Best use of this money?

[Pamcakey]

Hi,
I was hoping for some thoughts on the best use of this money. I could do with some opinions but reluctant to share with friends as it feels crass.

I am shortly coming into approximately 40-45k. Not an inheritance but a gift. Gifter originally wanted it to go straight into our mortgage although has agreed for part of it to go towards urgent roof repairs. I will not do anything with this money without the agreement of the gifter, but I’m considering if there’s better uses for the money and I want to make up my own mind before discussing potential different uses with the gifter. I will say, I am hugely grateful to the gifter, no matter how it’s used in the end!

About a year and a half ago, my partner and I moved into a 400 year old property. It’s beautiful but was owned by a ‘Bodge it Barry’ for 30 years so we have uncovered numerous issues with the electrics, plumbing etc. We’ve put in a fair wack of money fixing essential issues and fixing/replacing some outdoor structures that were essential for various reasons.

We still have an enormous ‘like to have’ list although the only real essential is some major work on the roof.

We would like to replace the kitchen, bathroom and en-suite. All are relatively functional but dated. The garden needs major landscaping to be useable. We also have 3.5 acres that is currently unusable as covered in scrub and undergrowth which needs clearing, seeding and fencing. (Need this space for livestock)

We are currently saving in the region of £600-£800 a month towards these long term projects.

I’m wondering if, really, we are better off using this chunk to get at least a fair wack of these big projects done rather than spending the best part of 10 years saving and doing it slowly. I feel if we get most of these projects done, it frees up cash which we can use, in part, to overpay the mortgage as well as the extra enjoyment of the property in the meantime.

We are in our early/mid 30s and both have very secure public sector jobs with comfortable salaries. No kids and no intention of having them. Both of us are likely to progress in our careers. We have about 50% LTV on the mortgage although we still owe around 250k. We are still on a low interest rate and due to remortgage mid 2026. I’ve looked at current mortgage rates and we would be able to absorb the increase without issues although will significantly hamper the amount we can save towards the renovations. Putting this money on the mortgage would only result in about £100 off the monthly payment.

I have about 20k in investments which I see as very much a ‘don’t touch’ fund for dire emergencies only.
I also used a calculator online and worked out a £200 overpayment a month would result in 60k savings over the course of the term and paying it off almost 10 years sooner.

As I said, I am hugely grateful for the money regardless of how it’s used for, I’m just wondering if putting it straight in the mortgage isn’t necessarily the best use for it in our current situation.

Sorry it’s long, I wanted to explain everything properly! Thank you for any thoughts.

Whether you use the money to do the work required or overpay the mortgage, it's going into property either way, it's just a different order of doing things.

It sounds like the roof is the most urgent, then the fencing/landscaping so I would pay for these to be done now/soon out of this money. Do not think about overpaying the mortgage while you have the low rate, as that's likely to cost you thousands in lost savings interest or increased borrowing costs if you need to borrow in the future.

The kitchen, bathroom and en-suite can wait and be done from savings over the next few years.

If you are saving c£600-800 a month I would be overpaying the mortgage by £200. As you say it saves you £60k, plus when you renew your monthly payments will be lower even with an interest rate hike. It also still gives you c£400-600 savings each month. Alternatively put the £200 into a high interest account and pay off the mortgage at the end of the term.

Split the £40-45k, and get the roof fixed and 3.5 acres cleared. The first stops deterioration to the property via leaks, bad weather etc. The second can generate/save income either by enabling you to rent out the land or by raising your own livestock.

Review your to do list, add likely costs and then prioritise them logically e.g. electrics and plumbing before bathroom and kitchen.

When the mortgage comes up for renewal look to pay a lump sum e.g. £20k. This will further reduce mortgage payments enabling you to continue over pay and save to get the work done.

Sorry, to add once the basics are done focus on one room at a time. A living room or bedroom where when you close the door it feels done.

Thank you. Forgot to mention we won’t be putting any lump sum into the mortgage before our rate increases, I know it’s better in a high interest savings account until then.

I have to admit, you guys aren’t giving me the answers I wanted haha (I do appreciate the thoughts!).

I was feeling more inclined to chip away at as much of the renovations as possible (if I got the gifters consent!) as once the mortgage renews, we will be down to saving roughly £400 a month, which, whilst not an insignificant amount of money, I feel like it will take a solid 10 years to get the house where we want it. Whereas once the major works are done, we can reduce saving and concentrate more on overpaying the mortgage (Probably a 50:50 split of that £400 as we already have a significant amount invested and both have excellent public sector pensions so am not hugely concerned about adding tonnes to savings but would like to build another pot for the investable repairs and upkeep of an old property!). So whilst we wouldn’t knock a big chunk off, I feel like it would be a more tangible difference to day to day life.

The 45k wouldn’t cover everything, but it would go a fair way. But I will muse on these thoughts - the gifter very much wants it to be a meaningful windfall hence they were thinking mortgage and are likely to be thinking along the same lines and I am keen to not offend them!