Redundancy money ... pay off mortgage or save?

[BibiThree]

I have definitely asked for advice on this before on here but cannot for the life of me find the thread, so apologies for the duplication. I was hoping to get around £30,000 redundancy, whioch has been recalculated at around £21,000, which I am taking! Not entirely sure how I feel about it, but I am leaving v shortly.

Anyway, would I be better off saving this money (we have our house on the market) and using it as a deposit on new house, or just paying it off our existing mortgage and hopefully having more equity in our house when it sells?

Does it make a difference? Thank you, I am easily confused by money matters.

Presumably, you don't need the redundancy money to live on and there is another source of income into the household? I ask because, if you are going to be applying for JSA or other benefit whilst you look for a new job, there are some rules that apply to how savings are assessed.

Whether you're better off saving the money or investing it in your home largely comes down to what you can earn from it and whether or not you need access to the money quickly. If your mortage interest is costing more than 3 or 4% then paying some off will earn you more than if you put it into a savings account earning less than 3%. Similarly, if you have any outstanding debts like loans, overdrafts or credit cards that are costing 15-20% to service, you're better to pay those off. But, if there might be a point in the near future where you need some of your £21,000 and you don't already have a rainy day fund to fall back on, you should keep it in a place where it's more easily accessible e.g. a Cash ISA.

Thank you, that is really helpfully explained

We are going to try to manage on DH's wage for now, and the house move shouldn't make us too badly off if we're careful.

Will keep back enough to cover any major expenses, cars, Christmas etc and put as much as I can into paying off the mortgage without incurring charges.

Good points made by above guest, Int rates on savings are rubbish at the moment so you need to lock it away to get a decent amount -fine if you are sure you will not need to dip into it.

I would pay off as much of the mortage as possible and have a very small rainy day fund. The money saved monthly should go on a Christmas/hoilday fund. I have also done very small 5 year plans not always great interest but has always meant on the I have been able to pay for something bigish without needing credit or when single go on a great holiday