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Original poster

WWYD re large sum of money

52 replies

Art3mis · 27/02/2022 13:48

Basically I was diagnosed with cancer and have claimed only insurance, and have received a large sum of money (75k) - actually didn't expect to receive it - though illness is serious, I'm not terminal and am expected to 'recover'.

We could pay off our mortgage and be mortgage free at 36, but our monthly payments are only £400pcm and easily manageable for us as we don't have have any other 'debts', though we don't have any savings at all. Both in stable, permanent jobs with local authority.

This house isn't going to be our forever home, and we are v likely to still require some sort of mortgage as house prices have gone up significantly, if we decided to move which was the plan before my illness.

WWYD? Do we pay off the mortgage and have nothing left, pay some and put some in savings (ISA? Bonds? No idea what's best!), and do some needed updating to our home?

We have 3 dependents, with one hoping to go to uni next year, the other two are preteens. We did consider contacting a financial advisor - would this be a good idea?

Any help or thoughts would be helpful! Honestly have no clue.

Thank you!

OP posts:
Frenchfancy · 27/02/2022 13:54

Which insurance policy? Was it related to the mortgage? I think I would pay the mortgage off. If you move you can always get another mortgage.

Have you been given the all clear from cancer or are you still undergoing treatment?

girlmom21 · 27/02/2022 13:57

I'd pay the mortgage off. You'll have a spare £400pm and no issues getting a new mortgage.

Original poster
Art3mis · 27/02/2022 14:00

It was critical illness cover, as part of a decreasing life assurance policy, seperate to our mortgage.

I'm still undergoing treatment atm.

Can I ask why you would pay off the mortgage? Is it a security thing for you, or does it just make sense to do that - I honestly have no clue lol

OP posts:

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General money
girlmom21 · 27/02/2022 14:03

For me it's the security of knowing if anything happens to me my family won't lose their home

Original poster
Art3mis · 27/02/2022 14:07

That is a good point girlmom - my husband could still manage the mortgage payments on his salary alone, but definitely something to consider.

OP posts:
Hexagonmum · 27/02/2022 14:08

Go on holiday, put rest in a savings account which hopefully has good returns...paying off your mortgage is just meh as it's the only loan we can have with the lowest rate.

Starlitexpress · 27/02/2022 14:13

Some into pension, your earnings may go down because of your illness so don't let it affect your retirement.
Some off the mortgage, but keep the payments the same so you reduce the term.
Savings.

Last, but not least, do something that will make you feel good again.... holidays, new wardrobe whatever you want to do with it!

Citygirl2019 · 27/02/2022 14:13

@Art3mis I'm in the same position OP. I have chosen to clear my mortgage. I also do have some left over that I'm going to use on some home improvements.

This was not meant to be my forever home (purchased after divorce). But priorities change and for me it is important to know my adult (university age) DC have a home that's paid for and is safe and warm.

My diagnoses isn't terminal, but critical illness generally only pays out if it's likely you will have future health issues linked to the cancer. Also, my policy meant that it ended. I no longer have a life insurance policy, from what I'm reading that would be difficult to get now. Do this all needs to be considered.

Good luck with your treatment.

CurlyhairedAssassin · 27/02/2022 14:14

@Hexagonmum

Go on holiday, put rest in a savings account which hopefully has good returns...paying off your mortgage is just meh as it's the only loan we can have with the lowest rate.
But interest rates are likely to go up now the Bank of England is slowly increasing the base rate.
ReginaFilange001 · 27/02/2022 14:18

Also worth bearing in mind that what your husband could afford the mortgage payments Iif anything did happen to you that with 3 dependent who understandably would need his support it may mean he wouldn't /couldn't work as he does now and may see a drip in earnings. Knowing the mortgage is paid off and that £400 is gone would give him some space to be there for his family. Some employers will. It be sympathetic for too long unfortunately.

Original poster
Art3mis · 27/02/2022 14:19

A couple of points - having only worked part time, I haven't actually been paying into a pension so I don't have one, but my husband does.

And yes citygirl I don't have insurance now, apparently I'm pretty much uninsurable for 5y, so I'm told.

I'm in Scotland BTW, no clue it that makes any difference!

OP posts:
Original poster
Art3mis · 27/02/2022 14:22

@ReginaFilange001

Also worth bearing in mind that what your husband could afford the mortgage payments Iif anything did happen to you that with 3 dependent who understandably would need his support it may mean he wouldn't /couldn't work as he does now and may see a drip in earnings. Knowing the mortgage is paid off and that £400 is gone would give him some space to be there for his family. Some employers will. It be sympathetic for too long unfortunately.
Absolutely a fair point to consider, we don't have any family local either for childcare so it is likely he would have to reduce his working hours or pay for childcare which would put more of a burden on him.
OP posts:
Mumoftwoinprimary · 27/02/2022 14:25

Speaking as someone who laid off their mortgage at about the age you are - it is difficult to explain the level of comfort you get from the fact that your children’s home is safe and no one can take it.

It may not be the best thing from a financial point of view but from a “well-being” point of view it is excellent.

Mumoftwoinprimary · 27/02/2022 14:26

That’s “paid off” not “laid off”. Although I guess laid off kind of works - it is gone either way!

Original poster
Art3mis · 27/02/2022 14:31

@Mumoftwoinprimary

Speaking as someone who laid off their mortgage at about the age you are - it is difficult to explain the level of comfort you get from the fact that your children’s home is safe and no one can take it.

It may not be the best thing from a financial point of view but from a “well-being” point of view it is excellent.

I think I sort of feel like if this was our forever home, it likely wouldn't even be a thought, we would just pay it off.

But because we know we want to move, and this house is going to need work before we could sell (we need a new roof)...I think that's what makes us reluctant if that makes any sort of sense.

I do not feel qualified to make this decision. Blush

OP posts:
LoopyDream · 27/02/2022 14:34

I might find myself in a similar position from selling an asset. I won’t be paying off the mortgage. Our mortgage amount is ‘easy to find’ every month vs using all of the money. Plus it would net us a £5k early repayment charge.

I have a list and it includes some crazy things like a new car and a holiday to the Maldives, but also some practical things like 12 months of mortgage payments set aside.

Only you know what your wants and needs are, and you don’t need to decide RIGHT NOW. Make that list and decide what feels right.

Please also consider your ISA allowance as that might be a good way to invest some of it

labyrinthlaziness · 27/02/2022 14:36

If it was me I would stop and put the money into a bank account for now. You are rushing.

You say I do not feel qualified to make this decision - then do not make any decision until you do feel qualified to make the decision. See a financial advisor. Read a lot. Think slowly and calmly.

You've had a big shock, maybe you just need a few weeks or more to let the existence of the money sink in.

Citygirl2019 · 27/02/2022 14:41

When you are using critical illness insurance money to pay off a mortgage, the bank generally waver the early repayment charge. So definitely check if you have one.

Original poster
Art3mis · 27/02/2022 14:44

@labyrinthlaziness

If it was me I would stop and put the money into a bank account for now. You are rushing.

You say I do not feel qualified to make this decision - then do not make any decision until you do feel qualified to make the decision. See a financial advisor. Read a lot. Think slowly and calmly.

You've had a big shock, maybe you just need a few weeks or more to let the existence of the money sink in.

This really resonates with me right now. At times I don't even think my diagnosis has sunk in.

Someone mentioned an Early Repayment Charge I think ours would actually take us over what we received from the payout Confused

I did have a look at one of those 'if you paid X how much would you save in interest and how much time would it take off your term' sites and it was very interesting.

OP posts:
alwayswrighty · 27/02/2022 14:47

I am a protection adviser.

Personally I'd be considering getting the roof done on your place. Keeping some money back. Maybe 10/15k and then talking to the mortgage company about how much you can repay from the mortgage with no penalty. Just be aware, not all lenders will allow a lump sum over the tolerance without a fee, and it is a waste to pay that.

alwayswrighty · 27/02/2022 14:49

On a separate note, yes life insurance will be very difficult to obtain for the next 5 years due to underwriting guidelines.

I am pleased you are recovering well Flowers

labyrinthlaziness · 27/02/2022 14:51

At times I don't even think my diagnosis has sunk in

Very likely. It is a massive shock and there is huge pressure to focus on the relief that it is not terminal with no time to process the fact it happened at all. If I sound mildly bitter it is because I had a positive outcome from a scary situation once and the pressure to just move past the difficult section was very strong. You also said you were not expecting the payout, and money is a stress as well as a good thing.

What I would do is put a couple of thousand in my own account to spend on a few things to make life nicer/easier over the next few months and then stop and let the whole situation sink in.

Take care Brew and Flowers.

JamMakingWannaBe · 27/02/2022 14:52

Separately to your insurance payout, start paying into your work pension. LA's generally put in 20% contributions. You are missing out on a very generous perk.

Mia85 · 27/02/2022 14:57

having only worked part time, I haven't actually been paying into a pension so I don't have one, but my husband does.

Do you mean you have opted out of your employer's pension? Is it LGPS? If so it is probably the best pension scheme there is and comes with very good protection if things go wrong with health.

CottonSock · 27/02/2022 14:57

Don't use the whole amount to pay off your mortgage. Having no pension leaves you vulnerable. What if the unexpected happens years down the line, dh leaves or similar.

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