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I stand a chance of being able to pay off part of my mortgage after getting some money from my father's estate, essentially about 10% of the outstanding loan value. However, I do wonder if this is best use of the money if I plan on moving within a year.
WWSTWD?
Commiserations. I'd say especially if you are likely to move soon (and intend to use this money as deposit) then paying off some mortgage is a good idea IFF it directly affects the interest charges. Check whether they actually do this (I'd hope most would these days, there was a time when the interest was calculated annually).
If not, just find the highest interest bank account that doesn't tie it up for too long.
my considered response is that the money would be better spent on a . . . . . . . new bike!
Interest rates are low so you won't save a huge amount on the mortgage. If you are planning on moving I'd keep it pretty liquid. Maybe cash isa or premium bonds. You won't make much but it'll be a handy pot when you move to pay for all those other expenses not covered by the mortgage and hopefully have some left to do something nice with: new bike, new kitchen, nice holiday.
Sorry for your loss, hope you're doing okay.
Depends how much money it is and how much your mortgage is really. If you're buying something else you may be better sticking it in premium bonds then just using it towards the deposit or other moving costs.
Paying off 10% of a £500k mortgage will make a bigger difference than 10% of a £50k mortgage so it depends really.
So sorry about your Dad.
Check for overpayment fees.
If that's not an issue or if you can stagger it then deffo pay mortgage off.
You might not save a huge amount of money in terms of interest charges etc but you'll wipe a few years of the length.
Alternatively hold on to the money, pay a bigger deposit on the new gaff and take the new mortgage over a shorter term.
whack your figures into the mortgage calculator to see how much you will save by making an overpayment.
[url= https://www.vertex42.com/Calculators/mortgage-calculators.html ]https://www.vertex42.com/Calculators/mortgage-calculators.html[/url]
Thanks all. My dad actually died (fsck cancer) a couple of years ago now, but it has taken this long to sort out his house.
I've checked on overpayment and can do 10% without charge and it will have an impact on interest (I can essentially choose to keep the payments the same and shorten the term, or keep the term the same and reduce the payments). It struck me that this might be handy if interest rates go up.
My thought was that, if I did move for work in a year, maybe keep the house as rented out for year until I get settled, then sell it. That would give me about two years of having the money work for me. Premium bonds have been less than stellar as a return for me so far. Maybe I should resurrect my old ISA.
Paid off one mortgage and the wife moved in, paid of another years later and I was moved out, just saying.
That's not exactly how it happened but it's not too far off. The point I'd make though is that if this is a legacy from your father maybe you might want to make sure it goes towards something that you'll always have, bike for life time maybe 🙂
Hehehehe! No such thing! I was thinking about the carbon Bronson, then the rest on C&H, but the sensible part of me took over. No worries on wife taking it. The divorce was last year.
Sorry to hear of your loss.
Very, very disappointed in the STW Collective....
No mention of Coke n hookers!
Then invest in a drawbridge and make sure it remains your castle 🙂
My school of thought is that you need sufficient savings to tide you through a bad spell, but beyond that there's no point saving more while you have debt that's costing more than the return on savings. Your situation is more complex but if you can afford the deposit on a new place then net borrowing would still be reduced if you pay down the mortgage now and then have more equity from the sale to reduce the new mortgage. So there's not much point keeping the money in a savings account returning 1% while you're paying 2,3,4,5% on the current mortgage.
Go on a really nice holiday, enjoy some of the money, life's too short.
did just this... pay off the lump sum and use it to reduce your monthly repayment.. but keep repaying the original amount you ll be amazed how quickly the mortgage disappears.. be aware that some lenders.. nationwide.. actually write off mortgages below 2k.. 🙂
Surely knocking 10% of a mortgage is always a good idea as you save on interest, time off mortgage and will get a better deal next remortgage. Also doing it now is very good as rates will go up
Make an investment in the house, in yourself and/or buy yourself something to remember Da by.
In the same position, we paid 10% off a mortgage then spent about one fifth of that sum on a 50th party on a steam boat on the Thames for my family. After last year, we needed something to cheer us all up, and it was just a great day with wonderful memories. Thank you mother. Wish you could have been there.
Pay the mortgage, buy some memories to go with it. The memories will stay with you longer than the offset in mortgage.
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An offset mortgage linked to your current and savings accounts would be ideal. This effectively stops interest charges on offset amount and you can still get your hands on the cash if needed.
I have had a First Direct account that does this for 8 years and it has worked really well.
From what the OP mentioned he probably is tied into a mortgage at the moment though.