What to do with 200k

[Meltham Terrier]

We are in a fortunate position that we are going to have a windfall of a little over £200k.

The money would clear off our Mortgage which is £1300p/m and has approx 18yrs left and is on a fixed deal @ 2.1% until May 2024.
I would then expect that to rise to £1500p/m

My logic tells me that clearing the mortgage and investing the £1300 p/m would be our best option. Especially with interest rates not expected to come down anytime soon.

Other options would be
Longer term saving plan or plans due to value.

Holiday home / Air BnB but we would need a mortgage on that to buy something to generate enough income to cover its costs and contribute to our house mortgage.
This would be looked at as a long term option and a way of having passive income in retirement

I know that there or lots of other options, and opinions are welcome. I would not want anything with high risk.

Thanks

[paddy1970]

Coke and hookeers...

[Mark83]

Does your mortgage have an early repayment charge?

2.1% is a lot less than the potential earning potential of your money in safe investments - cash ISAs around 4-5%, premium bonds now 4% and both tax free. £20k each in ISAs, £50k each in premium bonds. That's £60k left over to maybe play with.

I'd consider clearing or heavily overpaying my mortgage when my fixed rate ends and there's no ERC.

[Japveesix]

It's a bit of a wildcard choice but I think its a really solid option:

https://www.pistonheads.com/buy/listing/14086013

[GT4P]

Put it in to savings at 5%+ (circa £10k+ a year )instead of paying off mortgage until mortgage deal is up and then pay off.

Instant access accounts are paying 4.5% at the moment but rates are ever increasing as rates rise, see other thread Santander e saver.

Edited by GT4P on Monday 10th July 22:09

Here’s a link https://www.pistonheads.com/gassing/topic.asp?h=0&...

Edited by GT4P on Monday 10th July 22:12

[rallye101]

A£200k Morgan, bog off!!!!

[Meltham Terrier]

The mortgage deal has a penalty if paid off before May 2024 , would be £2-3k , but I can pay 10% without penalty.

[Meltham Terrier]

Japveesix said:

It's a bit of a wildcard choice but I think its a really solid option:

https://www.pistonheads.com/buy/listing/14086013

I think I’ll stick with my Cayman S.
200k for a Morgan mad money imo. But I’m sure there’s a market for it

[covmutley]

It probably depends on a number of things, but me personally I would up my pension now by something like £900 a month and pay myself back out of the pot, and overpay then clear the mortgage in May 24, and then enjoy the £400 a month gain.

That should cover a nice night away every month, or some decent meals out etc.

Oh and congrats also. You are now a 'free man'. You can go and work a minimum pay job and still be comfortable (ish!). Must be quite a liberating feeling.

Edited by covmutley on Tuesday 11th July 07:15

[Abdul Abulbul Amir]

How old are you and are you a higher rate payer?

If you're a higher rate tax payer I'd do as above and start building up chunky pension. You could pay in circa £2k gross each month when the mortgage is gone.

[Edible Roadkill]

100k into NS&I premium bonds 50k you 50k wife
40k into cash isa 20k you 20k wife
60k into savings account

Clear the mortgage in May 24

[ev_buyer]

£15-£18K - on Solar Panels and Battery Storage will give you 8-10% ROI, add value to your house.

[deckster]

The head says to invest (sensibly!), as the likely returns will easily outperform your mortgage rate. 20 years on you will, undoubtedly, be financially better off.

However do not underestimate the freedom and mental benefits from living mortgage free. For most, spending the next 18 years without the shackles of having to make mortgage payments is a considerable benefit.

[Mogul]

Paying off the mortgage in May 24 sounds appealing. No point overpaying if you can earn more on the money in the short term.

Between now and then, you’ll want security so you short dated Gilts such as TN24 which redeem on 31/1/24 will give you a guaranteed tax free return of around 5% pa between now and that date.

Between Feb and May, you might try avoid incurring an income tax liability on any alternative short term savings products by using ISAs and your allowances (not forgetting your spouse’s ISA/allowances)

[Cupid-stunt]

family holiday is the answer .....

Then most tax efficient which is mortgage post May 2024.
Till then - tax efficient savings - so ISA / NSI

[Pepperpots]

I'd pay off the mortgage but then I hate being in debt.

[bitchstewie]

There's a massive psychological element to this.

Do you like your job?

£200K is a lot of "fk you money" if you ever decide you just don't want to keep doing what you do now for a while and it's the kind of sum that can put you in control of your life.

But some people dream of waking up one morning mortgage free because that's their idea of freedom.

[Meltham Terrier]

I love my job and it the pay allows me to enjoy life also. So I don’t think renting house and going walkBout for me is the right thing to do just yet. May be in a few year in my Mid 50’s I might think differently about it.

Interesting that most people think that Mortgage freedom is my best option in the current climate.

[covmutley]

You say mortgage freedom, but dont forget my suggestion was to divert the equivalent mortgage money from your salary into your pension. if you are a higher rate payer, the 40% saving will far out perform most funds and individual shares.

Edited by covmutley on Tuesday 11th July 15:41

[anonymous-user]

I would put the £200k into the highest interest paying account I could. May 2024 when the mortgage fixed period ends I would pay the mortgage off.

Then as others have suggested, I would salary sacrifice the equivalent monthly mortgage payment into my pension.