Inheritance advice please

[Puddypuds]

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.

Pay off your mortgage. I did it when I was quite young and had a good job. The few people I told said I was bonkers, I could have had more meals out, better car, holidays etc etc.
Six months later I was very ill. I didn’t know whether I would ever going to be able to go back to work. As I lay in bed, I used to think ‘ thank goodness I don’t have to worry about paying the mortgage, losing the house…..’

if you pay off your mortgage and put the £600 into savings you will have £7200 within 12 months enough for a very good holiday
( the extra £40 can be used for treats each month)

personally I would first make sure you have an emergency fund however secure your jobs, 6 months basic living costs, then do you have money for car repairs new boiler etc, if you already have this then just pay off the mortgage checking how much it costs to redeem entirely etc etc when your fixed deal ends
I would then use the rest to pay off mortgage
the £640 I would divide £140 into a treat fund, £250 for long term savings or pensions £250 in your names but set aside provisionally for your children whether driving lessons college expenses allowing them to go on one of the school skiing trips etc

We just had a similar amount come our way, we paid the mortgage off, we are now saving what was our mortgage payment for holidays/fun stuff. A holiday doesn’t happen overnight, plan it, pay the deposit, then get the money together from money you save.

We’ve been mortgage free for a couple of months and the feeling is good.

Travel, make memories, enjoy some of the inheritance with your family

OP can do that with some of the money she saves from not having a mortgage but no way should she blow £10k on a holiday.

The family has a household income of £56-60k pre tax and they have two teenagers to support through university.

If you decide to pay off your mortgage don't pay it off completely if it's a flexible type which will allow you to do this i.e. leave a small amount owing in order to keep the mortgage account open.
If, in the future, you decide you need cash for a house extension it is much cheaper to borrow against a mortgage than take out a loan.

Thank you all. We have savings of around £13K but have been saving for a new bathroom (for years) ie the £3K and have a big house expense coming up involving a joint septic tank which could potentially clear us out. My heart of heart says mortgage too and possibly a special, but not extortionate, holiday. I've survived potential redundancy and my husband was made redundant so we save hard all the time!
Appreciate everyone taking the time to reply. I will look into increasing my pension pot too.

I’d still have the holiday, this is a windfall. If they hadn’t inherited their income would be unchanged and they would still have two teenagers to support through university without £50k in the bank or off their mortgage. They’re still quids in.

Pay off your mortgage and save the £690 you'd normally spend on mortgage payments and use that for a lovely holiday next year.
That's what I'd do! 😊

Is your mortgage fixed, or what rate and for how long? We have a similar sum saved but the interest on our Marcus savings (1.5%) now outpaces the mortgage (fixed at 1.3% until 2026), so the money is earmarked to clear mortgage then but for now with savings interest set to rise further, we’ll sit on the cash with it earning more than the mortgage costs.

Pay off your mortgage and then start putting that payment aside as savings or increase pension

I paid off my mortgage but wish I'd bought a house instead and rented it as we would have doubled our money by now.

Don't just save, invest. Cash in bank is worth less over time due to inflation.

Wish I could take my own advice as I save but don't even get good interest. Need to buy another house.

30k off mortgage and you’ll be left with a teeny mortgage. £20k savings and £10k holiday

How much can you pay off without incurring penalties, each year? Say its £15k. I would pay that. And put another £15k aside and pay next years ad soon as this year is over, as soon as a new year starts.

Then I'd put remainder in different pots; Bathroom, a bit in a separate account for possible redundancy, a small amount for a holiday, 5K for both children, before you know it will be gone.

This is good advice. What is your mortgage rate? In the current environment with interest rates rising you could could get 2-3% on savings. Don't forget the option of saving in ISAs too, as any interest over £1000 will be taxed.

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.

And if you are a higher rate tax player, but keep the pension you take below higher rate you only pay 20% tax on that instead of the 40% you would have paid in your salary.

I have recently, in my 50s become a higher rate tax payer for the first time and didn't realise this, so everything over the higher tax rate is going into AVCs. I now realise this is how those that earn more can retire even earlier, and lower earners that need the help struggle with building their pensions. Double that advantage if you are a couple with two high earners.

I feel like a tax avoider, but also I would be mad not to take advantage of it 😳

I would pay off mortgage to save paying off interest but also because then you also save on life insurance on mortgage. So double savings. I would save some of money I used to pay for mortgage to fund kids through Uni or deposit for house. Basically id save to put aside £10k each for their future. I'd open a stocks and shares ISA and save some of money that would have been mortgage payment (£400) into a stocks and shares ISA.

What's the interest rate on the mortgage? If it's fixed at a low rate you may be a

.... able to make a profit by investing rather than paying off the mortgage.

What is your interest rate and are you fixed? I’m wouldn’t break a fix and pay an ERC to pay it off for example. You could probably do better by investing in a pension or stocks and shares isa but there is a strong psychological benefit to being mortgage free especially as rates are rising.

My fixed term ended three months ago. Mortgage has since increased month on month (currently 2.84 per cent) but new fixed term deals are higher than latest monthly payment.

I’d probably pay mortgage off then in that case. If you don’t pay off I’d definitely shop around for a new mortgage though, better tracker rates are available than 2.84%