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Original poster

Inheriting large sum of money. WWYD?

69 replies

Rainallnight · 20/04/2020 12:28

My parents have both died and it has come to light that they had more money than we had ever thought.

The estimate is that I’ll inherit around £850,000. I recognise I’m extremely lucky and will of course give some to charity and to friends.

Our mortgage is massive (London) - around £400,000.

Should we pay it all off? And then what? Am clueless.

OP posts:
Mummy43026 · 20/04/2020 12:31

Pay off your mortgage, bank the rest & live comfortably, maybe go part time & enjoy tour life. You havent stated if you have kids or what age you are.

Chilver · 20/04/2020 12:32

Sorry for your loss. Definitely pay the mortgage off (think of all your new found disposal income on a monthly basis without needing to pay mortgage!). Then it depends on what stage of life you're at? For us, we want a passive income for retirement so would look to invest in property, also have young children so would invest for their future education etc.

Chilver · 20/04/2020 12:32

Disposable... fat fingers!

Littlefish · 20/04/2020 12:33

You need to speak to an independent financial advisor and discuss the most efficient way of investing your inheritance, be that by paying off your mortgage, making the most of ISAs and other investments.

BlingLoving · 20/04/2020 12:42

Paying off the mortgage is definitely a good idea as well as any other debt you may have. If your mortgage is a super low interest one, you might choose to invest the money and pay your mortgage on an ongoing basis as the investment income would potentially be more than the interest payments but you'd need specialist advice.

You are very lucky and I think it's lovely that you want to share the love but please don't feel you have to start giving away money to everyone. Some charitable donations, even some substantial ones, are great but I have to be honest that if a friend told me she'd inherited £800k and she wanted to give me some I'd find the whole thing a bit odd. Grin If she said she wanted to organise a girls weekend and pay for I' might be okay with that but certainly not hard cold cash.

As for the rest, you should seek advice. You could invest it for long term benefit to you in the form of decent returns into your retirement. You could siphon off a percentage for more high risk, but potentially high return, investments if that attracts you. You could put it somewhere less high risk but very safe and reduce your working hours or go find that dream job you've always wanted but that doesn't pay that much. It really is u pto you!

I do know that your parents would probably want you to use a big chunk of it to ensure you're okay financially long term. But for the rest, I think it's up to you - maybe you take that amazing trip you've always wanted to take!!

maxelly · 20/04/2020 13:11

Sorry to hear about your parents, don't feel under pressure to make any quick decisions Flowers

I would 100% seek some proper independent financial advice rather than going off what people on the internet tell you, it will be very dependent on you (and your DH/DPs) personal circumstances, your jobs/work, the number of DC and their ages (e.g. are they approaching the age where you'll be wanting to help them with university costs, first cars, house deposit, weddings etc), your housing situation and whether you want to sell/move any time soon, your attitude to investment and risk, long term growth vs immediate income and return, your pension situation and retirement plans, loads of stuff which you shouldn't go into detail about online as too identifying.

Paying at least some off the mortgage is probably a good idea, but again it depends on what interest rate you are paying compared to what you could expect to gain from investments, and what overpayment penalty you have on your current deal. You will also want to consider what you do with the money you then save on monthly repayments, spend it on improving your current lifestyle or save/invest for the future or a combination of both?

I think probably you want to allocate the majority of the money to long term investments (some combination of paying off the mortgage, maxing out pensions and ISAs and then a balanced investment portfolio for the remainder managed by a professional), but you should consider allowing yourself some more short term spending, e.g. as others have said, any home improvements, allowing yourself a bit more work flexibility, maybe even a holiday or car. I'm sure your parents would want to see you enjoy yourself a little as well as wisely investing the majority.

Troels · 20/04/2020 13:38

We paid of our mortgsge ASAP and it makes life so much easier.
Should we lose jobs or get sick, we don't need half the income we used to need each month.
We also carry no debt now. Pay the CC off in full monthly and pay in full for things we need like a new fridge or washer etc. We even have newer used cars paid in full that we drive till no longer working then do it over again.
It makes you feel very free and unburdoned.

LovingLola · 20/04/2020 13:39

Why would you feel you have to give some to your friends?

Toilenstripes · 20/04/2020 13:41

We paid off most of our mortgage and upgraded our kitchen. The rest for our pension pot.

Fueledwithfairydustandgin · 20/04/2020 13:42

I would pay off my mortgage, enjoy some of it on holidays or a car then I would use the rest to buy property to rent out

Guacamole · 20/04/2020 13:46

I’m sorry about your parents OP.

They have left you money and you can use this to protect yourself and your future. Pay off you mortgage, pay off any debts, invest some of the remainder for you (or your children). You should seek legal and financial advice. And please you really don’t need to give any of it to other family or friends. It was left to you.

Figgygal · 20/04/2020 13:50

Is that after inheritance tax don’t forget to take that into account

But yes personally I’d be paying off the mortgage and getting proper advice around making the most of what’s left looking at investments. How old are you? do you work full time? Have kids?

even after your mortgage is paid that’s a significant amount of money that can make changes to your daily life

TheEndIsBillNighy · 20/04/2020 13:50

I would pay off my mortgage.

With the remainder, could you purchase a couple of buy-to-let properties in the Home Counties, for example? All rental income allows you to build up additional savings & you could sell properties in many years to come (if necessary) as a pension / to help out any offspring.

maxelly · 20/04/2020 13:56

Please don't leap straight to a buy-to-let if you want to invest some money, they can of course be a good investment in some circumstances but certainly not the only option to give you a passive income and a good long-term 'safe' home for your money to sell out of for retirement. On the contrary, BTL is much less tax efficient than it used to be, can be quite a lot of hassle to manage and there is the possibility of quite a lot of volatility in the housing market in the next few years. Take financial advice!

swimster01 · 21/04/2020 07:33

Would definitely pay off the mortgage - it frees you in various ways.

Ii wouldn't give money to friends - the balance left after paying the mortgage isn't massive.

If you are a higher rate tax payer, look at maxing out your pension contributions.

I wouldn't rush into buy to let as I wouldn't want all my eggs in one basket - you already have a house which in itself is a large investment in property. I know it's your home rather than an investment as such but it is still where a high proportion of your money is. Also property is an illiquid investment, not so easy to offload if you need access to cash.

DeathByBoredom · 21/04/2020 07:36

I'd take a year maybe more before deciding anything about charity/friends/btl. Grief has massive massive impacts on decision making for a long time. In the meantime maybe look at the mortgage and short to medium places to keep the rest of the money? Usually I'd say shares but ...

Verily1 · 21/04/2020 07:39

Do you have children?

Is this amount after inheritance tax? As that’s 40%

Of course pay off your mortgage/ move.

You should keep most of the money in property- so if you have dcs then buy and investment property for each of them.

Dont leave leave it in a bank- every day it will lose value to inflation.

Bristolbitsandbobs · 21/04/2020 07:40

Find an Independent Financial Adviser. Not St James’s Place, or a ‘wealth manager’. Make sure they have plenty of clients with over 500k and the AF4 qualification, but preferably Chartered.

Interview 3 and see who you feel comfortable with.

lemontreebird · 21/04/2020 07:44

Don't feel you have to give large sums away. And, in the case of friends, would they do the same for you?

When I inherited a couple of years ago, I regarded it as the sum total of all that had been worked for, saved and passed down by all of my family before me. I know that at least some of them would have wanted the money kept in the family. I feel I am the temporary custodian of this money for my dc and need to be careful what I do with it.

Pommes · 21/04/2020 07:45

So sorry to hear about your parents, OP. Definitely pay off your mortgage. Perhaps do something your parents might have liked - if they liked travel, for example, visit some of their favourite places.

Please don't feel you owe anyone else (charities, friends etc) anything from your inheritance. It is a life-improving but not necessarily a life-changing amount to suddenly have. If you have children perhaps you could put some aside for their university fees, their first car, first mortgage etc.

Bristolbitsandbobs · 21/04/2020 07:45

Oh and paying off your mortgage is a perfectly legitimate course of action, but you’ll get a different view from each of them.

Daisiest · 21/04/2020 07:46

I wouldnt give any to friends, lots of problems are caused by that sort of thing.

Bristolbitsandbobs · 21/04/2020 07:47

I imagine OP felt obliged to say something generous so she was piled in on.

homeschoolchaos · 21/04/2020 07:48

That is a totally life changing sum of money, but right now you’re grieving. It’s true you can’t just leave it in the bank, but you could also take some time just to work out what to do with it. Is this in cash, or is there property to sell first? (The latter would allow you some thinking time anyway).

Paying down the mortgage is a really good idea, but I’d not pay down all of it - if you keep the account open with a small amount in it’s easier to borrow in the future, in the unlikely event you would need to.

I’d also take a close look at the house you live in now - is it the right house in the right location? Does it have potential/would you want to do anything to it? Would you want to move? This money will enable you to live the life you want to live (within reason, not giving up work etc, just being comfortable), so think about that.

If you have children/are planning to have kids, then think about saving for their future - how will you educate them? Will you give them a house deposit etc?

Call me a meanie but I’d not give any to friends just yet. I’d probably not tell anyone irl just yet either. Get some proper financial advice and see how to make the money work for you.

Oh and I’m ever so sorry for your loss Flowers

homeschoolchaos · 21/04/2020 07:49

Oh and don’t forget to enjoy some of it - but yourself something nice/big that you’ve always wanted, but never dared to buy, go on a fancy holiday somewhere (not now, obvs)