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Original poster

if you inherited £100k...

104 replies

ruddynorah · 30/07/2010 13:59

if you inherited £100k what would you do with it? or rather more to the point, what should i do with it as my head is just spinning with it all?? situation- after my gran passed away i inherited about £100k (will get it early next year i think).

there's me, dh, dd aged 4 starting school september, and ds 8 months. i'm due back to work in 2 months.

we have a £150k mortgage currently on standard variable, so no penalties for overpaying.

i work back to back with dh. he pays all bills and mortgage. my income is spending money, about £800-£1000 a month depending what hours i go back to work on. we have no childcare costs due to work opposite each other (him earlies, me lates).

do i.....

A) pay off large chunk of mortgage, maybe £75k, and keep repayments the same which will mean mortgage is totally paid off in 10 years ie by the time i'm 40. other £25k will pay off £5k car loan, £5k aside for each of the dc, £5k for some stuff to the house and £5k into savings for next years holidays.

B) as above but keep mortgage term the same, so half the monthly repayments. means more in our pocket each month, nicer hols etc etc. though we aren't massively fussed for this, we like uk hols while the children are young really.

C) take 5 years off work. (will have to go back short term until money comes through though) 5 years x £800 a month = £48k to fund the 5yrs off. so would still leave £50k (allow for 'pay rise') to make maybe £25k overpayment to mortgage plus £25k to do as above. so, mortgage would carry on over longer, but would have career break, though of course impact to think of 5 years off career ladder/pension etc etc blah blah. would probably do some volunteering actually to keep some semblance of activity out of the home as it were.

D) something else..

i don't exactly love my job, i do it because the hours fit and it's good money for what it is iyswim. as it stands, i'm with the children all day, then go to work while dh does tea and bedtime. i won't see much of dd as she'll be at school all day, though i'll be there for drop off and pick up. it would be nice to be home each evening.

but we'll save an absolute fortune if we overpay massively on the mortgage and be mortgage free in 10years.

thank you for reading all this.. soooo...tell me what you think?? i just want to make sure i do my best with this money. dh will go along with whatever i decide

OP posts:
JJandbump · 30/07/2010 15:00

Same happened to me 3 years ago and i had the same conundrum.

Eventually took the plunge, DP and I gave up our jobs in yorkshire, bought a business in the scottish highlands, now we work together, at home, are both around all day to bring up DS, have 3 hens 2 cats 1 dog and we love it all

i looked at it as a chance to do something i'd never have been able to do otherwise - at the end of the day if it all goes belly up and we have to go back to where we were, we've really not lost anything and had an amazing experience.

before you can do anything like this though i think you need to get over any feelings of what you 'ought' to do with it, and any feelings of guilt that may be attached to it. Once you're free of the emotional connection to the money you can look at the situation in more of a blue-sky-thinking kind of way.

enjoy it, and don't feel guilty about doing so

xkaylax · 30/07/2010 15:01

I would pay the mortgage put alot away to save but would also treat your family to a really nice holiday.

greygirl · 30/07/2010 15:05

holiday and pay off mortgage.
or 'inheritance jewellery' and pay off mortgage.

morethan1 · 30/07/2010 15:07

This reply has been deleted

Message withdrawn at poster's request.

Original poster
ruddynorah · 30/07/2010 15:49

ok. yes overpayment is the way to go isn't it. on an overpayment calculator if we do A we'll be saving ourselves a whopping £160k in interest with the lump sum. we're already making small inroads with that anyway just by rounding up the repayments, so should be comfortably paid off in 10 years. this is really a big deal for us because dh is a lot older than me so means we'll pay it all off before he retires.

i've been looking at the overpayment thing on moneysavingexpert site so am thrilled we can do this without going super frugal like some of the devotees on there.

yes, spend and save the £25k (don't think i could just put it all on the mortgage and not have fun with some of it at least) then do the lump sum overpayment with the bulk of it, and keep mortgage repayments the same.

any other ideas more than welcome

OP posts:
NonnoMum · 30/07/2010 18:16

Buy a hundred thousand lottery tickets?

(only joking)

bronze · 30/07/2010 18:20

me I would pay of debts then some mortgage
you definitely A

Tootlesmummy · 30/07/2010 18:28

Now the mortgage does seem the most sensible short term option but the question I'd ask is do you have a pension? you need a pension and a lot of people think that they can downsize when they're older and live off the equity they release from the sale but it won't be enough to fund retirement.
If you don't have a pension or it's small I'd see an IFA and they will assess overall your provisions for now and future and then advise you on what to do.
Bearing in mind as well that mortgage rates at the moment are very low......

ChasingSquirrels · 30/07/2010 18:35

we paid a significant chunk off the mortgage (children were 3.5y and 2weeks when ex-H great-nan died and left him a similar amount).
I still went back to work after mat leave.

Original poster
ruddynorah · 30/07/2010 18:35

i have a company pension. i pay in 6%, they pay in 12%. obviously could be worth zilch down the line. i also have my previous employer's final salary pension frozen (not much but enough for an annual holiday by my reckoning).

and dh has a decent pension, he's police.

OP posts:
Original poster
ruddynorah · 30/07/2010 18:37

squirrels did you continue to overpay or did you lower your repayments?

OP posts:
AnnoyingOrange · 30/07/2010 18:37

I would pay off a chunk of the mortgage and clear my debts. Then spend some and save some

Tootlesmummy · 30/07/2010 19:57

In that case I would agree that pay off a chunk of your mortgage would be a better way to go as the amount of interest you'll get won't be much in a savings account versus the amount you'll get if you pay off a chunk and then leave your payments at the current level.

Alibabaandthe40nappies · 30/07/2010 20:03

I would clear any non-mortgage debt, and then split the rest equally between paying off the mortgage and having some cash in the bank (think ISA, Premium Bonds, 5-year investment bond). Then you have the advantage of paying off your mortgage early and saving stacks of interest, and having some cash in the bank for emergencies/unexpected expenses.

Naetha · 30/07/2010 20:14

Pay a fair whack on to your mortgage so your repayments drop a little (to give yourself a bit of breathing space) but so that you're still paying it off pronto.

Fill your and DHs cash ISA allowance so you've got a slush fund if you need it, and then have some treats - improve your house if you want, nice holiday, new car. Treat yourself, but make sure that mortgage gets paid off.

If the mortgage is paid off in say 10 years, then you could feasibly stop working and have your career break then, as you wouldn't have a bloody huge mortgage hanging around your neck.

We had a similar (but lesser) windfall, and thats what we did. We now have 72k left to pay on a 225k home, and we're hoping that we can get that all paid off by the time I'm 40 (12 years time). Don't forget as well, that often lifestyle "treats" can be investments - yes we spent £12k on a new car, but it costs us £80 a year to service, rather than the old one, which cost over £1000 a year to maintain. Same with the house - we had a new kitchen and bathroom put in - they've added value to the house, and are also ultra efficient, and we don't need to worry about the boiler going boom.

Just don't forget to raise a glass to your gran now and again

Original poster
ruddynorah · 30/07/2010 22:04

yes i'm liking the idea of retiring a career break at 40 hadn't thought of it that way round actually.

OP posts:
PuzzleRocks · 30/07/2010 22:08

A. Without a doubt. Otherwise you will look back and think "if only I had gone with A, the bugger would be paid off by now". Or somesuch.

Original poster
ruddynorah · 30/07/2010 22:15

indeed.

OP posts:
cjlb · 31/07/2010 01:37

Alternatively, if you can reasonably comfortably afford your mortgage at the moment, pay off any unsecured debts, then start house hunting for a bigger house with a big chunk of what's remaining.

Mortgage will still get paid off as planned and you will have a great deal more (hopefully) equity in the property later on. Then you can downsize when the kids leave home giving you the inheritance back and more.

Lynli · 31/07/2010 01:52

It depends on the interest rate on your mortgage, I wouldn't pay mine as I get a higher rate on the savings. You may wish to remortgage using some of the money to reduce the loan to valuation and get a better deal.

You should make an appointment with an independent financial adviser. It maybe you could invest some and make more than you would save.

foreverastudent · 31/07/2010 08:52

There are no savings accounts at the moment which pay above the rate of inflation so 'saving' is just losing money.

Also if you keep your assets 'liquid' ie in cash it is all too tempting to fritter it away.

Also dont keep it all in one bank, or you wont be protected if it goes bust.

If you dont fancy btl why not invest in a business?

foreverastudent · 31/07/2010 08:59

There are no savings accounts at the moment which pay above the rate of inflation so 'saving' is just losing money.

Also if you keep your assets 'liquid' ie in cash it is all too tempting to fritter it away.

Also dont keep it all in one bank, or you wont be protected if it goes bust.

If you dont fancy btl why not invest in a business?

ChasingSquirrels · 31/07/2010 09:11

umm, we lowered the payments. I can't remember why now, I think cos I was on maternity leave at the time.

trainsetter · 31/07/2010 09:15

Mortgage, it's a no brainer.

morethan1 · 31/07/2010 18:28

This reply has been deleted

Message withdrawn at poster's request.