I’ve been left some money from my late fathers estate. The intention was always to use it to pay off my mortgage.
The total plus some of my own money is around £160k. My mortgage is interest only with 12 years to run and it would cost £85k to pay it off. Its on a standard variable rate and is currently only costing me £180 a month. I’m 50 this year, I’ve got no kids or other dependents.
Absolutely no idea what the best course of action would be so I thought I’d ask for advice on a mountain bike forum!

Don’t pay off your mortgage … that’s pretty much free money they are giving you

How’s your pension looking ?

160k would be a good chunk for a buy-to-let

I believe that “coke and hookers” is the standard answer

The mortgage has got to be paid off at some point though as its interest only.

Why are you on the SVR? By my calcs you’re at 2.5%

You can get much cheaper mortgage rates at the moment. 2yr fixed at 1.5%

Max out your ISAs to start with.

We have a range of global index trackers for a good chunk of our investments. But we’re c.40yr old so a little different position.

I would pay off the mortgage, max ISA and then consider what you want to do with the rest – pension contribution could be your 180 a month mortgage and lump sum invest the rest barring the money for a new bike 😉

I would optimise the current loan and buy another – thats c half a 1 bedder in sw london so you’d be yielding c 4-4.5% before finance costs. Capitalwise I’d expect it to double in 10 years – thats 7% pa compouded.

good luck dont get scammed.

NZCol, that’s my inclination as well.

depends on risk aversion as well. I considered Buy to Let a long time ago, and while might have delivered the returns, I wasn’t happy with the lack of liquidity, the slight herd mentality, and the potential hassle.

ISA, Pension, mortgage re-alignment. Classic car for good measure? On the investment front anyway. Other stuff comes under other categories!

At 50 maybe be cautious? How much in pension pot now? If loads concentrate on ISA over pension otherwise maybe go for pension mostly – obv if a higher rate tax payer then pension is more advantageous than if not.

pay off mortgage
put in ISA money each year – £15k+
Rest in Pension

pretty much what NZcol said, but as you are 50 this year you may be better off using the lump sum to go straight into a SIPP (hargreaves lansdown?) because the compounding interest of pensions isn’t going to work as well for you – and then the 180 drip feed into whatever investment suits your risk attitude

I would be tempted to pay for proper advice..

risk aversion

Yep… thats why he should have a buy to let.

Guessing the OP already has a Pension … so why put all your eggs in the same basket … an ISA will not be much different … having a vast proportion of the amount invested in equities and/or gilts.

People don’t need company or government stock but they sure do need a roof to live under?

start giving to crowd funding projects.

I’ll have to look at my pension but its not amazing. I have no real desire to retire anyhow and in my industry I can keep working for as long as i want (or are able). Yes I’m risk adverse so buy to let isn’t for me.
All good advice so far.
The main issue for me is that should i pay the mortgage off or is that a stupid idea and i could be doing something better with the money that I would feel comfortable with. Because its interest only then its going to have to be paid off at some point in the not too distant future.

Complicated investments are way out of my league and I’ve already decided on the new bike – its going to be an FJR1300 🙂

Are ISA’s still the way to go given the tax free interest allowance announced in the last budget?

Isa doesnt have to mean cash, it can be stocks and shares. Given the ability to transfer between cash and stocks ISAs I’d say yes it still is the way to go.

Out of curiosity what investment product do you currently have to pay off the mortgage?

There is nothing wrong with electing to pay it off or investing the money for the future. It just depends on your attitude to funding investment with debt.

My mate had a minor heart attack which means he’s very likely to get a payout to the value of his mortgage from critical illness insurance. He can’t pay the mortgage off for 2 years without penalty so plans to invest some of the money in a manual Ferrari 360 – prices are lower than the earlier 355s and the 360s were the last with a real manual option… he’s pretty convinced there will be a decent return in 2-3 years.

So do that.

Nothing in place and at the time you didn’t have to provide any proof – its was always the intention to use the money from Dads house to pay it off as I’ve never earn’t enough to be able to afford a repayment mortgage. Living on your own isn’t easy!

In all honesty if that’s your situation I’d be paying the mortgage off then investing the remainder. buy to let doesn’t make much sense to me and never really has unless you are doing all the work yourself.

Of course buy to let is evil anyway… 😉

How about buying a bigger house and then rent out a room or a floor?

Rent a room scheme

You could still be mortage free and it may be more tax efficient than but-to-let: no income tax or capital gains tax.

Of course you could end up living with a psycho which would spoil it a bit.

if you’re on a ridiculously low interest rate then perhaps stick with it and look at buying a property in France. What with the euro and the French economy, there’s never been a better time to invest in something you can use or let out or both.

Alternatively just pay off the mortgage and max out your isas and pension so you can look forward to an early retirement.

Nothing in place and at the time you didn’t have to provide any proof – its was always the intention to use the money from Dads house to pay it off

That makes just a bit of a difference to anything I’ve said. 🙂

How about paying a enough off your mortgage to leave you with a repayment mortgage of £180 a month? … Max out the ISAs as you can get to that money if you ever want to, rather than the pension pot (although that has changed recently( and the rest on bikes n beers.

This way you’ve kind of hedged your bets … Mortgage is taken care of and you have money to invest else where for hopefully a better return.

Hmm, that sounds like something worth thinking about.

Quick check found that… 30k @ 2% (cheaper available) over 15 years (to take you to 65, if you are 50? ) is £193.

I hope this is right? Please check it yourself

Yes, I had a quick look and found something similar. The only thing is you are at the mercy of interest rates, arrangement fees, surveys etc which is one of the attractions of just paying the whole thing off now and having done with it 🙂