inheritance

[BaryMerry]

We've inherited some money from my grandfather - I've been left £20k, DDs have also been left the same between them and DH and I are trying to figure out how best to use this money. We've never had such a large sum in one go, and want to make sure we make the most of it. I want to spend a little bit on a new greenhouse for the garden, so I can grow tomatoes and dahlias like my grandfather did. But apart from that, we have a number of options and not sure what is best.

For background, we have no significant debts, apart from the mortgage - we moved to our perfect home two years ago, £150k mortgage (about half the house's value if that's relevant) which needs redecoration throughout, including a new bathroom, but nothing extremely urgent. These are changes we had been planning to do over the next few years probably by saving up for things as we went along, but would consider a loan for bigger jobs.

So do we:

1. spend it on the house - new windows, bathroom, redecoration, log burner etc.
2. use it as a holiday fund - a pot we can dip into so that we can do family holidays more regularly (we are crap at doing holidays at the moment - no spare money to organise them)
3. a bit of both
4. invest in property - something we're both thinking might be a good long-term investment; probably a buy-to-let, possibly a holiday let. Either way, is £20 000 enough to get started in this area? It could be a deposit but we'd still need a mortgage - so perhaps that would defeat the purpose?

WWYD?

BTL would give you 5% rental income ( less any mortgage and costs ) + approx 10% growth on total value , depending where you lived .
Don't forget other countries might have bigger growth opportunities than the U.K. .
Research what's up and coming, or where large financial investment is Beng made.

I wouldn't spend the kids inheritance, I'm not sure that's a safe plan. I can see the benefits of the investment idea but I'd be too nervous about it going wrong.

My family have the rule that money rcvd as a gift can only be used for property to pass on to the nxt generation - bit like the jewellery thing - we are not the keepers, but the safeguarders of our inheritance .

Depending on how the money has been left to the children you may not be able to spend it or use it for a buy to let. They need to be over 18 to have a mortgage or be on deeds of a property and if the money is in trust then you cannot just take it and use it in this way. You need legal advice if you are considering that.

Thanks for more input folks, I'm finding it really helpful to see the different views and opinions.

Someone asked about savings - not a great deal tbh, under 10k. So possibly another reason to make the money grow/have an investment to fall back on? But I think I'm still leaning towards investing it in the property we already have - if we look after it and improve its value that will surely help in the future yes? We're not likely to sell (DH says they'll take him out of there in a box!) but we could release equity in the future if we needed to?

I've also had the (possibly bonkers) idea of buying a caravan?! Not a big expensive one - something secondhand to 'invest' in more family trips, weekends away. I struggle with the idea of spending 2-3k on one holiday which we'll enjoy for a few days and that's it. But if we can spend the same and it will allow us to take many holidays then that makes more sense to me!

I had an unexpected tax return a few years back of £7000 I bought a 2nd hand caravan . The kids were 5/7 then, we had 5 years of fun!

A holiday isn't just for a few days though. It's a lifetime of shared memories, experiences that you may never have had the opportunity to have, an opening of eyes to a different culture, a broadening of kids' horizons.

£2k is a bargain to get all that!

On the other hand if all you ever do on a holiday abroad is lie on the beach, then don't waste £2k!

Has it been left directly to the kids or to you 'for' the kids?

If it's been left directly to them you can't pool it with your money and spend it on anything like a deposit.

I think a caravan is a great idea.

titchy the last time I lay about on a beach on holiday was more than 10 years ago - before the kids were born!! It's a dim and distant memory...

Yes I'm inclined to agree with previous posters - we shouldn't (and possibly can't) do anything with the DDs money. I was surprised DH suggested it - he's usually quite 'proper' about that sort of thing. I don't think I'd be comfortable about risking theirs - I'm clued up enough to know that property is not a guaranteed money-spinner.

What a lovely dilemma you have. I think I'd get the new windows and bathroom and possibly the caravan if there was enough left. That way you have invested in your property and benefitted on a daily basis and saved yourself having to save for the improvements and you can have as many holidays as you have time for, for a good many years.

We thought about buying a caravan with some of our inheritance but then you need to have a driveway big enough to park it on and a car powerful enough to tow it ! Unless people are talking about a static caravan on a park somewhere which then incurrs ground/ site rent?

OP you don't mention savings or rainy day money.

I would keep at least £3000 for that.

The problem with paying a lump sum of your mortgage is it reduces the length of the mortgage not necessarily the monthly payments and if you get made redundant or whatever it doesn't nessarily mean you can have a payment holiday.

We have some savings, not loads - under 10k I think, last time I checked.

We put away 350 each month currently - 100 for each DD, 100 for short-term savings (dip into regularly for unexpected bills eg car, home repair etc) and 150 long term savings.

If this windfall was our 'pot' for home and/or holidays, I'd like to think any spare income we might have at the end of the month (it does happen occasionally?!) could then be saved or put towards special family treats of some kind.

Re mortgage payments, I haven't looked into it deeply but I don't think overpayment would help our monthly payments. Seems like we'd be saving on the overall interest paid over the term - which is nice obviously but I don't feel like we'll see the benefit of the money. I'd like to be able to use it in a way which we will all appreciate now (or soon).

DH is actually not totally against the caravan idea! Have been looking on the MN camping boards to see if it will put me off, but not yet! We mentioned to my mum and she said her dad (who the money has come from) bought them a caravan when they were children and they'd have lots of holidays in it. Apparently it was tiny but they really enjoyed it! We would obviously have to give it a try, but the idea is still in the running.

If it was me I would have put it all into the mortgage and keep the payments the same. It would be £20k I'd never pay interest on again plus £10k or thereabouts in interest saved, so really you'd be £30k better off. Mortgages are expensive debts.

Ours is 2.68%, for every £1 borrowed we are repaying £1.40.

We overpay £30 a month, it knocks a year off the mortgage. When the sofa payment ends that money will get put onto the mortgage, that's another 2 years gone & it's money im not used to having to spend so I won't notice it. So our 17 year mortgage will be 14 years instead

I look at it that I might not be in great health when I'm older and having no mortgage going out every month reduces my need to stay working full time.

I love the idea of having no mortgage debt at all.

I wouldn't touch kids money, it's there's.