What To Do With £50k?
Discussion
I'm a bit clueless about most things financial, I don't have much in the way of savings or debts apart from the mortgage and generally plod along quite happily.
I've been given a gift from my parents of £50k as they were advised to do by a solicitor, something to do with inheritance tax but I'm not sure of the details.
As tempting as it is to blow the money on a new bike/car and other toys, I think that I need to be sensible with it
We currently have a mortgage of about £120k on a property worth about £180k, it's fixed for the next four years at about 3.5% and we can overpay by £500 a month.
I was thinking that the best thing to do would be to overpay the mortgage by the maximum amount each month then set up an ISA for me and one for my wife and put the maximum amount into each of these this year then again in April.
Does that sound like a sensible option?
What would be the best thing to do with the remaining money?
I've been given a gift from my parents of £50k as they were advised to do by a solicitor, something to do with inheritance tax but I'm not sure of the details.
As tempting as it is to blow the money on a new bike/car and other toys, I think that I need to be sensible with it
We currently have a mortgage of about £120k on a property worth about £180k, it's fixed for the next four years at about 3.5% and we can overpay by £500 a month.
I was thinking that the best thing to do would be to overpay the mortgage by the maximum amount each month then set up an ISA for me and one for my wife and put the maximum amount into each of these this year then again in April.
Does that sound like a sensible option?
What would be the best thing to do with the remaining money?
FYI the 7 year rule applies here re inheritance tax and gifts. Your parents/parent needs to live for 7 years for the gift to be totally out of their estate. It's one of the few easy ways to avoid potential IHT.
It's always advisable for the parent with the longest life prospects to make the gift.
It's always advisable for the parent with the longest life prospects to make the gift.
Someone smarter than me will be able to do the maths, but I was thinking that you could re-mortgage and lower the outstanding amount and therefore the interest paid?
If your current mortgage is fixed for 4 years are there penalties for paying off during that period ?
Lets say you have £45k to use after taking some out for holiday/a few treats etc.
What I was thinking is that it might be more cost efficient to have a £75k mortgage over a shorter timescale (i.e. you keep your repayments to what they are now) than a £120k mortgage that you overpay. If there are any penalties for early pay off they'd need to be taken in to account.
Not a nice thing to mention, but should the worst happen in the next 7 years and you lose both parents the £50k will be back in the estate and you may have to borrow again to put it back. One would hope this is not likely though!
If your current mortgage is fixed for 4 years are there penalties for paying off during that period ?
Lets say you have £45k to use after taking some out for holiday/a few treats etc.
What I was thinking is that it might be more cost efficient to have a £75k mortgage over a shorter timescale (i.e. you keep your repayments to what they are now) than a £120k mortgage that you overpay. If there are any penalties for early pay off they'd need to be taken in to account.
Not a nice thing to mention, but should the worst happen in the next 7 years and you lose both parents the £50k will be back in the estate and you may have to borrow again to put it back. One would hope this is not likely though!
Edited by Crafty_ on Sunday 22 December 15:40
your original though pretty much sums up the best course of action, despite the low rates on cash ISAs and the fact you are stuck with Nationwide and their stupid £500 pcm overpayment limit.
the only other suggestion is to see waht the redemption penalty is and the current interest rate as there are some stonking longer term fixed rates around. it might actually not cost that much in real terms to get out of the current rate given you'd qualify for the best in market at the lower loan to value ratio.
or, look at a buy to let property if that floats your boat
or, buy the performance car.
the 7 year rule hopefully won't be an issue and should the worse happen the estate presumably has sufficient residual monies to cover any tax charge, if applicable; hence the solicitor advising them to start gifting now.
the only other suggestion is to see waht the redemption penalty is and the current interest rate as there are some stonking longer term fixed rates around. it might actually not cost that much in real terms to get out of the current rate given you'd qualify for the best in market at the lower loan to value ratio.
or, look at a buy to let property if that floats your boat
or, buy the performance car.
the 7 year rule hopefully won't be an issue and should the worse happen the estate presumably has sufficient residual monies to cover any tax charge, if applicable; hence the solicitor advising them to start gifting now.
Personally I'd overpay the mortgage by the maximum amount each month as suggested.
Then settle any other debt.
Followed by buying a (used) Rolex S/S sports for yourself and the other half.
Buy 1oz gold, 1oz platinum, 1 oz palladium, 10oz silver.
£1k bitcoin, £1k litecoin, £1k premium bonds
Remainder into self select stocks and shares ISAs invested in safe, high yield FTSE 100/250 shares.
Nice problem to have!
Then settle any other debt.
Followed by buying a (used) Rolex S/S sports for yourself and the other half.
Buy 1oz gold, 1oz platinum, 1 oz palladium, 10oz silver.
£1k bitcoin, £1k litecoin, £1k premium bonds
Remainder into self select stocks and shares ISAs invested in safe, high yield FTSE 100/250 shares.
Nice problem to have!
Edited by B17NNS on Monday 23 December 00:26
If your parents have been advised to bung you 50K I suggest you get advice from them because obviously they did something right
Best moving region over the past six months has been Europe, best over the last year, the US.
Any form of savings is a bet on Sterling and how it will be handled by your Gov.
Sterling is relatively strong at present, Global allocation fund would be my choice before the Pound gets back to under 1.6 to the Dollar. (Which I suspect is where Carne would like it)
Best moving region over the past six months has been Europe, best over the last year, the US.
Any form of savings is a bet on Sterling and how it will be handled by your Gov.
Sterling is relatively strong at present, Global allocation fund would be my choice before the Pound gets back to under 1.6 to the Dollar. (Which I suspect is where Carne would like it)
fido said:
£30k - premium bonds
£15k - savings for a rainy day, future home improvements
£5k - holidays, DSLR, watch
That's what I did .. haven't done the holiday bit yet
premium bonds ? def no no according to this £15k - savings for a rainy day, future home improvements
£5k - holidays, DSLR, watch
That's what I did .. haven't done the holiday bit yet
http://www.moneysavingexpert.com/savings/premium-b...
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