What to do with a £300k inheritance?

[adviceseeker22]

Yes I know it's a good problem to have.

I line an easy life so even though I though in RE at first, it seems like too much hassle and not enough ROI.

Investments (via a broker/advisor) I don't know, but for some reason I don't fully trust it. I'd be happy to do it with a bank though.

The last option (and most sensible one) seems to be to pay off the mortgage, and get an ISA where we put our savings.

BTW pensions wise, we seem to be doing OK (even if I think it's quite small these days, projections show it will be ok once we retire, and I'm pretty sure we don't need 2/3 of our income).

Definitely the mortgage, but compare any early redemption penalty to the amount of interest you'd pay over the period to when it expires. If the penalty is bigger than the interest you'll pay, keep the mortgage until expiry of the fixed rate and make the maximum overpayments you can.

In the meantime, invest the money in something pretty secure, like fixed term interest accounts.

When your fixed rate period runs out, or if the ERC is less than the interest you'd pay, pay the mortgage off.

Then plough the money that you'd otherwise be spending on the mortgage in to future investments/pensions.

Oh, and definitely reconsider the early retirement plans. You'll be in a good position financially. At the age of 44 I really cannot envisage another 23 years of work and would dearly love to take early retirement!

I think one chunk expires in 2 years and the other one in 3. Redemption figure is 7k. I pay around £600 per month on interest. So given that's the case I think it makes sense to pay it off ASAP

@adviceseeker22

Me also.
Unfortunately I've dc has leaning issues and after 5 years struggling in state even though she needs very small tweaks the state system cannot help, very small things.
Just pointing out unexpected stuff comes up.

This might sound awful but if the inheritance is from your side, it might be worth seeking legal advice on how you can ring fence it should your marriage split up, before you pay it into the mortgage, ie you own a bigger share of the property.

With the reminder of the money, holiday, savings and pension

Pay off mortgage

Save up

Buy a bigger house , get a mortgage once interest rates drop

Pay off your mortgage asap.

£40k left is this year’s and next year’s ISA contributions. However, I would treat ISA money as never to be withdrawn but to use income from it in retirement (tax free) and so would treat that as a very long term investment and go low charge passive S&S ISA (e.g Vanguard) if I was happy to treat this money as ‘pension’ money.

So if you plan on spending it before you retire ISA may not be the best route.

Isn't the ISA annual limit individual? So we couldn invest that £40k the same year (£20k DH / £20k myself).

I don't see any future for the ISA apart from our pension (or the future home we plan to buy) but if we can afford the higher mortgage if rather go that way than using the ISA

We paid off our mortgage and I now put my equivalent that I paid towards mortgage into a mixture of Lisa and pension top ups. I also opened isa for dc. It's such a mental relief to not have a mortgage especially with interest rates.

How old are you op?

Mortgage (as long as no ERC)
AMG
Pensions
Savings

^^

Sorry, what's AMG??

I'm 39 in a few weeks

I inherited, not quite as much but paid off our small mortgage, invested the remainder and will retire at 55 eleven years later when I can also claim most of my NHS pension without penalty. So more a long term benefit. Am happy to chance I remain in good health.

Pay off the mortgage first.

Pay off your mortgage . 20k each in an Isa . Use the mortgage payment to save for your children but don’t put it in their name.

🤣 it's a Mercedes AMG - inheritance can't all be spent on sensible.

Oddly enough I'm happy with my car! I want to fix my teeth (that's the only extra expense I can think of!)

All the other expenses have been planned and we such should come from our salaries

Oh man if you have that much left on your mortgage then definitely pay off that mortgage! And put the rest into ISAs, including and Stocks and Shares ISA (just do a tracker fund if you're new to investing).

Then whatever you were paying towards mortgage every month, bung that into your pension. You'll be able to retire early.

Ah just saw your update, definitely put some towards fixing your teeth if you want. Your loved one would want the money to improve your life.

Definitely get your teeth fixed.
And please consider having that money protected from any potential divorce.

• I'd pay off a chunk (but not all) of the mortgage. If you want to move in future, it's best to keep a small mortgage on your current home to keep demonstrating your good credit standing.

• I'd make put the full annual allowance (£20k per adult) in a S&S ISA each year that I could afford to do so.

• Whatever is left, I'd put into premium bonds (the maximum is £50k).

Isn't the ISA annual limit individual? So we couldn invest that £40k the same year (£20k DH / £20k myself).

Yes. You can also invest £9k per year for children in a Junior ISA. Good way to save for your DC's university/first car/to give them a nest egg to get started in life.

I think I would use it to upgrade my house and buy a better one in a better area. So invest it in property that I lived in.

At 150k and 3.4 interest rate you're paying approx 5k a year in interest so the 7k redemption penalty would cost you the difference of £2k in 'real' terms.

I'd pay it off.

Pay off your mortgage - it’s great to have that piece of mind. Use the monthly payments from your mortgage to top up your pension.

Don’t forget to have a bit of fun with your inheritance, a couple of thousand on a nice holiday, etc

Yes, I think the ERF is nor here nor there so happy to pay it. Our outgoings are smallish in the grand scheme of things . With joint net salaries of £5k, and outgoings of about £2k (after paying the mortgage) . I think we'd be in a very good financial place.