100k windfall - what to do?

[Smarshian]

I am about to receive a windfall of around £100k in a few weeks time.
We are early 30s and live in what I would consider our forever home with a £230k mortgage which we are repaying (have 32 years remaining!)
DH has a good pension scheme with forecast 400k at retirement age. Mine is poor, not sure how much is in there but not enough!
2DC both preschool age, high nursery fees, this will reduce significantly in September when DD starts school and DS gets his free hours.
Small credit card debt of around £1500, no other debt. Could do with replacing one of the cars. Have holidays booked and paid for for next year.
Have around £7000 in various savings accounts for short and long term savings.
Help me decide what to do with this money!

Yikes. Popcorn.

Pay off debt and in to mortgage. Use the money saved on mortgage to boost pension savings or other savings

Mortgage and your.pension, maybe stocks and shares ISA fort long term investment.

Probably get an appointment with a financial advisor but that's what i'd do I think

Is 32 years a typo?

Put money towards mortgage, reduce the term so that payments are down to whatever level you can afford and/or put money saved into pension.

32 years is not a typo. We had to take it out over the longest period possible in order to afford the house and nursery fees. Plan was always to shorten term when we remortgage (in Jan 22) after kids nursery fees reduce.

Pay off debt
Pay for one big house or lifestyle expense which you know will give you years of pleasure or utility (less than £20k)
Buy one reasonably priced second hand car
Put £10k in an instant access ISA for an emergency fund
Pay the rest of your mortgage and massively increase the ££ that you pay into your pension from monthly income.

All this assumes your jobs are COVID secure.

Popcorn? This is Money Matters, not AIBU.
I don’t know OP, we are having an inheritance soon, so will be in a similar position. We are very cautious financially though, so will pay off most of our mortgage.
If I had any credit card debt, I would pay that off straight away.
If we have any left over we will get newwindows as they were blown when we moved in 16 years ago! We haven’t been able to afford anything like that before.

If you have 32 years left on the mortgage, use the whole amount to reduce the term.

I would:

• clear the debt
• replace the car
• max out ISAs for the year
• invest the rest. (Get good advice if this isn't something you're au fait with).

In your position it's not a big enough amount to trigger any major spending, so suggest you don't get sucked into any permanent lifestyle inflation.

Put it into your pension.
If you pay off the mortgage and you and dh split, he will potentially get 50% of house equity..
You may not get equivalent out of his pension.
I know that sounds harsh and I hope you stay happily married forever but protect yourself... Why does dh have a much better pension than you?
If you had a plan together to manage your finances then don't change it, protect your windfall and yourself

make sure you have more savings for 6 months wages, then the rest straight onto the mortgage

Your pension.

Not sure why people are shocked at 32 years left on a mortgage?

OP i would overpay your mortgage to reduce monthly amount, then use that money instead to boost what you pay into your pension each month.

Clear all other debts.

Decide on an amount for savings

Spend some!!! Seriously pick an amount and just blow it on something you didn't think you could afford or always wanted. Enjoy some of it 😊

Pay off a chunk of mortgage.

God I wouldn't like to be in your shoes having that decision to make 🙄

Put some money away for your children’s future, overpay the mortgage and buy yourself a car.

Definitely your pension, maybe hold back £10k to pay off debt.

@Iminaglasscaseofemotion

God I wouldn't like to be in your shoes having that decision to make 🙄

I think it’s wise to think about where the money is likely to have come from before saying things like this.

I’m not an expert at all but I would find out if you have any early repayment penalties on the mortgage. If it’s 10 percent max overpayment per year, pay the 10 percent now and find out when you can pay the next 10 percent off and keep that aside (could only be a few months). Clear the credit card debt now. Open a stocks and shares isa and put in 20k now, then another 20k in April. Use whatever you will have left for a car.

Personally, I would not pay much off mortgage as it's probably the cheapest money you will ever borrow. Paying into pension is good advice. Invest 60/40 stocks shares for at least seven years or would you be interested in a holiday cottage or apartment somewhere? Something you could use regularly or perhaps rent out occasionally then sell when kids are older and you want to go on holidays outside the UK?

We’ve had this twice we paid off all debts, a large chunk of mortgage, replaced cars then decided to move to bigger more rural house so it covered those costs and some improvements
We invested the rest (dh works in the industry) and take an amount every month to cover remaining childcare costs until youngest starts school next year then will turn off the money

What’s left could go on mortgage but don’t want to be asset rich and cash poor if a rainy day comes along (and it has as dh had a period of ill health and unemployment) so have kept some accessible but in high interest investments

Seriously consider whether you really intend to never move again as if you think you will the younger you do the better

I don't think you should call it a windfall if it's an inheritance.

I'd start by either overpaying the mortgage each month or once a year you can pay off a lump sum

We currently overpay £100 a month and have also paid off two considerable lump sums in the past three years

Our monthly repayments were significantly reduced after the lump sum payment each time

With such awful interest on savings accounts nowadays it made sense

Put some in your pension. A projected £400k pot will only net you £18000 ish a year.