What to do with critical illness payout
Discussion
Morning, I was unlucky enough to have a kidney removed due to a tumour, but fortunate in that I had opted in to my employers critical illness cover. Health is wealth, except in this case!
So I now have an unexpected £100k which has opened the door to being able to purchase our first property. Thing is, it looks like the purchase would be in 2 years or so. With this in mind I'm trying to maximise the benefit in meantime.
We have c£10k personal loan and some cc outstanding, my initial plan was to clear these together with the house purchase/mortgage application to maximise flexibility around value of deposit available Vs how much debt would be allowed.
With the current longer timeframe it seems crazy to be paying tax on some interest ( ISA maxed out) and also interest on the personal loan. So I'm thinking to pay off the debt now.
Another point is considering changing to an EV to save current fuel costs, assuming monthly fuel bill is roughly equal to salary sacrifice net deduction, which would have less adverse impact on mortgage affordability?
Many thanks in advance for your thoughts on these!
So I now have an unexpected £100k which has opened the door to being able to purchase our first property. Thing is, it looks like the purchase would be in 2 years or so. With this in mind I'm trying to maximise the benefit in meantime.
We have c£10k personal loan and some cc outstanding, my initial plan was to clear these together with the house purchase/mortgage application to maximise flexibility around value of deposit available Vs how much debt would be allowed.
With the current longer timeframe it seems crazy to be paying tax on some interest ( ISA maxed out) and also interest on the personal loan. So I'm thinking to pay off the debt now.
Another point is considering changing to an EV to save current fuel costs, assuming monthly fuel bill is roughly equal to salary sacrifice net deduction, which would have less adverse impact on mortgage affordability?
Many thanks in advance for your thoughts on these!
What’s the reason for waiting two years ?
It makes sense to pay off the loan and CC’s however I would then during the 2 years make the same repayments back into the account as if you still had the loan.
Think I would stay away from the car idea, cars are a money pit. Just because you could afford it, doesn’t mean you should. Plus fuel costs are insignificant compared to depreciation.
For such a short term I am not sure equities or trackers are a good idea. If there is a crash you may need the money before shares prices rise again.
Personally I’d accelerate buying now, you’d save the rent and have your own place, that has a value all of its own!
Theclarinettist said:
Thanks, regards the EV, if my fuel and insurance costs are say £300/month and the net deduction for salary sacrifice is also £300/month then changing should save money as it includes maintenance, tyres etc.
Current car is 14 year old golf so always needs something doing each year.
It's not very PH but you seem to have your priorities straight and if you want a cheap EV for commuting I'd suggest something more like this rather than getting onto the Finance train.Current car is 14 year old golf so always needs something doing each year.
Nissan Leaf
https://www.autotrader.co.uk/car-details/202609176...
MG4
https://www.autotrader.co.uk/car-details/202609075...
not clearing the loan/credit card now is a bad idea. Pay off all your debt day 1. You won't gain any flexibility by having £100k deposit and £20k in debt vs having an £80k deposit (which should be enough anyway, in the vast majority of the country) - the banks will take a full picture view. that loan @ 7,5% interest will cost you £1500 over the next 2 years.
I'd probably be buying a house asap if I didn't have one, is there a reason for holding off?
I'd probably be buying a house asap if I didn't have one, is there a reason for holding off?
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