’re certain you’re not going to need the money in a hurry. Sod’s law you’ll need the money just as you come into a time of your life - maternity leave or redundancy - that you won’t qualify for a re-mortgage or equity withdrawal.