Not sure what to do with a big windfall - can you help?

[crossedfingers]

Not to spend it
We have had a long term financial committment which finally is coming to fruition and in the first quarter of next year dh and I will hopefully have £200k.
We have a £100k mortgage a fairly modest house 3 bed semi in dire need of decorating and 2 second hand cars, comfortable by some standards not so well off by others, pretty mediocre really!
We haven't discussed what we will do with the money and my head is spinning at the thought. I would like dh to get a really fantastic car as that really means alot to him, he loves his toys and has been working his b&&ks off for the past couple of years. I don't know what would be the best scenario with the rest of the cash - I have a feeling that dh will want to spend the other £100k on a house with a view to renting it out, I am not so keen
I'd be interested to hear what you would do to get another perspective on our situation. Would you pay off your mortgage with some left to spare, or put the money towards a really fabtastic house that you always thought was beyond your reach and then carry on as before?

I hope you will appreciate I have changed my name for privacy reasons.

[ustoo]

We're in a similar situation - dh has inherited about 150k (mother died).

We have quite a big mortgage, but lots of equity in the house too.

We have some (not huge) debts eg credit cards and will pay this off. The majority of the money will be used to reduce our mortgage (currently about £900 a month). The rest we are using for a loft conversion as this is cheaper than moving to get the extra space we need.

[dingdongMEGGYMOOonhigh]

Firstly, lucky you!
I think I'd buy a bigger house (if it were my money) in a nicer area with a lovely school for ds.

I would buy dh a nice car too - he also loves his gizmos!

[Nemo1977]

ooo lucky you.
Think if it was us we would pay off our house. Look at a cheaper house to buy and rent out to DSS etc as you could make about £70 plus a week in rent which could then fund a new car for dh.

[expatinscotland]

I'd buy a house outright. One we really wanted and which would be our home for a long time. Then see an adviser about whacking the rest away w/the least amount of tax fallout possible.

[Blu]

I would put the money into property - either buy paying off your martgage and/or buying another to rent, way, way way before buying an expensive car! Cars deprecaite SO fast, and you end up with nothing to show for your efforts in however you saved for this money.
Property gives you a future.

[CarolinaMoon]

I would deffo buy a bigger house and keep the mge, so the outgoings stay about the same but with better assets. I'd hate the thought of frittering it away by spending more on day-to-day stuff instead of a making a good, solid investment. How unexciting is that?

I wouldn't be fussed about a flash car myself, but think it is dead sweet that you want your dh to have one

[starlover]

i think you should lend me £5k for my house deposit!

god i don't know what i'd do... i THINK I would put the money towards a nicer/bigger house. or some of it at least... say £100k

then i would splash out on lovely things with maybe £30k (enough for a new car and other bits and bobs) and then I would invest the rest and have a lovely big nest egg

[yep]

Similar situation again. DH inherited £225K about 2 years ago. After the inital shock wore off we decided to pay of the mortgage, £125K. We have enjoyed living mortgage free for the past couple of years, doing up the flat with the aim of renting out next year. Will then buy a bigger house, most of whats left, about £70k for the deposit (keep £20k for a rainy day) and hopefully rent from this propery will cover the mortgage on the next one.

[MeerkatsUnite]

I would talk with a financial advisor about the windfall once it is received (get more than one opinion as well).

Would pay off your current mortgage and do up your current property. The buy to let out market is not very hot at present and this may be more problematic to you in the long run as well (bad tenants etc).

New cars also depreciate like mad - you'd be better off buying a nice car that's a year old so the majority of the steep depreciation seen in the first year has passed.

[ustoo]

forgot to say, we did consider moving, but are already in a very sought after area, and larger houses than ours here come up once in a blue moon. Otherwise, we would certainly have considered a move to a bigger house, but only because we do need the space.

On the fantastic car front, I'd say why not, but don't buy brand new because that's when you get hit with the worst of the depreciation.

[yep]

I had thought of just selling this flat, using the rest of the cash to buy a fantastic house that is out of our reach, but over the long term I think it is better to own two properties, and sell off one later and have a comfortable retirement. We are not that materialistic really, and still drive an old car. But you should treat yourself in some way, even if it is just a great holiday in the summer.

[roosmum]

mortgage-free living is SUCH a luxury these days - so i'd go for that personally.

getting a 2nd property to rent out is a pretty sound idea too IMO. lucky you!

[roosmum]

mortgage-free living is SUCH a luxury these days - so i'd go for that personally.

getting a 2nd property to rent out is a pretty sound idea too IMO. lucky you!

[Lio]

Hee hee, a thread about a windfall just below one about farting (how old am I?)

[crossedfingers]

Grumpy I just wanted to clarify, it's not an inhertitance it's an ongoing foreign property deal that's almost complete.

I'm not sure about this house and another tiny one to rent, I don't think I want the hassle of letting out to tennants. I understand what you are saying about selling one off to pay another but when the family grows up and moves on a suppose we could sell a bigger house and downsize?

I didn't think of a brand new car either I was thinking about a really fab luxury model which was about 2 to 3 years old, yes they do depreciate so quickly don't they?

[crunchie]

Depends if you 'need' a new house or not. If I felt I had outgrown my house, I would probably buy a new one. Or if not I would pay off my mortgage. I would also definatly look to buy another house to rent out. If and when Dh and I get our greedy little hands on any inheritance ( ) we would look at buying a flat in london, prmiarily for our kids when they get older, but to rent out for now.

[ustoo]

that's our plan ustoo. Our house is in London, so we plan to stay here, or in the London area to stay "in the market". When it's just the two of us, we will sell and hopefully have enough money to buy something smaller somewhere fab, plus a fair bit of capital left over.

We've talked about buying a second property to rent out, but we're happier doing things this way. Whatever works for you really.

[crossedfingers]

our house really is too small and it's in a terrible state - we've never had the money to do anything with it, so we'd have to tidy it up a bit to sell.

I'm favouring buying something bigger i think

[dingdongMEGGYMOOonhigh]

Well, you should do that then, or perhaps if you like the area you are in would you consider doing up your house and possibly extending? If you have enough loand then that's another option for you.

[crunchie]

If your house is too small and you feel you have outgrown it then I would be for buying a larger house tbh. However I wouldn't necessarily go for a mortgage free life, unless I paid the equivilent to a mortgage into a great saving scheme. Otherwise you get into a habit of living mortgage free and spending your earnings, what if they drop?

So personally I would buy a new house with the equity in your current one, plus say £150,000 of the additional money - so if your current house is worth £150,000 you should have £200,000 to spend. This keeps £50,000 in the bank and you could live mortgage free. However I would then save the equivient of your current mortgage (say £800 a month or whatever it is) in a high interest account (or shares or whatever) Spend the £50,000 on a new car, a nice holiday and to have a nice 'rainy day' fund.

Then if your dh or you want to cut down on work (or are forced to) you can easily reduce your outgoings by up to £800 a month without having to cut back IYKWIM.

HIH

[pepsi]

We have been fortunate enough to pay off our mortgage and it really makes a difference to your life. I would pay off the mortgage with the first £100,000, buy £30,000 in premium bonds and do various other saving account with the rest and you could still buy a nice car, have a good Xmas and a nice holiday next year. As months go buy you can then put aside some of the mortgage money for nice things or just live really really well every month. My dh has his own company and since Feb hasnt been able to pay himself a full wage, so every month we are eating into savings ....if we still had a mortgage we would have been well and truly up the creek by now. Its a real stress buster. Every time I visit a friend who has just moved to a lovely lovely house it always crosses my mine that we should move....and we could afford on paper a much better house than we have now....but do I want the stress of being stretched and worrying about what ifs and the answer is no. I just want to be able to enjoy my young family and not have to worry about the pennies. You are in a very very fotunate position so dont waste it.

[yep]

Crunchie has a good point. It is really easy to get into the mortgage free living and end up spending all your earnings on whatever . We have been using the money that we would been spending on the mortgage on doing up the flat. Probably have spent £7k so far.( OK not all the money has gone on the flat.)

[crossedfingers]

I am bumping for the savvy evening bunch!