What would you do with 100k inheritance

[Savannahview]

Ok, so I've named changed and I'm reluctant to ask people in real life! I will be shortly inheriting approx 100k. We have a mortgage of approx 98k with 12 years left. We are comfortable but not high earners. About 5k on a credit card. 2 teenager kids. What would you do?? Spend, save or abit of both! I do want to enjoy some of it, my parents both died young so I am a firm believer in living life whilst you can!

Only your mortgage provider can answer in detail, so phone them up and ask: should you pay it off now and pay the penalty, or pay it off at the end of the term? Is there any overpayment limit and is there any benefit to this?
If the the first person you talk to doesn't seem to know what they are talking about (not uncommon on customer help lines) ask to speak to someone with more expertise.

Check the rules about paying into pensions - is there an annual limit? Do you have a private pension outside of work or from a previous job, or just your current workplace one? Do some research.
Once the mortgage is paid off, maximise payments into your pension using the money you are no longer paying the mortgage with.

Agree

In a similar position but with 80k

We are probably going to pay off the mortgage. There is a calculator on the mortgage app and if we pay the 80k off the 100k mortgage then we save 50k in interest payments!

We have no penalty for paying off any amount

Also then can use the amount we would have paid on mortgage to out in savings

I would pay off the mortgage if it is cheaper to pay the early redemption penalty charge. Ask your bank for a breakdown of how much interest you will pay until the fixed term ends. If it is more than the redemption penalty, you’ll be quids in. If it’s less, you can over pay normally by 10%. But ask your lender for the amount you can repay without penalty.

Most mortgages will let you pay off 10% without incurring extra charges, so I'd do whatever your provider allows, pay off credit card debt, save a little for a treat (something new for the house? Redecorate?) and plink as much as you can in ISAs.

I would ring your mortgage company and ask them what you can pay as a lump without incurring penalties. ISAs you already know. Credit card debt clear d of course.

Something you never thought you could have and now can (whether that is a family trip to eg safari or a dishwasher or a conservatory).

Something to remember the person who has gone (£5 for a tree to be named for them or a bit more to buy a tree to plant at home).

And just splash a little bit - don't think before you choose groceries one week and get everyone new summer shoes!

I'm expecting a similar sum this year. We have £192k on our mortgage and about £9k in CC and loan debt. I will pay off the loan and CC, put £10k each aside for DC, then we're planning a new kitchen, new bathroom and en-suite, replace all carpets and replacing DH's car. I'm also going to treat myself to a new handbag so probably £3k on that and then £12k ish on another Orlando trip. Whatever we're left with will go into savings and we'll pay extra on the mortgage each month. Not planning on paying off the mortgage as we have a lot to do in the house and I want us to enjoy some of it.

I would pay off the credit card and mortgage. I would then use the additional funds you have each month to save for holiday/cars/kids futures, and basically, carry on as normal, just completely debt free.

All the sensible things suggested above; such as clearing debts, filling up ISAs and paying off some of your mortgage- plus a trip to the Maldives 👌

I'm super cautious so I would first calculate whether any early redemption charges on the mortgage exceeded the total interest I'd have to pay in the meantime - if they didn't, I'd probably pay it off now rather than waiting, as interest rates on savings are declining.

If net penalties applied I'd probably pay off the credit card immediately, put £20k in an ISA now and another £20k on 6 April. Then the rest in a high interest savings account (or premium bonds for a tax-free monthly thrill without guaranteed returns) until any early redemption charges on the mortgage expired. Then I'd pay it off.

This is effectively what we're doing at the moment, because our savings match the balance on our mortgage. The mortgage is on a very low interest rate, so the savings are currently earning more than double the interest we pay, especially if we make the most of tax-free options. This will change in a few months when the low rate and the ERCs expire at the same time. We're biding our time and stowing the money in 'safe' savings until we can pay the mortgage off without incurring penalties. We're in our fifties and starting to think about retirement though, so clearing the mortgage is important to us.

We are both in the position of having a child with additional needs. Can I just point out that if your youngest child eventually has to claim benefits, that large amounts of savings may work against them? For example, over £16,000 will stop them from claiming Universal Credit. Maybe it would be more beneficial to hold funds in your name and provide cash for specific purchases for your child as needs arise.

This, but £10k for the holiday and £45k off the mortgage. The difference of £5k more on a holiday will be a lovely luxury, and a nice way to remember your loved one

You need to do some maths and look at your mortgage terms.

I was shocked at how small the penalty was for overpayment on mine, it was more than worth paying the rest of it off because it was cheaper to pay the penalty than two years of interest. Maybe it was because our mortgage originally had a low interest rate so it probably seemed like a higher penalty back then, I don't know.

Given how high your interest rate is now, it may be worth paying it all off now with how much you could save in interest long term, especially as ISA rates aren't as great as they were a year ago.

Also if anyone knows you've come into money and is likely to badger you for it, you can immediately tell them you literally don't have it!!

Just to mention if you have savings earmarked for your child, but not in their own account then it still counts as your savings for tax purposes.

I’d pay off the whole mortgage and be done. Start saving/investing the mortgage money. Treat yourself to a holiday in the meantime.

I agree with this

You can ring your mortgage company and ask them about early payment charges. I’d pay it all off.

Breathe again!!
make sure it gives you security and future freedom should you ever need it

I would only consider making extra payments on mortgage if you are 100% sure there's no risk of divorce.
Inheritance is usually not part of a settlement.
Best to save for children a bit for you and enjoy a nice holiday!

You may be able to overpay some of your mortgage or you may have to pay a fee to do so. Best thing you can do is give your mortgage company a call tomorrow and ask them!

Second the ISA suggestion, 20k each pre and post April 6th. You can draw down the money whenever you need.

Personally I'd pay off 10k of the mortgage, whack 80k into ISAs and enjoy 10k. You can always withdraw from ISAs in future to give to kids, but if they aren't responsible when they are 18 you run the risk of not being able to not give them the money.

We are in a similar position to you although we inherited a little more due to me & DH losing a parent close together.
We have done loads on the house & have a little more to do
Replaced my car
We are doing a trip to the Caribbean this year...not 5* fancy but a nice hotel & an add on hol to our usual European summer hol
Considering another long haul next year
We are keeping some as emergency funds & the rest into ISAs
We have a mortgage but we are unsure what to do about paying some of that off at the moment. It's due for renewal at the end of this year so I think we will consider what to do then
We also have kids so will ringfence some for studies/cars for them.

I've found it hard knowing what's best to do.

Credit card debt

40k in a stocks and shares ISA preferably but depends on how you feel about watching amounts fluctuate.

Pay off as much mortgage as possible without redemption fees
Treat yourself to a holiday
Do not put money in the name of a child, they get full access at 18 and may be a complete idiot with the money.

i don’t know if banks still allow this but I paid my mortgage off by making 2 payments per month dividing the monthly loan price in half. That way you pay the interest off faster. I think they call it by monthly. Not sure but it cuts your interest rate off at the end of the loan and then your just paying the principal off.

I'd pay off the credit card and most of the mortgage, then I would enjoy a lower mortgage and lower monthly payment which would mean more money every month for fun experiences.