Pay off mortgage or invest?

[Yesnosorryplease]

I know next to nothing about financial planning.

We have never had much money to put away and only have small amounts of savings in Premium Bonds.

We have a few debts - big one being a mortgage of about £230k with 18 years remaining on the term, and then some smaller credit card debts being paid off within 0% period.

We both have work pensions but nothing outside of those. Absolutely no idea how good they are or what they will pay out.

Neither of us expected to be given any lump sums but we have recently been told that we may be gifted around £250k from the sale of a family property. The expectation from the family member is that all recipients end up mortgage free as a result.

I am not counting my chickens as I have no guarantee that this money will come to us, but it has made me wonder if just paying of the mortgage is definitely the right thing to do with the money?

If the caveat is to pay off the mortgage then personally that is what I would do because that is the stipulation of the gift.

You need a pension forecast, it’s easily done, ask your works pensions dept.

@ViscousFluidFlow I wouldn't want to go against the wishes of the family member, but I also think they (like me) didn't understand that you can make more interest in different ways, and still pay it off a long way ahead of time. I can't see them being unhappy if we have a plan and don't just go nuts and waste it!

These are the sort of things I've been looking at @HowcanIhelp123 and looks a good way forward

I think I am very risk averse @AntheasAccessories - we never ever foresaw money like this being gifted so I don't want to risk it at all. I think we will definitely need to pay for advice but wanted to get my own thoughts straight first

DH loves the thought of just paying the mortgage off @mirror245 but I am interested in modelling how you can make more in interest to offset the penalty etc and then paying off at the end of the deal.

This doesn't seem right. Have they got your correct address?

I feel like I may have had emails. I am going to pull my head out of the sand and investigate

I think gather all your own financial information, see an advisor and then be transparent with the person that is gifting this very generous amount.

ISA are great but you can obviously only put in 2 lots of 20k per year as a couple.

Pay off the mortgage and then invest the amount of the now non-existent mortgage monthly into a high interest account. Enjoy the freedom!

I wouldn't invest a big sum in one go personally. Pay off your mortgage and debts is a no brainer to me. Then invest your current monthly debt payment.

If it were me and it’s to be mortgage free, I would put it in various savings accounts (think it’s 85k to be covered if the bank goes bust) and just let it sit until the fixed term on your mortgage expires and then pay the whole thing off. I’d use the interest earned during that period and pop it into a s&s isa in a higher risk investment because it’s ‘free’ money in my head so doesn’t matter if I lose it all and leave it be. I’d then look to save the mortgage payments, but would seek advice on the best way to park it so I had a mix of cash to help the DC out and longer term.

Full disclosure, I’m just a moron on the internet, who’s not particularly savvy or bright!

Is there a reason for that?

Our mortgage interest is 2.1% but interest on Isas and high interest savings can be 5%, so you can make more by holding on to it for a bit it seems?

In simple terms if you buy in to the market at a peak then you make less profit. The general advice is to drip feed in regularly so that you also buy stock when it's "on sale" so to speak, as that is more profitable in the long run. This then smooths out all the profit/loss cycles the investment will go through over the years.
My Vanguard ISA was sitting at 16% gains last week so I've cashed in my profit with a view to dripping it to to my youngest sons junior ISA (other kids have benefited from a windfall before he was born and I'm keen to catch him up). I've been waiting to do this as I didn't want to sell at a low. I don't want to pop it all in at the current high so I'll be drip feeding it back in.
As an aside, I'd recommend looking up Dave Ramsay. He's a American financial coach, and he rants on youtube videos about the stupid things people do with money which I find helpful from time to time to help keep my nose clean! He also has the seven Baby Steps - the best order to approach financial goals when you don't quite know where to start.

As PP have suggested, I’d pay off 10% your mortgage immediately and - if you get it before 5th April - put £20k each in an ISA now, and another £20k each after 6th April.

That maximises your tax free allowance.

Check whether your 10% mortgage reduction is per calendar year, or within the term of the mortgage e.g. if you fixed in September, your annual ‘allowance’ to pay it off may be sep-aug. Mine is calendar year.

Put the rest into savings - but bear in mind you can only earn £500 in interest if a HR taxpayer, and £1500 (I think) if BR - otherwise you will get taxed on this as well. Hence maximising ISAs it’s important.

NHS pension statements are on your ESR. They get updated every year

James Shack talks about this here