What to do with inheritance

[BlueJellycat]

Sadly my mum died earlier this year. I have yet to sell her house but when the estate is fully wound up I expect to have 215 k.

I really rather she was alive and this life changing money isn't making me feel happy right now.

I have 190k left on my mortgage. It's fixed at 1.83% until Nov 25. If I repay now I have a 5k charge on the account. It's interest only.

The repayments are interest only and £290 a month.

Am I right in thinking that I'd be better putting the money into a fixed rate 5.3% account until Nov 25? It's just so confusing.

I have 95k now and expect about 120k more on the sale.

I'm on tax credits and know I will be moving to UC some time soon so ideally for that alone I'd like to pay the 95k onto the mortgage to halve it. Further down the line once the house is sold I might not need the UC as in theory I will own my home. However in reality I only pay £290 pm on the mortgage. I know it sounds like depreciation of assets but we have never made any capital repayments ever and we are ten years into the mortgage. We owe more than we borrowed.

Thanks

Check your contract. You might be able to pay 10% off the mortgage capital annually.

Doesn't UC stop anyway when you have 16k of 'cash' anyway?

As far as I remember you are only allowed to have £16k in savings on tax credits. (Or is it £6k?)

So I think you'll lose your benefits. In that sense I suppose it's better to pay off your mortgage while you can?

Pay off your mortgage and pay £290 (what would have been your mortgage into a savings account. Keep at under 15k so you still get UC.

I believe tax credits do not take into account assets. However, the income from the investment will be taken into account- so if we think 5% of 200,000, that’s 10 grand a year, which may well affect your tax credits. You need to compare how much you’d lose in tax credits vs how much better it is vs paying off the mortgage. I’d guess it would make sense to invest and not incur the early repayment fee, but that depends on your tax credits.

Google says there is no savings limits for tax credits but I might have got that wrong. I have only just had the probate this week so mot really double checked

I can't comment on the UC aspect but bear in mind you may have to pay tax on interest on savings depending on if you've already used your personal allowance.

That would change the commiserations around the early repayment charge on the mortgage.

https://www.gov.uk/apply-tax-free-interest-on-savings

Sorry about your mum OP

CONSIDERATIONS!

Look at the NS&I deal, there was a thread about if yesterday. 6.2% but you can’t touch it for a year. You may as well profit £6k than lose £5k.

https://www.nsandi.com/products/guaranteed-growth-bonds

It's so confusing as I have a disabled child at the highest rate of dla so his carer right now. So I don't pay tax.

I don't have the letter for a moving date to UC yet and I'm thinking you get a years grace after switching so I'd have time to the mortgage off once I have the house probate in one go.