Paying off mortgage with inheritance

[GoingToInfinity]

We are in a very fortunate position that we are set to inherit a sizeable amount, enough that we could pay off the mortgage in one go plus a bit left over.
However we're trying to work out wether this is the best way of using the inheritance. We have a fixed rate mortgage which allows 10% overpayment each year without being penalised but don't know what the penalty would be if we exceed this amount.
We're also likely to want to upsize at some point in the next couple of years.

Would we be better off paying off mortgage in one go, and taking out a smaller additional mortgage when we upsize, or paying our maximum overpayment each year, putting the rest of our money in the highest interest rate account we can find and then upsizing with a cash sum?

What interest rate are you paying on your fixed rate mortgage and how long is it fixed for?

We paid ours off with inheritance. It meant that we were £800 a month better off and DH can now increase his dire pension pot. However, we are probably a lot older than you OP and have no plans on moving in the foreseeable.

We had this query. We had to pay a charge for paying off early so we kept a tiny mortgage. This also means if we want to move and up the mortgage we wouldn’t have to start again with none iyswim.

My overpayment penalty is 2% or 3% depending on how far we are into the fixed term. However think you would struggle to find a savings account that pays more than you are paying on your mortgage without locking it up for a long time or taking risks with your investment. Personally I’d pay off the bulk of the mortgage.

How long is left on your fixed term? If you wait for it to finish they’ll be no early repayment charge, although you’ll be paying interest in the meantime.

The interest is 2.14% and fixed until March 2020.

@companylovesmisery did you pay off a large lump sum then and pay a fee for overpayment?
I'm wondering whether this could be a good option for us to save us applying for another mortgage within the next couple of years.

I would pay off as much as I could with no penalty, and pay the rest off in March 2020

A colleague of mine inherited £100K from her gran and upsized her house with it - it just allowed her to move to a bigger house a few years earlier than envisaged.

Would you want to upsize now and port your mortgage?