What to do with £25k?

[Darkling1]

Longterm poster, but name changed for this thread.

I’m due to receive £25k through unfortunate circumstances and I’m trying to figure out how to utilise it. This is a life changing amount of money for me, so I want to make sure it’s balanced.

I have a long term partner and we bought a house together two years ago. We have £165.7k remaining on our mortgage. We’d like some work done to the house, but thankfully, none of it is urgent.

I’m not employed and I’m in receipt of disability benefits (contribution ESA) and I am hoping to be able to work again at some point next year.

I have a Stocks and Shares ISA (£8,100), some money in Premium Bonds (£1,400) and a small Emergency Fund (just over £1,000). I also have my old work pension.

How would you suggest I utilise this money? I’m in my 20s, by the way. I’d definitely like to overpay the mortgage, but I’m not sure how much of the money to use.

Grow up and stop taking it personally and your taking absolute shite if you think £20,000 will magic money tree into £900,000. 😂 What planet are you on? Are you Liz Truss in disguise. You obviously someone who hasn't got a pot to piss in but plenty of fantasy advice.

Thank you all for your helpful suggestions. The issue is that I want to use a chunk of the money towards home improvements and to overpay the mortgage (as long as the Deed of Trust reflects what I’m putting in, so the money can be ring fenced in case we spilt in the future.)

Without this money, we would not be able to afford the home improvements anytime soon, so it puts me in an awkward position.

A PP has said that a Deed of Trust can mean bugger all, so are there any alternatives to ring fence the money, if I do want to use most of it for home improvements and overpay the mortgage?

This thread has given me a lot to think about!

A deed of trust does not mean bugger all. It is very useful if parties go to court where jointly owned property. You can get a deed of trust drawn up by local solicitors as they would be the ones (not mumsnet) to reassure you.

I suggest you either do some maths or use an online investment calculator.
If you put 20k away at 10% interest for 40 years you'll have a little bit over £900k. No arguing with the maths!

@CuarloDeFonza you need to learn about compound interest.

The 10% consistently across 40 years in unrealistic especially in the current climate. The last 40 years the west grew in a post war era, the same is not guaranteed again, indeed the emergence of china and India will see to that.

You need to learn what 'CAPITAL AT RISK' means.

First off, money is a tool to use to get want you want. You said you wanted to use it in a balanced way in your OP.

The investment in S+S isa/emergency fund advice is the most sensible thing to do if you want to grow your £25k and protect yourself from anything unexpected.

But it's perfectly reasonable to use the money to buy/do stuff (ie home improvements) if you're clear that that is going to improve your live in the here and now but not give you future financial returns (assuming you're not adding an extension or loft conversion? But unless your kitchen/bathroom is falling apart even redoing those won't provide a significant return when you sell up)

Consider why you want to overpay the mortgage. And if you'll have to pay fees to do do. And where you see your relationship in 5 to 10 years.
If you put the money in S+S ISAs you can reasonably expect a 7 to 10% return over five to ten years. Would overpaying on your mortgage save you the same amount of money on the interest? You need to find an online calculator to do the sums - try moneysavingexpert. What if you put the money away for 5 years or more, then when you sell or remortgage use that money to reduce the amount you borrow on the next house/remortgage. By that time would you expect to be married to DP?

Overpaying a mortgage is good advice, but it might not be the best advice for an unmarried 20 something, with an inheritance and limited savings.

I’ll just leave this here….

Check out offset mortgages when your mortgage comes up for renewal. You can offset your ISA and savings against your mortgage which reduces the interest that goes on every month. It means you still have the capital at your disposal but it is helping towards reducing your mortgage. I can't remember the minimum amount you need to have in savings to offset your mortgage, it used to be £12K but that was a long time ago.

Who said anything about limiting investments to the West. I suggested investing in a portfolio of globally diverse funds. These could include China and India.

Anyway the OP already has a S+S isa so this conversation isn't relevant to them. Hope it's sunny where you are, have a lovely afternoon

@CuarloDeFonza I wonder where you are right now and how well positioned to give advice on investing? I am set. Not wasting my time on you.

@Darkling1 Invest, ISA’s / SIPP, you are young enough to reap big rewards. Home improvements are not the way to go especially given you have a partner.

I have a 7 figure property portfolio and 6 figures in my savings. I don't own a single share in any company and I don't trade markets, never have. Thank for attempting to diminish my experiences with your devotion to the markets. I don't do posh gambling.

Thank you, this is very helpful. I have quite significant mental health issues and I know that having some work done to the house would really help (e.g. having a bath installed and replacing the living room floor because it is rotten.) and would allow me to enjoy our living space more.

My S&S ISA has been performing well since I’ve opened it. It’s to top-up my workplace pension. (I’ve attached a screenshot.)

To be fair to my DP, since I’ve been out of work, she (we’re in a same-sex relationship) has taken on the burden of paying for the majority of our outgoings. I pay for half the mortgage, some of our energy usage. I also pay my own phone bill, life insurance and critical illness cover out of my ESA too. My DP covers the rest.

Yes, we’d both like to get married. We discussed this recently.

I’m in a similar position. Set to receive an inheritance. Still have no idea how much due to it being through a “finders” firm. We think between £28k and £35k. I’m going to
use it to pay off some debts, buy a semi decent car (nothing fancy) and get all
the jobs that need doing in the house done. We only have a mortgage of £39k now but we’ve decided if we pay off the mortgage we’ll never be able to afford the other things

That’s totally understandable!

im following! Thank you OP for starting this thread!

The inheritance you are due to receive “soon”who is that from?

OP does not say that it is an inheritance.

It’s not an inheritance, but I can’t talk about the circumstances of why I’m receiving the payment. Sorry, I don’t mean to be cryptic.

I would top off the ISA for the tax year. You can put in up to £20K a year, tax free.
Of the remaining about £7k, I'd put perhaps half into an easy access "rainy day" fund, and use the remaining for a bit of fun.

😂