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

Inheritance advice please

46 replies

Puddypuds · 27/08/2022 09:17

Hi I am due to inherit in the region of £60k shortly and would really appreciate some sound advice.
The amount would just about pay off my mortgage which is currently around £640 per month and has another 9 years to run. I have no intention of moving. I am married (both have reasonable full time jobs in the £28 - £30K bracket) and have two young teenagers.
The money will be absolutely amazing for us but it isn't a life changing amount in the sense that it isn't hundreds of thousands. We don't have any debts, other than our mortgage, but have always had to be sensible with money.
Would you pay off the mortgage? Would you splash it on an amazing holiday such as travelling to explore Canada as an example? Would you save it all for an unknown future? How much do I put away for the kids bearing in mind cars and university are looming?
This shouldn't be a quandary, especially when there are people who are currently struggling, but this is my situation now and most definitely a once in a lifetime thing.
Please throw some thoughts my way just to help me widen my perspective.
Thanks for your time.

OP posts:
Afterfire · 27/08/2022 09:21

I’d pay off your mortgage. Long term security etc. That’s what we did in a similar situation. We then booked a holiday on a 0 % credit card and used the money we would have spent on the mortgage to pay it off quickly.

cloverleafy · 27/08/2022 09:25

What's the interest rate on your mortgage? How much can you pay off without penalty (usually 10% annually)? When is it next due for renewal (ie you can reduce it without redemption fees)? Those questions would all be factors for me.

shufflestep · 27/08/2022 09:27

Pay off the mortgage, especially in the current financial climate. Then that £640 a month can go straight to savings and you'll rapidly be able to afford the holidays etc.

junebirthdaygirl · 27/08/2022 09:28

I wouldn't pay off the mortgage as you know whatever happens you will pay your mortgage but it is very difficult to build savings so l would put most of it there and not touch it. Maybe spend about 10000 on a one off holiday before your teens get too old to join you.
I find having money in savings is a great security blanket when things go wrong even if you never touch them eg Car breaks down/ washing machine gives up the ghost etc. Usually manage to pay but being able to say to myself..l have savings..really makes my life easier.
I know it's different in the UK with college loans but here in lreland all that money would be spent on college accommodation.

EttieWarbler · 27/08/2022 09:29

Do you have any savings?

I would pay off the mortgage but only if you can commit to saving/investing the £640 monthly payment.

That way you can put money aside for university, holidays etc. Kids can get part time jobs to save for cars if they want them.

LionessesRules · 27/08/2022 09:33

Do you have any savings?
I'd make sure I had 6 months spending and bills in a instant access savings account.
Are there any redemption penalties on the mortgage?
I also think I would set some of it aside for something special - but not the whole 60k on a holiday!
It doesn't all need to be used at once, and it doesn't need to all be used for one purpose.

EttieWarbler · 27/08/2022 09:35

Maybe spend about 10000 on a one off holiday before your teens get too old to join you

With all due respect this advice is bonkers.

silverclock222 · 27/08/2022 09:37

I received a large I inheritance and the first thing I did was pay off mortgage. Best decision I ever made and would highly recommend it. You never know what life throws at you but to know you always have a home, that's more important than anything. Since doing this I have had cancer twice and DP made redundant but we have our home.

DianaGarageDoors · 27/08/2022 09:38

Afterfire · 27/08/2022 09:21

I’d pay off your mortgage. Long term security etc. That’s what we did in a similar situation. We then booked a holiday on a 0 % credit card and used the money we would have spent on the mortgage to pay it off quickly.

Same, or pay off the mortgage and immediately set up a DD into a savings account.

JenniferAllisonPhillipaSue · 27/08/2022 09:39

I would pay off the mortgage in case something changed in the future that meant I couldn't afford it (eg ill health) or so that I could change my job if my current one became intolerable. I'd try and put an amount similar to my monthly mortgage payment into savings, to be spent on house repairs, a holiday, that kind of thing.

ultraviolet4753 · 27/08/2022 09:49

Definitely mortgage. Make sure you have freehold too.

Hugasauras · 27/08/2022 09:57

I think the 'sensible', financial decision is mortgage. That said, I wouldn't be averse to spending most of it on mortgage but keeping a smaller sum aside for a special holiday as a family. It's what I plan to do with my inheritance - majority of it on sensible financial decisions but my mum has explicitly said she would love us to have a special trip as a family with it to enjoy ourselves.

GretaVanFleet · 27/08/2022 10:05

EttieWarbler · 27/08/2022 09:35

Maybe spend about 10000 on a one off holiday before your teens get too old to join you

With all due respect this advice is bonkers.

I respectfully disagree, if they were only getting £10k fair enough but there’s still £50k in the pot. Travel, make memories, enjoy some of the inheritance with your family. The person that died surely would want you to do something amazing with some of it rather than save it all for the future.

WeAllHaveWings · 27/08/2022 10:05

Have you done the calculations for how much you would save in interest (and mortgage protection insurance if you have it) by paying off early? Thats what we did with a similar sized inheritance and it convinced us to pay off then look into what to do with the mortgage payment each month instead.

As we were in our late 40s, and had savings for ds for uni already, we put the mortgage payments into AVCs for our pension (don't pay tax on them). We havent spent any of the inheritance yet, but the total financial benefits we will get will be much more than the original amount.

ItsSnowJokes · 27/08/2022 10:08

I would pay off the mortgage and then set up a savings account and transfer the amount I had been paying on the mortgage into a savings account each month. That will soon mount up to a good sum for savings, holidays, uni etc....

Babyroobs · 27/08/2022 10:17

We had similar a few years ago and paid off our mortgage. It is a huge relief knowing that whatever happens in the future you will always have the security of a mortgage free house for you and your kids. We have similar earnings to you, and that then frees up money monthly to pay for nice holidays etc, not that we have had many.

InsertPunHere · 27/08/2022 10:20

I'd pay off the mortgage and put half the mortgage payment in an account with a view to funding your teens (university is mindbogglingly expensive) and the other half on one side for nicer things.

Str8talker · 27/08/2022 10:20

Unless you can afford to gamble (which you can't), you'd be stupid not to get shot of your mortgage. If you insist on spunking away some cash on something you can't afford, get another loan nearer that time. Or just save up for it.

CharlotteSt · 27/08/2022 10:24

We sold our business and had enough to pay off the mortgage. We had a ridiculously low interest rate but we just wanted the security so personally I would do that and enjoy the extra monthly "income".

NeedNotWantNot · 27/08/2022 10:32

Pay off mortgage. Save into a pension. It's how I got rich slowly.
The government gives you the 20% tax back i.e. you put £1000 in pension, the government will give you a further £200 in your pension, so it becomes £1200.
Higher rate tax payers (paying 40% tax) can claim another 20% back, so £1000 put in a pension effectively becomes £1400.
www.gov.uk/tax-on-your-private-pension/pension-tax-relief
You will eventually have to pay tax when you take it out of the pension, but you will have a tax free allowance each year so the first £12,500 is tax free. You can't start taking the money out of a pension until you are 55 (this changed from 50 a few years ago, and the government might change the rules again). If it's a long term investment I'd consider an ETF tracker (low fees) in a SIPP (on a platform that has low annual fees).

SuperCamp · 27/08/2022 10:42

When we paid off our mortgage the money that used to go out each month was immediately set up to go into a savings account each month.

That would build to a ‘good holiday’ level for next year, and then in future years keep saving the savings from your salaries, but draw down on that account for Uni costs etc.

Do you have good pensions? Because the tax advantages of saving into a private pension make it very efficient. Though pensions are not performing well atm because of Everything.

LadyGardenersQuestionTime · 27/08/2022 10:46

I’d do one big holiday with the kids, put aside one lump for emergencies, the rest on the mortgage.

PauliesWalnuts · 27/08/2022 10:50

My mum died when I was 23 and my dad a few years later and my brother a couple of years ago. Memories of family holidays we took when I was a kid are all I have left. Spend some on a holiday - you never know what’s around the corner.

Aus84 · 27/08/2022 10:52

Where would the money work hardest for you? Compare what you’re paying in interest with what you could earn by investing the money. Maybe you should make an appointment with a financial advisor?

chilliesandspices · 27/08/2022 10:53

I'd keep a 6-12 months of expenses in a savings account, use some for a holiday and then pay the rest to the mortgage (but check how much you can overpay without incurring charges). If you put it all onto the mortgage and lost your jobs tomorrow it won't help pay the rest of your bills.