Pay off mortgage or increase pension?

[Stripedcat9]

I’ve just inherited around £250,000. I have a property with a mortgage of £230,000 outstanding, this is jointly owned with my fiancé although I put up most of the £100k deposit again using a previous inheritance which is currently protected with a trust deed. We pay 50:50 on the monthly mortgage amount which is small in relation to our earnings; less than 10% of our joint income.

I don’t want to leave the inheritance in savings accounts as I’m only 27 and can see it being eroded by inflation.

Would I be better off paying off the mortgage and funnelling the monthly payment into my pension? Or would I be better to keep making the mortgage payment and putting as much as possible of the inheritance into a pension now? The other option is to pay off a chunk of the mortgage and ask my fiancé to cover the rest, then put the amount I save into my own pension.

Any advice gratefully received!

Why don't you pay off your half of the mortgage and invest the rest. That way you would then have disposable income each month that you could also use to increase your work pension.

If I were you I would be getting legal advice to ensure your equity in the house is protected in case of separation from your partner.

You need a proper financial advisor to go through all elements of your financial situation before you make a decision like this. Its far too complicated to ask this question without providing a lot more information

I'd keep the mortgage. If it is easily affordable, why go to the trouble of arranging to pay it off and dealing with the hassle of it being a joint property.

Pension or ISA are sensible places to put it.

The first thing on your mind should be how you protect your money. Once you are married it becomes a joint asset and your DH gets half if you split up. I don't want to sound negative but it's a lot of money.

If you put it in your pension you can't touch it until you are 55 I think. That's a long way away, you're only 27. I know there is the tax advantages to putting ina pension however I am very very cynical, the government can change things at the drop of a hat and you don't know that the future holds. Maybe you need to look at spreading it a bit more - ISA, pension, mortgage etc.

Be careful with a financial advisor, they charge £££££ and it's hard to find a good one.

Pension. The more you put in earlier in life the more you benefit from compound interest. Correct that you can't access it til retirement but if you don't 'need' it just now then you're not going to miss what you've never had and it will boost your pension in a way like no other. BUT....you can only pay up to £40k pa into your pension before the tax benefit disappears (and this includes your monthly contribution from your job). So if I was you I would filter it in over a few years maxing your £40k allowance and you can use up any previous allowance from the past 3 years too.

Don't pay off your mortgage as you've probably got a relatively low % fixed rate PLUS you need to be cautious around protecting yourself financially. I am sure your fiancé is lovely and you trust him etc etc but statistically your relationship may not last and you don't want him swanning off with your £s. You need to protect your pension too in case he can make a claim on that.

You probably need to see an FA for that sum of money but they can be pricey and sometimes with a bit of research you can understand it enough yourself to make sensible choices.

Should add as @Noisyprat said above that spreading the investments / risk would be better and you can use things like S&S ISAs rather than putting the whole amount in one place. That would also give you flexibility in access too.

I just DM'd you my financial advisor's details. Her fees are totally reasonable and she charges a flat fee as opposed to charging by the hour (which gets really ££££).
She's also excellent... has a really great podcast.

Pension

Pay off all your debts excluding mortgage. Then invest 75% into a spread of stocks and shares, not individual ones but funds. Remaining 25% should be used to experience new things, travel is a key item.

Settling your mortgage is a short term euphoria which at age 27 won’t touch the sides.

You need a financial adviser. Some of that should definitely go into your pension and set up trust funds/isas or similar for your kids if you have any.

We women tend to lose out on our pension for a few years when we have kids so it makes sense to get a chunk of that now while you’re young. It’ll earn you good interest over the years too.

And as others have said spending it all in your house is a risk. While I’m sure you don’t feel you’ll ever split up with your fiancé, I can assure you that’s how a lot of us divorced women felt at the time too. If it’s all in the house, half is his.