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 would you not reduce the term-it’s a no brainier-why would you pay all the extra interest?

We've got an economic crash around the corner. Better to get current outgoings down.

It has given me lots to begin to think about - looking closer at my mortgage, the interest rate is 2.3% and, as I changed mortgage providers three years ago, I am 'locked in' against making big over repayments for the next two years.

We were in the same position, OP. We were allowed to pay 10% of the outstanding balance without penalty each year, so we did that for 2 years. Then, as soon as the fixed period ended, we reverted to variable rate for a month and paid the rest off.

Until we did that, we were in the crazy position of paying 2.1% on our mortgage while having equivalent savings that were only earning us 1%.

Not having a mortgage has made it possible for me to go part-time for the last few years of my working life, for which I am very grateful.

Pay off credit card, small holiday, some into savings and 25k on home improvements (loft conversion or extension)

Loads of people saying "pay off credit card". Have they missed the bit where the OP says it's interest free for the next 2 yrs???

No not missed that fact, but I personally hate owing money so would rather just pay it back if I could comfortably afford to do so rather than have it hanging over my head. It would instantly improve your credit score.

Loads of people saying "pay off credit card". Have they missed the bit where the OP says it's interest free for the next 2 yrs???

No not missed that fact, but I personally hate owing money so would rather just pay it back if I could comfortably afford to do so rather than have it hanging over my head. It would instantly improve your credit score.

Nope, it would worsen your credit score. If you want a good credit score, you need to have credit outstanding, and be paying it off in accordance with the loan. Mortgage, credit cards etc.

People who live in £10m mansions with no mortgage, and have no outstanding credit card bills or any other loans, have a dreadful credit score. Which doesn't matter, as they don't need to borrow money.

"Nope, it would worsen your credit score. If you want a good credit score, you need to have credit outstanding, and be paying it off in accordance with the loan. Mortgage, credit cards etc.

People who live in £10m mansions with no mortgage, and have no outstanding credit card bills or any other loans, have a dreadful credit score. Which doesn't matter, as they don't need to borrow money"

The OP has a mortgage so she doesn't need a CC debt to get a credit score.

I haven't had any debt, borrowing or repayments whatsoever for years and have the highest band of score.

Pay off CC and mortgage.

£20k would knock 4 years off my mortgage. I understand what some people have posted regarding the credit card. I am pretty disciplined so could pop it into an account and earn a bit of interest whilst making repayments.

I reckon I’d be aiming for 5 years off the mortgage term, then you’ll be paid off by 50 all being well.

I'd look at overpaying rather than reducing the term on your mortgage. This then gives you flexibility with lower payments every month. Especially important when you don't know what's around the corner at the moment!

blog.moneysavingexpert.com/2014/10/dont-shorten-your-mortgage-term-if-you-can-overpay/