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Investments

Discuss investments with other users on our Investment forum. For more advice read our tips for saving for your child's future.

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Original poster

Do we pay off the mortgage?

13 replies

Ilovechocolatetoomuch · 20/05/2018 07:34

I am completely clueless when it comes to investing money. My husband and I have always worked hard and now own two properties (one we rent out which ticks over nicely).
My question is; sadly my mother and father both passed away in the last couple of years. We are in our early 30s and are now faced with inheritance of about 500k We are using 100k to make our home perfect for raising our two young children. However what do we do with the other 400k We have a large mortgage on both properties totalling about 350k is it worth paying these off completely? We still have another 25 years or so to go on them. Any advice greatly appreciated, thank you.

OP posts:

ihatethecold · 20/05/2018 07:40

I would certainly pay of both mortgages if it was me.
It will give you so much freedom and you will pay so much less because of not paying interest for the next 20 or so years.
I don’t know how long you have left to pay. Do you have pensions?
I would then invest the money saved into pensions.

Pradaqueen · 20/05/2018 07:48

I think it depends on your family circumstances. Assume you have no other high interest debt? Do you both work? Personally, i’d Sit down and write out how you see your family life developing. Both of you working FT? One or both of PT maybe? Kids likely to go to uni? Are you likely to move House?

Given the position on relief on mortgage interest payments is going to change over the next two years, i’f Definitely pay that off, but decide what to do with the rest off of your family wish list? Then ask a really expert adviser or maybe invest the remaining into a house renovation project so that you have two paid off rentals and keep the mortgage on your family home if it is your plan for both of you to work?

Sorry for your loss, it is difficult deciding what to do in these circumstances. Friends of mine used their inheritance to buy a holiday home as their mum would’ve loved them using something they could never have afforded otherwise.

blaaake · 20/05/2018 07:49

I'd definitely pay off the mortgages. You will save fuck loads on interest, and also have the spare income that you used to pay the mortgage with to save up/enjoy, plus your remaining 50k.

Original poster

Ilovechocolatetoomuch · 20/05/2018 07:50

I have a teachers pension and my husband has a private pension which is o.k but not great. We are hoping to keep our second property and use that as our main pension as currently the rental income is 1100 pcm and it’s in London so hopefully price won’t fall too much.

OP posts:

Vitalogy · 20/05/2018 07:51

YES.

Ninchninch · 20/05/2018 07:54

100% pay it off! Live rent free for the rest of your lives. Amazing.

iheartmichellemallon · 20/05/2018 07:56

Yes, pay off both mortgages or at least massive chunks on both, invest a good amount into your pensions & splurge a little on a fab holiday!

I'm sorry you've lost your parents but they've left you in a great position financially so I hope you enjoy the money & the freedom that comes with it.

Original poster

Ilovechocolatetoomuch · 20/05/2018 11:50

Thank you for the advice. I didn't know if there was a better way of investing it, mortgage seems most sensible to me.

OP posts:

GummyGoddess · 20/05/2018 11:53

With that amount of money, perhaps a meeting with an IFA might be a good idea? Even the £50k that you have left after paying off the mortgage would be worth discussing.

purpleleotard · 20/05/2018 11:54

if you are happy to take a risk then you could use some of the £350k as deposits for more rental properties.
Remember that more properties means more work.

Sierra259 · 20/05/2018 13:48

Definitely pay off the mortgages. It will give you a huge amount of security for the future and save you a fortune in interest. Don't forget to take into account early repayment fees, but I think it will still be worth it! Sorry for your losses

Cannockcanring · 28/05/2018 10:25

Please get sound financial advice rather than the views of unknown people on the internet!
For my two penneth (not an expert), I'd say consider seriously changing to an offset mortgage rather than paying off. You can hold your inherited money in a savings and/or current account against it, so you'd pay no interest while you had as much as the mortgage ount, but it would leave you the option of using the money, if you changed you mind and wanted to extend the house, or by am investment property, without the need for setting up a new mortgage. May not be wise if you're not good with money and think you'd just spend it all tho!

ItalianParent · 07/06/2018 09:29

Assuming there are no huge expenses on the horizon, I would NOT pay off the mortgage - not all of it at least. I'd speak to a mortgage broker, pay off just enough of the mortgage to be able to access the lowest rates on a new mortgage, and invest the rest. 10 years ago I would have invested part of it in property, but not now, now I'd max out my ISA allowance, put as much as I feel comfortable with in a pension, investing most of the money in low-cost tracker funds.

My view is that there is an element of risk, but the risk you'll end up with much less if you pay off the mortgage now is far greater, as long as you have a 7-10 year horizon.

Not everyone will agree with this, of course.

Also, do NOT even consider this if you are the kind of person who is useless with money, doesn't know the difference between an ISA and a pineapple, doesn't change saving account every time the promotional rate is up, etc.

Just my two cents.

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