Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Original poster

What would you do with 100k

102 replies

Smarshian · 12/01/2021 20:42

We do not want to move house. Early 30s, 2 DC in nursery, DD due to start school is Sept, DS gets 30 free hours in Sept. currently pay around £1k/month for childcare. I work 4 days and earn around 30k. DH works FT and earns around 45k plus bonuses.
We have a mortgage with 32 years remaining and a balance of around 225k. Nothing we particularly want to spend on, although we may want to upgrade one of the cars soon and in around 2/3 years thinking of a Disney trip.
I have a civil service pension, although have only been there for around 3 months. DH has a great DB pension through work. Both putting in above the minimum.
What to do with the money? Mortgage? Investments? What would you do in our situation.

OP posts:
ContadoraExplorer · 15/01/2021 05:44

I would love the security of being mortgage free, especially with the worry that those year has caused so many people.

If I had £100k coming to me, I would stick £10k into savings so I had more of an emergency fund than we do just now, £5k into each of the kids saving accounts and then overpay the mortgage which would almost half what we have left.

Under normal circumstances I'd probably use a bit of it for a family holiday but, on the basis I doubt we'll be going anywhere soon, I don't see the point and could save up more later for that when we know more about when we're likely to be able to travel safely again.

Nacreous · 15/01/2021 06:07

I think I would do a good chunk (50k maybe, or 75k) to the mortgage and use that half to reduce the term and half the amount. (So if just reducing term would make it 17 years and just payment by £300 I'd do 24 years and £150.

Then you've got a bit more flexibility of something goes wrong, can keep at least a year's worth of the £150 (use it to add back to the kid's savings?) And then could switch back to overpaying.

Then I think I'd put some money aside for the holiday and top up the emergency fund. If I had any left I'd put some aside for a car. Remember with cars, as a depreciating asset it's worth saving up monthly for the frequency with which you think you need a new to you one. E.g. my car was bought just under 4 years ago, was £5.5k and was 5 years old, but hardly any miles. It should do at least another year but potentially up to 4 as I don't drive much. So I need to save about £100 pcm for my car (cost divided by 5 year minimum life span), then after next year I have the money in the bank and any extra time I get out of it is a bonus. I view it like paying for a holiday, my service or Christmas - all come around infrequently but still need need saving for regularly.

EuroTrashed · 15/01/2021 10:24

@Smarshian

I am interested in the implications of this - I will be a beneficiary of the will (it is a gift from my dad and I will inherit around 50% of his estate)
The £100k will be treated as part of his estate if he dies within the next 7 years. If the total estate is in excess of the then-current tax free level (currently main home allowance plus £325k or something?? so total £500k if home is included and it's given to children). The tax on the estate will reduce the amount inherited, but it all depends on the size of the estate and how long he lifes - with the tapering effect, this might eg remove the value of the estate from being taxable. Essentially, he needs to live for 7 more years to make it tax free so here's to that.
YoMaMaMa · 20/08/2021 21:24

@Nix32

We're in a similar position, except the money had already been invested - it's been transferred to me. It's in an investment fund which has an average growth of 6%. I can withdraw 5% of the capital annually, tax free. If I don't claim it, it rolls over each year. It's been in my name for a couple of years and I'm only just about to use a tiny percentage of it. I feel an enormous responsibility to use it wisely.
hello, do you mind messaging me what fund it is (or you can also post here but not sure if allowed)? Been trying to diversify investments too. Thanks!
ElizaDoolots · 20/08/2021 21:39

chipsandpeas
75k paid off the mortgage
10K on a holiday to disney
keep 15k back for savings/towards home improvements/new car

Yes, this!

wedwewerpink · 20/08/2021 21:43

100k towards mortgage
50k on a campervan
25k invested per child

Disfordarkchocolate · 20/08/2021 21:43

I'm dull and would pay about £40,000 of my mortgage. Then I'd pay off our debts, set aside £5,000 for each of my children, put £10,000 in my pension and save the rest. My life would be so much easier.

wedwewerpink · 20/08/2021 21:44

Oh sorry for some reason I thought you said 250k!! Grin

With 100k I would still buy a campervan and put 50k towards the mortgage

Katefoster · 20/08/2021 21:47

Get an extension
Put some in savings for future DC
Save the rest

BeaBeaBuzz · 20/08/2021 21:49

For me it’d depend on mortgage interest rate and when current deal ends

PegasusReturns · 20/08/2021 21:56

Where it’s coming from does make a difference.

If it’s a once in a lifetime gift/inheritance of your parents hard earned savings then your probably should be more sensible than if it’s a totally out of the blue lottery win and you stand to inherit/earn more at a later date.

From a financial perspective short term savings, insurances, max out pension, long term savings, pay off mortgage is the best order.

If you’ve maxed out your pension for the year then I’d be a bit frivolous.

PhoenixFreesias · 20/08/2021 22:02

10% fun money for now
30% savings buffer
30% mortgage repayment
30% long term savings- could be pension, an isa, money for kids

Viviennemary · 20/08/2021 22:07

I would find a way to reduce the number of years on your mortgage. But a financial advisor is probably the best bet for working out figures. Bug you might want to extend your house or move.

Mantlemoose · 20/08/2021 22:19

I had a large inheritance. Paid off my mortgage in full, best thing I ever did, particularly since DP got made redundant this year and I'd already reduced my hours at work due to having that extra money to use. As I have £ in the bank, DP hasn't been entitled to any benefits so I'm having to support him (not impressed - my inheritance not his).

Bananarice · 20/08/2021 22:22

It would go straight into the mortgage.

GingerBrod · 20/08/2021 22:33

Smarshian

What did you end up doing? I can see this thread is all the way from January!

robotcollision · 20/08/2021 22:43

I'd share it out among several things. £20k each in an investment for DC, £35k off the mortgage, £10k for a really good holiday or two with DC, £15k on home improvements.

WombatChocolate · 21/08/2021 11:27

I think that having £4K in savings for a family isn’t enough, so I’d add £10-20k to that. Perhaps £5-10k for a holiday. Rest on mortgage.

32 year mortgage is far too long if not needed. The flexibility that having lower mortgage payments/paying off early in terms of option to spend more on other things now/retire sooner etc is massive in its impact. But the main gains are felt further down the line so those wanting quick gratification from their windfall don’t tend to go for it. £100k is fab and can make a big difference or easily vanish on a couple of holidays, a couple of cars and a house project.

Tootle10 · 21/08/2021 11:34

Haven't read all the replies but I would put the whole amount in an offset mortgage - reduces the interest on your mortgage so you can either reduce the monthly payments or reduce the term, but you still have access to the cash should you need / want it.

robotcollision · 21/08/2021 12:04

@Tootle10

Haven't read all the replies but I would put the whole amount in an offset mortgage - reduces the interest on your mortgage so you can either reduce the monthly payments or reduce the term, but you still have access to the cash should you need / want it.
That is good advice. We did exactly this while DC were small.
HollowTalk · 21/08/2021 12:06

@Crakeandoryx

£50k on mortgage. £50k invested into high risk fund and leave it alone for 10-15 years. You could make thousands by reinvesting the interest back into the investments
This is what I'd do. This is unexpected money and you should make it work for you.
Bunnycat101 · 22/08/2021 12:02

What is your mortgage interest rate?

If it’s low, I’d be tempted to invest a lump sum earmarked for the house rather than putting it into the mortgage. That way you have a safety net but also the chance for the capital to grow.

ithoughtisawapuddycat · 22/08/2021 12:09

We had exactly the same situation but got slightly less. We paid some debts, paid off our small mortgage, have money for major house improvements, I'm going to invest some (money was from my family) and the rest will sit in an isa as emergency funds.

NatMoz · 22/08/2021 13:46

This situation happened to me earlier in the year.

It is paying for our extension we've been saving for. The money we saved we are investing instead.

robotcollision · 22/08/2021 13:54

I'm surprised at the number of people who wouldn't syphon some of it off to use right now for fun - a holiday of a life time, for example. If it's all in sensible investments and paying off the mortgage, that is good and gives a sense of security but I think there's equal value in spending some right now on something you only ever dreamed of being able to do.

Swipe left for the next trending thread