what would you do if you inherited some money?

[sammysam]

we would really like to move but it would not be enough to enable us to go from a 2 bed to a decent 3 bed without increasing our mortgage (which we don't want to do with the way things are at the mo )

so do we use it to reduce our mortgage, save it or do either of the above and do a small extension on our house to make us more comfortable living here?

I'm really unsure what would be best

depends what mortgage rate you are paying...whilst you're deciding stick it in an ISA?

If you are happy with the area you live in then use it to extend you home if space is your priority. I would move because I don't like this area anymore .

If you are happy with the area you live in then use it to extend you home if space is your priority. I would move because I don't like this area anymore .

Is there an echo in here?

Paying back mortgage (even in part) especially makes sense if you are in the first of the mortgage, when your monthly mortgage payments are made up of mostly interest and very little capital. Then this benefit gradually decreases, to the point where it is not a good investment decision to pay back mortgage if you are in the last couple of years, where you are paying pretty much only capital anyway, but in installments. Why pay it all in one go? (Read up on the concept of'time value of money').

If you are in latter part of your mortgage, extend the house. You will be adding to its value so that when you eventually sell, it will be for more.

What CoteDAzur said!

pay off all our debts

What Cote said - but if you can afford it and it would increase your quality of life, build an extension rather than move - saves stamp duty etc. Moving costs can soak up £20k, easily, with EA fees, other fees, stamp duty.

we have only had a mortgage for 2 years so definately paying at least some off that sounds the way to go. we have no debts or loans etc either.

but we have very limited space so even making just some more living space so we could bring the pc out of dd's room (so we can use in the evenings and also to enable us to squeeze another cot in there for another dc-hopefully!) would make our lives much better.

moving is what we really wanted to do as we need more space but we would need 50-60 grand to do it by not stretching ourselves.
At the mo it looks like it will be 20-although after nearly a year of sorting the estate out my dad is still not telling us much (I think he wants it to be a surprise )

dp is worried that if we extend we won't make the money back-but then who knows?

If you really NEED the space and are unlikely to move in the next few years (therefore making concerns about adding value to a falling house price less worrying), I would extend, but if you can live without extending, it might be worth calculating how much your mortgage payment would go down if you paid off a bit of a lump sum - the answer might not seem very much on a monthly basis, but if it's dropped permanently that could really allow you to start saving for next house move...

Wow, that may be the longest sentence I've ever written. Sorry!