To ask what you would do with £45K?

[fortunatelynot]

Due to bereavement I have inherited £45K. I am 39, have my own mortgage of about £110K which is due to end in about 16 years.
I earn a reasonable wage, have a bit saved, but not loads and 1k in premium bonds. I have one credit card debt of 4K which I have on interest free card for another two years. I have two teenage children whom I largely support financially on my own.

I know it is not a completely life changing amount of money but would be interested to know what any of you financial savvy people would do to maximise the benefits. Thank you!

Why are people obsessed with paying mortgages off?

The interest rate on my mortgage is 1.1%

My guess would be that most people's mortgages are quite a bit higher than 1.1% and most current accounts that offer anywhere near a decent rate on savings only offer it on a limited amount of money.

100% pay off the credit card dept, two years is a short time, and you'll find these haunting you in no time... don't even think about this, it should be your top priority.

Then I'll speak to a financial adviser, and have an aim to pay off my mortgage with whatever investment. If you have children, a home is their only security... and if you don't, you never know what life is hiding for you and whether you'll have that job forever, and 16yrs is a long time.

I wouldn’t pay off the credit card, it’s a waste of interest free credit, put the £4K away and use it to clear it when the interest free period ends.

If it were me, I’d put 40k into my pension and have a decent holiday.

I'd pay off the debt and save/invest the rest.

Save it for the kids’ uni. Student loans are never enough.

The rest to pay the mortgage and cards, once the mortgage/card payments are lower it just feels as if you had a salary increase.

Enough aside to pay of the 0 interest card when the deal runs out

This could be far more financially savvy thing to do than pay off a zero % interest credit card debt, 2 years early. Set reminders on your mobile phone, tablet, paper diary, whatever you use to send yourself an auto-reminder to yourself 3 months in advance of the final payment.

Depending on the terms of the credit card, if they require you to pay a minimum monthly amount, you need to do this every month (Variable Direct debit is useful) so it doesn't negatively impact your credit scoring.

Consider a stocks & share ISA for you and each DC as a tax efficient wrapper as whatever Capital gain you make on the shares over time, it will remain tax free while the status remains an ISA. Check online for possible ISA deals. I would not recommend a cash ISA as the % interest rate is zilch, but shares in blue chip continue to perform well (especially property, pharma, FMCG). This is a long term investment, so you need solid companies to continue to give long term growth. Consider seeing a financial adviser. Given you have £45K and may want to do other things besides, you could invest £5-10K each and still have approx £10-15K "mad money" (as my DM calls it) for less 'sensible' things.

A family meal in memory of your loved one is also a lovely thing to do, depending on how close you were. Not a lot of money but still nice to reflect on the person's life and your memories of them. Sorry for your loss

Pay off credit card. Could you rearrange your mortgage so that it is an offset one? Then you could have access to the money if you need to (lost job etc) but still reduce your mortgage payments. And probably a holiday / something house related if that’s something you have been wanting to do.

Pay a chunk off your mortgage or clear any other debts you’re servicing

Premium bonds are worth a consideration but the chance of getting more interest than an instant access savings account is quite low.
Not so. You'll likely get at least the same as an instant access savings account (which is very low at the moment), and with a decent chance of more.

If it were me, I would clear the credit card, I would put £3K in savings, for emergencies, so you don't build up another credit card debt. I would buy a new (to me) car for 5K (Mine is 12 years old). I would spend/save £5K on special holidays and then pay £30K off the mortgage. Sometimes that isn't always possible though, I know my mortgage has a 10% limit each year, but depending on when your mortgage year ends, (mine is Dec, so I could pay 10% now and another 10% in January), you would need to ask your mortgage provider what the penalties are. It may be worth remortgaging to a different mortgage and borrowing less by using your money, and absorbing any penalties, and that would be worth seeing a financial advisor for.

That way I have something essential (car), something nice (holiday) and something sensible (mortgage).

I wouldn't reduce the payments though myself, as I am mortgaged until I am 67 thanks to divorce, so I am aiming to pay it off a bit quicker.

But we all have different priorities in life and you need to look at the suggestions, look at your own situation and decide what will work best for you, more money in your pocket each month, or mortgage free earlier.

Deposit on a second property

Pay off the credit card 4K
Increase the premium bonds to 6k
Reduce the mortgage with the remainder 36k

Do not go on holiday and buy a new car.

Nobody should have any credit card debt because of the criminal levels of interest attached.

Premium bonds because you need an emergency reserve.

The reduction of the mortgage will reduce your monthly payments by a third thereby increasing your cash flow and reducing your interest payments.

5k savings, 40k take financial advice and invest in bonds, investment funds, top up your pension. I work in wealth management and at your age your investments will grow far more than the value of your house given that property prices are going to stagnate for the foreseeable future.

Sorry for your loss. I am going through a similar thing and will receive a similar amount.
I'm half way through an extension so this will help to finish my extension and decoration (we were going to hit a few credit cards), I'm planning on spending some on a newer car too as mine is a bit old and become a temperamental and we need a decent family car.

The rest will go into ISAs and savings for future needs - I am keen to ensure I spend it well as my grandad (who died) worked hard in life and had a difficult time as a
Child and had to grow up quickly in the war so I'll use it wisely to be respectful of him 💔❤️

As with all these "I've been left a bequest of £xxx, how can I use it?" threads, it is crucial for the OP to get RW financial advice double underlined!!

Posters aren't financial advisers, they will have their opinions, but they will be irrelevant opinions, because they don't know an OPs overall financial situation. Such as:

1. How many years an OP wants to continue working;

1. How much total debt an OP has the type of debt and it's priority (mortgage debt is very different to credit card debt is very different to personal family debt/loans repayable to Aunty Mabel etc)

1. An OPs appetite for risk and their age, whether they are looking for medium/long term 5-7 year growth in a safe vehicle such as blue chip shares, or risky but potentially high-yielding tech stock.

Buy a flat or terrace requiring work, and rent it out. gaining £450 pcm.

In your situation in

:- I wouldn't pay off your credit card when it's 0%, I would keep that money in a savings account, so you can pay your credit card off if you need to. (Obviously only if you can do that and are not the type who would dip into it and have nothing to show for your money and still have your credit card debt)

:- would probably keep the rest in a long term high interest account, and use it for when my children go to uni. (Unless you have that covered)

:- if uni is sorted, I would pay whatever I could off my mortgage to reduce the term.

I’m sure OP is only asking as a way of sorting through what she wants to do. Asking opinions is a good way of focusing one’s own mind. She’d have to be pretty stupid to just start indiscriminately putting pp’s statements into action, wouldn’t you say? I’m crediting the OP with enough acumen to approach this with the care and attention it deserves and as part of that I’m quite certain she’ll go and see a professional.

Have a look at a mortgage calculator and how many years a lump sum will take off your mortgage and how much interest you will save if you keep the payments and reduce the term.

I put £40k into my mortgage (1 small inheritance + redundancy) and it was brilliant being mortgage free at 46. Saved thousands in interest.

Also any overpayments I could take back out of I needed them, so money would be available if needed.

and at your age your investments will grow far more than the value of your house given that property prices are going to stagnate for the foreseeable future

Really? Not in my area they aren't stagnating! The price of housing has gone from strength to strength since the 2016 Referendum. People always need housing, supply and demand will not diminish over the coming years.

Well demand will continue to outstrip supply in fact. As with everything, it depends on the area.

All in a marcus Goldman Sachs account, while you have a think. Good interest for current times.

For me £45k is an unimaginable and life changing amount of money. I'd pay off my ex and finalise my divorce then move house or massively improve where I am. Plus a nice holiday for me and the DC. As for what you should do, probably see a financial advisor to make sure you get the maximum use out of the money.

A what neighbourhoodwitch?

I'd pay off my debts.
Put some money aside for DC to help them out when they leave home
Have a bit to have fun with
Put the rest in savings so it is there if I need it.