£100k inheritance, ideas?

[Fuuuuuckit]

I'm about to come into c£100k.

Mortgage is £60k,17 years left on the term, manageable repayments curently £350/M. Have been slightly overpaying where I can, just reduced term by 5 years.

Want to put something in place for the dc (age 18 and 15) which they can't fritter away, poss £20k each

Salary not great (£24k gross) but household bills manageable, I save a bit throughout the year for Xmas, Birthdays, car expenses, small holiday fund. No large savings.

House needs about £5k work doing reasonably soon - front/back doors need replacing, roof needs the bit at the side the wind has just ripped off refilling etc. Could think about replacing all windows if I had the funds available.

No long-term savings currently. Ds 15 poss going to uni, dd doing an apprenticeship. CMS for ds (plus cb, wtc etc) will end in 2 years which is a worry.

Had thought about overpaying the mortgage monthly rather than lump sum, to keep hold of the bigger share rather than just whacking it all away in one go.

I am a cautious saver and I am a lover of spreadsheets for all my monthly transactions. Will be booking an appointment with the adviser at my building society ASAP, but have you folk got any ideas?

Oh, and a bloody good (for us) holiday when I've got my head straight!

60k mortgage
5k house repairs
5k for holiday/jewellery repairs
15k each for the kids

You can save their extra 5k each in the years to come.

I would also put their 30k in premium bonds until you are ready to cash it out.

Either way I would get rid of the mortgage as the rates are slowly but surely going up.

Also with your extra £350pm you could pay extra into your pension

Pay off mortgage, do work on the house, money that would have gone to mortgage into pension, you could stick the money for the kids in premium bonds in your own name till you are ready to hand it over and you can slowly add to that to top them up to 20k each.

Not having a mortgage gives you more choices plus security.

@gingerknobs

Consider how much £ you’ll need in retirement and whether your pension will genuinely cover it… ?

Then top it up before the end of THIS financial year (especially whilst stocks are cheaper right now).

Add more pension from April 6th for the next financial year.

THEN reduce your mortgage …

And avoid any crypto nonsense or whacky investment schemes.

Inflation might be 10% this year according to the Times today so any cash savings will be only worth 90% this time next year. Don’t keep too much in cash!

I think actually this is good advice.

I've been where you are. I paid off the mortgage, did home improvements, bought a new to me car and had a couple of fabulous holidays. FF 6 years, I have cancer for 2nd time, DP lost his job due to covid, utilities have doubled, food and fuel have increased and continue to do
Not having to worry about losing my house is the best feeling in the world.. I wouldn't do anything different

@Fuuuuuckit- I’m guessing you’re currently on a fixed interest rate for your mortgage? If so when does that end?

The interest rates are rising, I would look to pay off your mortgage as and when the terms of your mortgage allow, plus do the home improvements. Anything else could be put away for your DC to be used against a house deposit when the time comes.

In the meantime while you are deciding, put it in Premium Bonds so you have a (minuscule) chance of winning up to £1m more!

We were given £100k by my parents (thankfully still with us!) to pay off our mortgage.
Being mortgage free has been very freeing and it was a great relief during lockdown when I couldn’t work.
So I would pay your mortgage off, do £5k to house, £5k holidays.
£10k in savings such as a Cash ISA for a rainy day.
£10k for each child.

If it were me, I think I’d go for:

• 60k to pay off the house
• 20k to S&S ISA. I’d then set up a direct debit to the ISA for 350/month to start in April for the new tax year. You will have a lot more peace of mind if you own your house outright, and you won’t miss the money if you never get used to having the extra in your wallet. Over 17 years with a conservative annual 4% interest rate, you’d have accumulated 140k to cushion your retirement and help your kids. And unlike a mortgage, you can stop the direct debit if you ever get into trouble financially.

With the remainder, I’d do

• 10k emergency fund
• 10k repairs/holiday/jewelry

You probably won't find any better, more impartial, free advice on this subject than on the wiki maintained by the UKPersonalFinance community on Reddit:

ukpersonal.finance/lump-sum/

There's also a great article discussing whether it's better to pay off mortgage or invest:

ukpersonal.finance/mortgage-overpayments-vs-investments/

It discusses it in terms of overpayments, but the same thought process applies to lump sum decisions. As you can see from responses you've had here, opinion is definitely split. Investing is statistically proven to be the better financial choice, however many people benefit more from the psychological benefit of lower mortgage.

The most efficient use of the money would probably be
Boost your pension
Max Dcs Isas

Compound interest is an amazing thing.

I’d pay off he mortgage too, nothing like that feeling of having no debt. Not to mention not having to pay it anymore. Use the money saved to put into your pension.

A mortgage-free house is an incredible thing.

@Soontobe60

If you pay off 50k on your mortgage now, and continue paying 350 a month, it’ll be paid off in3 years, just after you lose money for your ds. You can’t put a price on peace of mind of having no mortgage to pay!

Great idea! If you do this let your bank know to decrease the term and not the monthly amounts as their default is usually to decrease the monthly repayment but keep the term at 17 years.

Pay your mortgage off. Take the 350 a month and invest in your pensioner.

20k for your kids combined. Since one is doing uni and the other doing an apprenticeship probably worth saying it’s to help with a house.

20k for holidays, house repair, jewellery etc
Maybe try saving 5k into savings so you have a future safety net

Id use some to pay off mortgage and put in pension.

Get out for spreadsheet and do the figures to see how much interest you save on the mortgage and any mortgage repayment insurance over 17 years.

Then figure out how much tax/NI relief you will get for AVCS over the same period and how much you are likely to have in your pension pot. Speak to your workplace pension department/provider, they might have a pension modeller for AVCS etc to give you an idea.

The numbers will help you decide or at least let you know the possibilities.

This could potentially let you retire several years early before your state pension kicks in at 68. I am 53 and just learning about AVCS, drawdowns, annuities, tax savings etc now, I wish I'd figured it out years ago.

You will still have £40k left to mull over how to spend on kids/house/holiday.