To think I’m not crazy for not paying this off?

[Juppc]

I’ve been given 70k which is around a third of my mortgage debt. If I paid it down on the mortgage my repayments would immediately reduce by 200 a month and obviously I would have a much smaller mortgage so be paying less interest.

however, I am a single parent, late thirties, to one child and have no plans to ever meet anyone again. This 70k represents 2.5 years of security to me for all expenses. I am currently highly paid but no idea when that could change. If I spent the 70k I would have only 8k left in savings and I am only currently able to save 400 a month. I’d never have 70k again.

I think I am being sensible? Am I?!

Yes, very.

You can get 8% on that if you tie it up for 5 years.

I’d pay 60k off the mortgage and then keep the 10k for savings to boast them to nearly 20k.

You are best off looking at a high interest account for the 70K or speaking to your provider regarding an offset mortgage, then interest earned will reduce your mortgage. It's a tricky one, I'm not sure I would pay all off at the moment. I think you are best speaking to some one qualified.

You probably can't make such a large overpayment anyway without incurring charges. I would do a bit of both, perhaps invest for now and at next remortgage pay a chunk off, keeping a chunk in savings/investments.

I have no idea about investments or where to start unfortunately

Yes, this is a good point, we have just remortgaged and can only do a 10% overpayment per year.

I would put 50k in to your mortgage at least. Yes, you might save only £200 a month but it’ll wipe years off your mortgage and hence thousands in interest. Put the other £20k in to an ISA. Maybe keep back a couple of grand for a shopping spree, holiday but I would deffo get that mortgage down.

What are your current mortgage terms and conditions in regards to early payments/rates and length of current deal?

Yes, i would need to know how much you could overpay this year without interest implications.

I would probably do a half and half at least, get it in a high interest account.

Do a google search for independent financial advisors in your area. Or speak to your mortgage provider to see if they have a solution - an offset might wipe a lot of interest off your mortgage and years.

There are no charges if I pay 30k then 40k (before and then after September)

Depends on your current mortgage rate. if it's less than you could generate in interest then save the lot for now. If your mortgage interest rate is higher then what you could achieve on savings/ investment then it makes sense to pay off some of the mortgage

It kind of depends on your interest payments. But there are calculators on line which show how much less you'd pay in interest on the lifetime of your mortgage by overpaying. You need to think how much you can over pay in the terms and conditions of your mortgage, when you are remortgaging etc etc.

It would make no sense for me as we remortgaged at a really good time and are paying a really low interest rate, our mortgage is nearly finished and we'd get far more in interest with the money in the bank.

it could save you thousands over the life of your mortgage though.

I'd keep some back whatever for 'emergency' savings. And treat yourself to something nice with a bit.

It’s more than having 70k means I have it there… almost like having the support of a partner!

See the money saving expert site...

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

There's some good advice on there.

What's your pension like? You will get a 25% tax boost straight off for putting it in there (although may be above your yearly contribution limit). Returns likely better than the interest rate on your mortgage too.

check your early repayment charge - pay off the maximum this year, and next, until you're ready to remortgage, then use half of what's left to reduce your mortgage.

then put the other half away as a reserve, but accessible if needed

Putting it in your pension would immediately add 20%. Obviously couldn't access it till you're 57 though

Cash > assets.

I’d put £20k in a S&S isa in a global tracker. Then the same again in April.

The rest across high interest accounts for now.

Not sure where the OP can get 8% on money tied up for 5 years. She says she is a high earner so would have to pay tax on the interest above £1000 per year. Money in an ISA (£20k is allowed per year) is tax free.

Personally I'd rather have 70k in the bank than £200 less mortgage to pay as I'd feel more secure that way. But it really comes down to interest rates whether it makes financial sense to pay some mortgage off - what is your mortgage rate and can you get a savings rate to beat it?

Even if you aren't interested in investments etc , you can still get no risk saving accounts where you'd get 4 plus %. I'd start with ISAs.

I'd split £30k mortgage; £20K pension; £20K emergency savings in a high interest account if it were me. Whatever you do, do not leave it in an account where you can access it easily or you'll dip into it here, there and everywhere and before you know it, it will be gone.

Ok so I’d do the 30. Then keep the rest and see how you feel. I’ve been a single parent so I do get it. ( never had 70k in the bank though!)

But think about knowing that the roof over your head is all yours!

I do understand the desire to have cash that’s accessible. What’s your income? You don’t have to say a figure, but are you on the standard rate income tax/higher rate? Are you close to jumping up a threshold?

have a read of this - https://www.gov.uk/apply-tax-free-interest-on-savings

I’d work out what the cost of 6-12 months full expenses would be. Keep that aside.
Then decide whether pension contributions or mortgage repayments are your personal priority and use the rest for one or both of those