Inheritance - wwyd

[Crikeyblimey]

I am about to receive a medium sized inheritance.

Dh and I are trying to decide what to do with it. This money HAS to make a difference to us, it is very important for this to make the biggest impact it can. It won't happen again.

Now we can either:
1 - use the lot to pay off our mortgage. We need to replace the car and would therefore need a loan for the new car. I would, at some point like to move and our current house needs work (new windows, exterior painting, new bathroom). We could do the jobs slowly using the money we save from not paying mortgage.

2 - Buy car, do house jobs, using at the capital and pay rest off the mortgage thus reducing the term of the mortgage (currently only got 8 years left to pay).

3 - Buy car and pay rest off mortgage, reducing the term even more and save up (but take ages) to do house jobs.

4 - blow the lot! Not really an option cos want it to make a lasting difference.

5 - spend some doing half assed tidy up of house jobs and move.

So - if it were you, wwyd.

2

Also 2

Can you make your current car last a little longer? If so my answer is 1 and save up for a newer car.

If car is on last legs then I suppose 2.

What sort of interest rate is your mortgage? Extremely likely that it will be a lot lower than interest on a car loan so you would be reducing your overall debt but replacing with debt that is more expensive.

I would also think about how soon you want to move. If quite soon then I would do basic maintenance like exterior painting but I'm not sure I'd go for new bathroom. I guess depends on your property but people often like to make some changes to make a house their own and it is possibly unlikely that you will get an increase in house value to match the cost of bathroom.

So from your options I'd go for a combination of 2 and 5!

Our mortgage interest is ridiculously low. I am a firm believer that the mortgage is the cheapest money you ever borrow but I think dh just sees "mortgage free" as the ultimate and who cares that we live in a falling down house that I'm embarrassed of but he seems happy with.

My choice (in my heart) is to change car, do house jobs and consider moving (this would mean increasing the mortgage by some due to wanting a house worth more than this one). I need to do the sums really and then put my case forward.

If you want to move, don't pay off the mortgage as you're unlikely to get such good interest rates again and if you get your new mortgage with the same bank they can transfer your balance at your existing rate (so, your overall interest is lower so you pay less each month/overall). E.g. £20k left currently at 2.5%, new house need to borrow an extra £100k at 4.5%, rather than the whole £120k at 4.5%. Does that make sense?

So 2.

Option 2. But with the caveat that you don't blow your money on an expensive car (so no Ferrari ) and keep your budget on your home improvement really tight. Keep as much as you can to reduce the mortgage.

It's worth spending a bit of money on upgrading your house if you want to sell it in the future. Double glazing, a decent bathroom, painting exterior sounds ok. People do like to put their own stamp on houses but they tend to think of cosmetic stuff. All they think when they see, for example, an old bathroom and kitchen is how much ££££ it's going to cost them.

And I don't have to tell you how much prices differ on windows. Shop around and most importantly haggle, haggle, haggle. I had a quote of £16k, two £10k for doing the whole house (it's only a small house but has loads of windows!). I beat the £16k down to £12k, £10k down to £9k but the last company went down to £7.5k.

Do the same with the car purchase, especially if you are buying new.

Thanks for the replies. I'm thinking option 2 is best.

The windows are already half budgeted for (phase 1 arriving on Thursday) so there is only another 2.5k to find for the rest.

Car will be not quite new and we have a 7 year old car to trade in. Should spend approx 6 or 7k more on the new(ish) one.

I am going to make a list of the other jobs that need doing and try to budget them out to hopefully have 20k to 25k left to put towards new house (if I can persuade dh to bloody move).

This money is from the sale of my mum's house (shared with my 4 sibs) - she died in July :(. I MUST make this money make our futures better, I owe it to my lovely mum.

5

I've recently had a similar situation. We decided that if we paid of our mortgage we would not save in te future or other things as you tend to live to your means. So we paid a part of it off to reduce monthly costs, bought car and invested the rest (also have put some aside for security incase we need it)