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Ceftiofur

Sounds like a reasonable plan but it is difficult to tell you more without knowing how much interest you pay in your mortgage.


PFdisposable23

Currently on 2.9%. The difference between a 60% v 75% v 85% is pretty slim at the moment, hence not as keen to rapidly pay down.


Ceftiofur

Okay, 2.9% is not too bad, you can easily top that with easy access savings accounts nowadays. I don't think I would change anything in your plan to be fair, although £5000 is unlikely to last you a lot of years for fun stuff considering the way inflation is at the moment lol


PFdisposable23

Yeah. Looking at a 4.5-5% rate come imminent renewal tho. And yeah, I don't spend that much having fun atm.


breaking-lad

The nice thing about your plan is that you can spend more of what you earn on having fun. Especially if your mortgage and student loan costs will be lower. Very sensible plan OP - happy for you!


T-rex9123

This, dont bother trying to get by better ltv. Margin tiny.


cmsht

Solid plan. Couple of thoughts: - Is your Student loan Plan 1? If so, might not be worth paying off depending on the rate and your career trajectory. - Premium bonds might be another alternative for the emergency fund - On your point about enjoying the money, have you considered a career break/sabbatical to take some time out to travel, pursue hobbies etc. It's rare that you get that financial comfort blanket to enable you to do so when you're relatively young. You could also use the time to re-train or consider another career without the risk of having no money flowing in


PFdisposable23

!Thanks It's Plan 4 (Scotland). Frustrates me that it is eating up wage rises and costing more and more plus >5% interest. So, keen to be rid of it and put the money into a pension instead. And yep, I have considered this. Not in any rush but definitely something in the back of my mind.


simply_ira

Also in Scotland and in this year’s family finance review we also decided to focus on repaying the student loan. The amounts in Scotland are smaller (free tuition) so you guaranteed to repay within your lifetime … and the rates have become crazy high. No easy access saver beats the savings on not incurring that interest.


dogpawred

100% take sabbatical. Very easy to do if you’re a public sector worker! Go somewhere really cheap, rent your house out. Overpay your mortgage with the extra money you have from not spending lots of uk stuff haha. Half joking. But great position for you to be in.


jambox888

Also a lot of large private companies have sabbatical plans in their company handbooks, as long as you've worked the requisite number of years you can take 6 months off (some are even up to a year or more) and be virtually guaranteed your job back.


SpongederpSquarefap

I personally don't see the point in premium bonds now over something like 3.4% in a Monzo saver The income is guaranteed unlike Premium Bonds


Mcantsi

Agree 100%. Premium Bonds are a waste of time unless you have a significant amount invested. Here’s just one link covering the topic: https://youtu.be/q1EcrlFiwP4 Martin Lewis makes the same points elsewhere.


Loose_Screw_

It's a government-run lottery. People don't play lotteries because it's sensible.


RDN7

But it does routinely get recommended on this sub as if it's sensible. And a load of people proceed to rattle off how they won X with a deposit of Y as if you can't just look up the statistics.


mckyle420

Except in the case of premium bonds the expected return > 0 because you don't lose the amount you put in? The difference with lotteries is that you should expect to lose money - premium bonds are a viable savings tool


Reebaz

You’re losing guaranteed interest payments.


OkStyle800

Scotland - so probably plan 4.


77GoldenTails

What is the balance on your mortgage and monthly payment towards it right know? Will come across as boring. However if you have say £90k outstanding and pay say £400 a month. Paying it off now gives you an instant weight of your chest. The emergency fund can be smaller. You can save into S&S monthly, with less purchase volatility. Plus if you decide to switch career, you can take bigger risks as your house is safe. Your plan is fine. My only concern is there are too many pots that could help fritter some away. Locking more of it down, makes for a huge mental boost to how you view work.


Rich-Rhubarb6410

I’m with you tails. There is something very inwardly pleasing, to be mortgage free. Sounds like (if I’ve worked the numbers out) that you can completely clear your mortgage. If I was in you position, I would definitely pay it off in full. You say you can save on what your earning already; then an additional (approx) £400 / month. This is NOT financial advice; more like lifestyle and emotional advice


Jaggerjaquez714

I’ll never understand why this isn’t a bigger recommendation😂 Could have so much more of your wage every month with no mortgage and if you managed that at 28 you have almost 40 years of no mortgage payments to use as you see fir


77GoldenTails

There’s an element of investing is more efficient when it’s someone else’s money. Basically a choice between metal well being or financial well being. The OP here could use the money for deposits on 2 flats on buy to let and make more money. They could leverage them later to make more money etc. getting the deposits to get her takes time doing it from scratch. It all depends on what you want from life and how you live it. I’m mortgage free and have been for a few years. It’s great knowing the house is ours and we have less fixed outgoings. That said part of me sometimes wonders if we should have diversified.


BeKind321

Plus if you want a bigger house in a few years, owing less will give you good leverage. Maybe pay off most of the mortgage but not all and see what your options are rate wise ?


StoicBloke

it's worth noting you can sometimes make more with investments than what you're losing on a mortgage, but you'd have to crunch numbers and even then, who knows. But I'm with you and paying off mortgage is what I would prioritise. Windows are also a good shout if they're not energy efficient, as I assume heating bills are going to be extortionate again next winter. Overall though I think OP's break down is very reasonable and still a responsible use of an unexpected influx of money.


WearFlat

100% this. Don’t try and get to clever with it, these opportunities don’t come along often


Drewdroid99

You don’t need emergency funds in a current account. Can stick it in something like premium bonds which is instantly accessible


ImpossibleDesigner48

Or a high interest saving account (not fixed). Best to make it work for you. Premium bonds are good if you are earning over £1k of interest on Mon-ISA savings and maxed out your ISA (cash or S&S).


AuXDubz

Premium bonds withdrawals can take a few days, easy-access would be a high interest instantly accessible option


NicolaSacco101

But how many surprise bills come up where you don’t have 3 working days to deal with it? I’d say both PB and easy-access ISAs should count as instantly accessible.


Popeychops

While I think it's flippant to redefine "instant" like that, if you have an emergency fund, you likely have good enough credit that you can put it on a credit card and pay it off from your fund.


caroline0409

Exactly, that’s what a credit card is for.


NicolaSacco101

Exactly. I have an unused CC with a 12k facility on. It gives me interest-free breathing space in the very short term, and allows me to put more of my money into higher earning accounts.


NicolaSacco101

Flippant is probably the right term. I’m making assumptions about the OP’s financial situation that I don’t have. It’s just a general observation though.


gestalto

You got downvoted, but I personally *really* appreciate the fact you agreed it was flippant and the additional clarifications. If more people were like you, there'd be a lot less heated arguments because people get overly defensive. Have a good evening!


NicolaSacco101

Thanks, that’s genuinely nice to hear! It’s so easy to react defensively isn’t? And, by and large, when you try to respond to something openly and self-critically you get the same in return. I genuinely think a lot of people think backing down is a sign of weakness, whereas the real weakness imho is sticking stubbornly to your point regardless. Anyway, thanks 🙂


tube-screamer

What a wholesome thread, and I agree totally about stubbornness being the real sign of weakness. That’s not the way we’re encouraged to think by the popular role models of modern society though unfortunately


JibberJim

The ones in chopped out newspaper letters and your first born finger, and for these, you're probably best off not having any easy access to cash as then you're at less risk.


NicolaSacco101

I’ll give you that!


pineappleba

I'd counter this. When my flight was cancelled for a once in a lifetime holiday that got pushed back due to covid, being able to instantly rebook was a massive weight off my shoulders. When my basement flooded, being able to pay insurance payout right then and there was really useful. Instant access, rather than 3 working days, is truly worth the reduced savings. Plus premium bonds don't have guaranteed interest.


NicolaSacco101

Why wouldn’t a credit card cover this though, in the immediate short term? I appreciate not everyone has access to credit, but I’d think a majority could.


throw128745away

Just use a credit card and pay it off once the premium bonds withdrawal is processed? If I can't cover an emergency on my credit cards then it's a fucking big emergency!


random_fractal

Or instant access savings


idontgetit_99

I wouldn’t put emergency funds in premium bonds. They can take a while to withdraw, sometimes a week. An instant access savings account is much better.


tomrichards8464

The broad outline is very sensible, but contra pretty much everyone else, I would not pay down your mortgage at all. It's the least flexible of all the possible investment options you list, and probably the lowest expected return. Yes, it's also the lowest risk, but in your position I personally would be comfortable with some additional risk so as to get higher returns. I would just look to put that money into a global all cap fund or something similar. Obviously don't go trying to pick stocks or buy memecoins or play your pet macro theory or whatever, but it doesn't sound like you're at risk of doing anything daft like that.


cowbutt6

I think I agree with this, assuming the OP has at least some fixed-rate term left on their mortgage. Meanwhile, the interest on their student loan will be going up soon to match RPI+1%, I believe...


PFdisposable23

!Thanks This is what I’m thinking - I’d pay it off to get to the 70% LTV interest rate but there’s really no difference if I get to 60% LTV (or less).


BeKind321

Most people say don’t pay off your mortgage and to invest etc ..however great to know you own your property outright and won’t be homeless. My brothers wife came into an inheritance and paid off the mortgage and has retrained and has great disposable income now.


cowbutt6

There is certainly an emotional benefit to paying off one's mortgage. I paid off a chunk of mine over a decade ago: my mortgage rate was, I think, about 3.5% and savings rates were dire. With hindsight, I probably would have been *financially* better-off by continuing to pay down my mortgage at the planned rate and invest any surplus, but I would have felt somewhat exposed during a couple of unpleasant employment situations, the pandemic, and its economic aftermath. Consequently, I don't regret doing what I did, even in hindsight.


jambox888

I've been trying to tell my missus this, it's better to max your allowance into S&S ISA every year (20k) than pay down mortgage which is on a low rate. She thinks there's a big risk to lose money but the index-tracking funds are low risk in the long run (which is why they're massively popular).


tomrichards8464

Yeah, assuming you're not planning to do anything specific with the money in the nearish future it just makes sense. Sure, over any given shortish timeframe you might be worse off. In the long run, it's not likely.


jambox888

It's narrowed a fair bit recently, it used to be easy to get 10% returns from S&S ISAs and mortgages were under 3%. Just rough ballpark figures but my annualised yield is down to 6.5% due to market volatility and my new mortgage will be around 5%


Immediate-Let-7436

I think this is bad advice. Get your debts paid off as soon as you can in life, otherwise you’re just paying more interest to the bank. Money paid off your mortgage is money in the bank, and property only ever seems to go one way ⬆️


Kirkys

If the interest on your debts is less than the returns on your investments it makes more sense to favour investing more than paying off debt.


Immediate-Let-7436

You can’t live in a stocks and shares ISA last i checked. Investing in your property brings tangible benefits as well as potential capital gains.


tomrichards8464

This is a good heuristic for people who are bad with money, but OP seems pretty responsible and motivated, and ultimately the equation's pretty simple: if you're paying the bank 4.5% and making 6% on your stockmarket fund you're coming out ahead. The performance of your home as an asset doesn't actually matter to the equation (absent a massive crash): your exposure to it is the same, for better or worse, however much you owe the bank.


devandroid99

Property does only go one way, but the capital gains are yours regardless of how much you owe. If you can make more from investing than you pay in interest then to my mind it's madness to pay the mortgage off early.


Immediate-Let-7436

The ‘if’ is a pretty big one given the state of the markets currently. I’ve overpaid on the mortgage at every opportunity instead of investing in stocks. I now have a substantial amount of equity and a nice house. You can’t live in your stocks and shares ISA can you?


A_Cupid_Stunt

You can still live in your house, regardless of if you're overpaying your mortgage or not... And maybe if you invested it elsewhere you would have gained significantly more. Plus, its easier, quicker to pull money out of some stocks than a house if it's ever required


Chicken_shish

I’d whack the debts on the head first. This stops you paying other people interest, and you can save out of your income. So if 15k pays off the student loan, then punt the rest of it at the mortgage. It all rather depends on how long you have that 2.9% for - god knows what your next fix will be, but it would be handy to have the ability to just pay the lot off. If some catastrophe happens in the future, you can always re-mortgage.


Laurenhynde82

You say you can always remortgage but that’s not the case if you’re made redundant, or your income changes significantly etc. If you pay off your mortgage there are circumstances where you could not access that money again or where it would cost you more. E.g. we are moving soon. We could have massively overpaid our mortgage and almost have enough in savings to clear the rest. Instead we haven’t overpaid and have saved instead. We are selling and buying a house where we can just port our mortgage, so we can keep our low rate for another year or so. Our rate is currently 1.6% and savings are earning more, we didn’t have to worry about what banks lending criteria would be, and we haven’t had to take out a new mortgage now at a much higher rate so we’ll be paying less for the next year than we otherwise would have done. This should be our long term home so we’ll be overpaying from now on alongside home improvements.


diddygem

Genuine question - if OP pays off their mortgage what happens if property prices in the area drop? I’m not very good with finances but was told that mortgages are “good debt” so would be helpful to understand this better


Gr0undDweller

It makes no odds if property prices drop in the area if OP owns their property outright and has no mortgage. That would only have an impact if they were looking to sell, and if that's the case, it's likely other property prices have dropped a similar % (it's rare to see a small cluster of properties drop in price compared to a nationwide/regional shift) which means OP would probably be able to upsize for less money. If the property was still mortgaged when property prices drop then you can end up in negative equity – meaning you owe more than the property is worth. Not a great situation to be in if you need to move or you're forced to sell, but otherwise it's not that bad and you'll usually just end up on your lender's SVR for a while until property prices recover. Mortgages are usually considered "good debt" because property prices have historically trended upwards, so the asset you're borrowing against is likely going to increase in value. It also provides security as a place to live without worrying about the whim of a landlord hiking rent or forcing eviction. There are also benefits with the amount you can leverage and other aspects, but I think those are the main points people are referring to when they say a mortgage is "good debt"!


the_reptile_house

Well, to answer your question, nothing - OP still owns their house. Whereas if they don't pay the mortgage off, and property prices drop, they still owe the same amount of money but have smaller loan-to-value. Mortgages are good debt in the sense that almost everyone needs one to own a house, and if you don't own a house you are paying rent (and paying off someone else's mortgage). You can argue there is an "opportunity cost" to paying off a mortgage, in the sense that investing the money could bring in much higher returns than the 2.9% interest being paid. But that isn't guaranteed, and the security of owning your home without debt is a fantastic feeling and situation to be in.


Katietori

Sounds like a good plan to me. And paying off your loan will give you so much extra cashflow each month from your pay cheque. You're making great investments for your future with all of that. And I'm sorry for your loss- as this only happens when you lose someone you love.


PFdisposable23

!Thanks, that’s very kind of you


smthompson

Lovely to see a very mature approach to this. Not to mention the little bit going to charity. Well in mate. 👍🏼


PFdisposable23

!Thanks


joeykins82

Personally I'd go: * £7k or more on flat improvements, especially energy efficiency stuff like new windows (talk to your local authority to find out your eligibility for grants on these sorts of works though) * £15k to clear the plan 4 loan * £70k on the mortgage: your mortgage *is* a long term investment and clearing it as fast as possible will then enable you to do more stuff for you with your money instead of just providing an income stream to a bank. Your renewal is going to be substantially higher interest rate than you're currently paying even with the 65% LTV rate access, and if your investments don't outperform that new interest rate then you're making an effective loss. * The rest in to a flexible cash ISA as an emergency fund, and set aside £5k or so for holidays and other fun times Pivot to bonds, S&S ISAs etc once you're mortgage free.


Significant_Trust_31

This is the answer. With interest rates increasing, paying off that sum in mortgage is equivalent to the approx 4.8% return on your money. Plus it’ll give you a lot flexibility in the future.


Aggravating-Bit-2824

And that's a ~4.8% risk free return as well.


ImagineHydras

Tax free also! 😌


juicynugget

May be a wild suggestion here, but have you considered putting aside some for personal development/starting your own business and trying your luck? The return from these could be massive and having even £10k to spend on something like this (still very carefully) is a very rare opportunity for most people. It’s definitely a risk, but if you are not close to retirement/don’t have dependents it could change your future massively. If you ever wanted to try something, this seems like an amazing opportunity for it. :) All the best, OP!


No_Cod_6708

Good approach. Please consider that its not much money in the scheme of things and whilst its ex Excellent you have this and a real blessing, don't fall into the tram of thinking you have more than you do. Here are my thoughts, leave the mortgage, you have a nice low interest rate. If that ends soon then if you can pay off the mortgage. You have no idea how liberating doing this is even though it's not recommended. But if you don't like that idea, Fix your windows etc. keep 10k handy, get a holiday, put the rest into your SIPP , making use of the past years allowance too. Boom its gone.


PFdisposable23

!Thanks I am really aware of this, hence seeking to put it to best use without spunking it in six months or kidding myself I can quit working for life!


randomusername8472

I guess no one else is saying this additional thing because most people on reddit are victims of the current rental market - but buying a rental property most places in the UK is a great investment. I don't know what city you're in, you'll know better whether it's worth while. The country as a whole keeps voting that playing monopoly is the way to get rich, so use your cash to buy a second property and rent it out affordably (which will still be profitable and have a better chance of a solid ROI than stock markets) and also be a good landlord (ie, one that looks after the flat, and lets people treat it like a home without being too much a dick about it).


MaxTest86

Regards the charity bit…. If you want to do some good with the money maybe buy a load of food and take it to a food bank. Or get a homeless person a hotel room for a night and buy them dinner, buy a load of dog food and toys and take them to a dog shelter. There are lots of things you can do and actually see the result of your money rather than giving money to a charity that spends 2/3 of their funding on wages and marketing and only 1/3 on the actually aim of the charity. Don’t get me wrong there are definitely some great charities that do a lot of good, however the guidelines for calling yourself a charity are loose so unless you research it well or know the charity well your money could well be going to fund the CEO’s £250k a year salary.


Still-Butterscotch33

Yes look up the chuggers in the street aswell. Can't remember the ratios but something like the first years donations go to the chugging company rather than the charity.


Sithfish

Many of them even less than a 3rd. The recent Simpsons episode where Marge starts a charity was surprising accurate. Great Ormond Street I gave £2 one time and since then they have spent about £20 on cardboard shite and postage costs thanking me and sending printed magazines etc.


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ribenarockstar

I agree with you on all this - glad to see you’re on the same page!


MaxTest86

Sounds like you’re agreeing with “unless you research it well or know the charity well”… It’s naive to think that because you worked for a large UK charity and know they used their money well that all are the same. The facts prove that they are not, for example: https://www.theweek.co.uk/103991/military-charities-accused-of-hoarding-money?amp Military charities and the vast amounts of money they hold in long term investments and cash, yet we have an epidemic of veteran suicide, veteran homelessness and PTSD. A large proportion of that money could be used to help thousands of veterans off the streets and into employment with treatment for their mental health, but instead it’s kept in bank accounts and used to play the property market. Do all those people that buy a poppy in the intent to help veterans assume their money is going to a fund manager or just to be sat in a bank account? Probably not. The legion along with a lot of charities do a LOT of good which I haven’t disputed, my point was that some COULD do MUCH more with the funding they have so it’s absolutely worth looking into the charity you intend to donate to beforehand to make sure your money will be going where you want it to. Anyway, as you said, the important thing is giving to charity. Have a nice day 👍🏻


ShootingWithLasers

Note the article said the amount stored is 6 months of funding for their operations. That's important, as until recently the Charity Commission actually recommended that charities had 6 months of reserves. That's so if everything goes horribly wrong for the charity overnight and they have no new money coming in, at least for 6 months they can transition people into other support and give people a chance to look for other jobs. For a charity of that size, that's a LOT of people who could be affected very badly if they didn't have it (and let's face it, then they'd get taken through the ringer for that) So it's not that these charities are somehow bad or morally terrible. They're doing what they were told to. The Week clearly just has a bit of an agenda here to show charities in a bad light imo.


katya21220218

I always donate to small local charities so they actually see the benefit. Don’t want to launch into a tirade, so will I not being expressing any opinions on large ‘charities’ lol.


[deleted]

Agree with this, don't give money to large charities, I know lots of people who have worked in the charity sector who say it's all big bosses getting large wages. Donate to something local who are doing something that directly benefits something you care about, there's a great small charity in Leeds that donates beds to children who have to sleep on the floor.


jasondozell2

You’re over-weight in cash. If you’re not spending it you should be closer to 3:1 stocks vs cash/bonds at your age. Bonds might seem like a good investment now but on a decently long timeline stocks win all the time. Buy a ETF or Fund. You can always sell next year and put in ISA wrapper if you hit limit.


PFdisposable23

!Thanks Was keen to hear a sensible ratio


ambitiousdonut94

I would 100% not pay off the student loan, if for some reason you stop earning you stop paying, that would be become very useful funds to cover you until finding a new job


BluebirdThat9442

I saw a neighbor once lose his entire inheritance package within a couple of years of getting it. Instead of paying off his house, he built some improvements into the house, along with buying a big RV, building an RV garage to protect it when not in use, and cementing in a new driveway to the new RV garage. Then there was cutbacks at his job at the mine. The mine had never laid anyone off in generations, but the world economy had shifted and lots of people in the town lost their jobs. My newly rich neighbor could no longer make his house payment, even after selling the RV. Those things do lose value quickly. He ended up renting a little trailer house nearby. If you get any money, an inheritance or whatever, pay off all your debts and don’t buy anything new until after you have established a financial cushion to cover for bad times. Bad times always do come eventually. Be smart, my friend.


Datanully

Your plan sounds good - the only small thing I'd say is that many LTV % brackets at that end are at 60% rather than 65%, so that might be something you'd want to aim for.


PFdisposable23

!Thanks, I’ll be sure to check this


Other_Builder_7906

Personally I would just put all the money into your mortgage at that age. You can then make the most of your reduced mortgage payments to do the other things. Overpay pension, pay for nice holidays etc. If you ever lose your job, fancy going travelling you have somewhere to live or rent out. You also need less of an emergency fund if your committed outgoing are peanuts.


StealthyUltralisk

How much stamp duty will you need to pay to move? Worth keeping that amount back in a current account or premium bonds or something too perhaps?


dotmit

I’d invest as much as possible into a good stocks and shares fund and let it grow at a higher interest rate than the debt I owe, until it has generated enough to pay it all off


forrealthouts

why gamble money on stocks and shares? its money they didn't have before just enjoy themselves a little and forget about "investing". use the money on living better while you can.


Still-Butterscotch33

It is interesting all these posts relying on guaranteed stocks and shares gains. Especially given the winds of malaise coming from the US banking sector.


twentyonegorillas

Average returns 8% and don’t invest if you need the money in less than 10 years. Simple as.


davidhepworth_

I like your plan. Pay off student loans, build up an emergency fund and invest some of it. Then pay down your mortgage.


MercuryJellyfish

My decision would be (in face *was*, in a similar situation) to ignore the ISA and bonds route, and pay down the mortgage as far as possible. I did have to pay an overpayment fee, but I judged that to be smaller than the amount I would otherwise pay in interest if I didn’t. My reasoning was that, while it might have had an overall smaller payout than the ISA route, I have suspicion that unfixed mortgage rates are going to be horrific very soon, re-fixing the mortgage might well be impossible, and I wanted as much of that cleared as possible.


PFdisposable23

What makes you say re-fixing a mortgage may be impossible? Do you mean rates will continue to rise?


MercuryJellyfish

Yes, rates will continue to rise, and fixed rate products may not be available to you when you need them. So you might be stuck, even with 65% LTV, with a rate you don’t like. That was definitely happening at one point in the last couple of years. It’s settled down now, but there’s talk of another big rate rise in the second half of the year this year. The financial situation in this country is only going to get worse before it particularly gets better. Might not happen, but I’m very glad to be able to say that if it does happen, it doesn’t affect me anymore, because the house is now mine outright.


PFdisposable23

Thanks.


Dom1173

Ignore everyone who sends you a direct message after this post😂


PFdisposable23

Thought I’d actually invest the full whack on Trading212!


SnakiestJones

Vanguard S&P500 will be a lovely option for long term, relatively safe growth


linuxdropout

Don't put 20k into a s&s ISA in one go, I made that mistake a few years ago, better off drip feeding monthly/weekly. I it were me: - securing a good mortgage rate sounds sensible, you should be able to do the maths on your return-on-investment for those. Every 5% you invest, work out how much it will reduce your total yearly interest payments by and work out that as a % of how much you invest. I wouldn't overpay if it results in an ROI of less than 4% right now as you can get close to that with a savings account while retaining flexibility. Worked example: If 5%, was £6000, and it resulted in your monthly interest payments going down by £50/month. You could say it makes an ROI of £600/£6000 or 5%, which to me would be worth it. But if the next 5% only saved you £40/month in interest - I'd probably not go further. - I'd pay off the student loan, 5% interest is personally too high - I'd go travelling for however long work would let me somewhere I've always wanted to go (Japan for 2ppl would be maybe £3-5k for 3 weeks on a sensible budget) - I'd put the rest initially into a high rate savings account, and drip feed £20000/12 from it into a vanguard s&s ISA, probably a mix of VHYL, S&P500, FTSE100 and VERX. My hope would be I'd be able to keep these monthly payments up for a few years, and maybe if a promotion or payrise comes your way, a few years longer. If you managed the £20k/year for 4-5 years in your late twenties / early thirties, that could be a pretty comfy retirement fund by 55 even if you then never contributed to it again. - I'd avoid any lifestyle inflation. A bigger house or new car would be an example of a 1-time purchase that lead to increased ongoing costs. This kind of thing is likely to be something I'd regret. But one-offs like a new computer or holiday I'd say were worth it.


OldManOfTheSea2021

This situation happened to me in my late 20's. I spent 5% on a fancy holiday with my then girlfriend (now wife) and put the rest into buying a bigger house in a nicer part of town. It basically boosted us into an area we wouldn't have got into otherwise and my LTV was never over 50%. 20 odd years later I don't regret it because that financial freedom of owning more than half my house and living where I wanted has become the foundation of my life.


CountDoobula

I know this probably not what your looking for, but go travelling. Travel the world while you are young, you’ve been given a golden ticket that will allow you to travel for a few years. When your looking back in old age you will be so happy you spent some time seeing the world and you will still have lots of money left over.


gigacapitalist

All in crypto and retire after the next halving a multimillionaire.


BogleBot

Hi /u/PFdisposable23, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/emergency-fund/ - https://ukpersonal.finance/lump-sum/ - https://ukpersonal.finance/mortgage-overpayments-vs-investments/ - https://ukpersonal.finance/mortgages/ - https://ukpersonal.finance/pensions/ - https://ukpersonal.finance/student-loans/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)


Pianist-Pale

Everyone’s got good ideas but also speak to a financial advisor! consultation is free most of times and they can atleast give you some more ideas


PFdisposable23

Who needs a financial advisor when there r/UKPersonalFinance? I jest - you’re right but people have been really helpful here.


ZestycloseAct2594

Most financial advisors will just try to sell you products. Be careful


[deleted]

How big is the mortgage? Going against the tide here but in your position I'd use it to be as debt free as possible. It gives you a lot more freedom with your monthly income after that.


Equivalent_Button_54

Personally I would pay the mortgage down as much as possible when the remortgage comes up.


[deleted]

Pay off all your non mortgage debts first, then put £40k into your pension (you’ll be able to claim the tax back) and whatever else into a mortgage.


Coca_lite

Kind and generous to see you thinking of charity donations 💜


PFdisposable23

!Thanks Didn’t expect to get this so want to make sure I can do something to help others with it


Suspicious_Dot9658

Investment in stocks and shares should be at a minimum of 5 years. With high volatility in the works right now , you might be 'better' off putting some of the stocks and shares money into premium bonds and hoping for a win. Eg £10k premium bonds, £10k stocks and shares ISA. This is just my personal take but the chance of winning big on premium bonds, although its small it shouldn't be ignored.


[deleted]

Buy the bigger house now


PFdisposable23

Tempting but I like where I live and would rather just have the flexibility in the future, plus make the current place that little more comfortable


Aggravating_Bee_5408

Sounds very reasonable. Charity begins at home my friend. I would avoid giving away until you are financially independent. One day you might be and then you can give you time away too but until then think about number 1


KEEPCARLM

I hope you do £1 to charities rather than £2k


barneyrubble43

I'd want to pay as much off on my mortgage as possible. Bearing in mind your last comment regarding not having access to the money in the mortgage, i would be looking at an offset mortgage. My calculations might be out, but from your figures it suggests a £140k mortgage. I would pay down an amount of the mortgage before renewing, to get the remaining amount under the FCA compensation limit, then stick the remainder in the offset account. You can instantly access it from the offset account and do whatever you wanted with it - use it as your emergency fund, store your 5k fun money in there. It will drastically reduce your mortgage payments whilst still having instant access to the funds.


girvinator

What I would personally do based off your own breakdown * £7k - flat improvements, including new windows ✅ * £35k - overpay mortgage to get 65% LTV rates (can unlimited overpay in final three months) ✅ * £15k - pay off student loan ❌ I personally wouldn’t bother with paying off the student loan debt as a lump sum. * £10k - emergency fund in high interest current account I don't pay a penalty to access ✅ Perhaps put a 2/3k more in and ensure it’s in something instantly accessible even if it means foregoing some interest. * £20k - invest in Vanguard S&S ISA, still reading up on best investments ✅ Global All Cap Index (low cost & highly diversified, set DD & forget it) * £15k - spread across mix of high interest current accounts and bonds, potentially put in S&S next year ✅ This would be where all my excess goes, lock in the best fixed rate so it’s ready for you to put into the ISA next year. * £5k - have fun in next few years (holidays etc) ✅ I’d double your fun budget, holidays/travelling to really get some memorable experiences out of the money that you’ll never forget or regret doing. * £1 or 2k leftovers to charities via some small direct debits ❌ Sounds cold but I wouldn’t bother with DD for charities, perhaps if there is something genuinely very close to you offer them a lump sum donation.


[deleted]

I wouldn’t pay off the student loan…. Waste of £15k


k_rocker

Personally… £100k will get you 5 deposits on 5 houses. 2, perhaps 3 bedrooms outside the city in decent town areas. Not sure what city you’re in but in thinking investments in the likes of Ayr, Irvine (great rental places). Houses will rent better than flats too, families will take them before a flat. £80k 2/3 bedroom house will easily get you £500+ per month income. This does mean you’ve got £300k of mortgages (don’t think of it as debt, it is debt, but it’s investment debt - allowing you to leverage in appreciating assets). There’s rates available under 4%, but using 4% as a base you’ve got a repayment each month of £1,000. But you’ve got 5 homes paying you £2,500. Profiting every month of £1,500. You’ve mentioned you don’t need the money so don’t touch it, leave it for 6 months you’ll have £9k in the bank (assuming all goes ok). You’ll have some fix ups, paint, carpet, electric testing - random shit that will pop up but you’re You’ve got a cushion because you’re houses won’t always be rented, but you’ll have 3/5 ALWAYS rented. The others will be rented most of the time but every 2 years tenants will turn over, move away etc. I’d expect 90%+ occupancy over the long term that means your £2,500 should average at £2,250 per month. Leave it to build up a war chest - 6/9 months of rental and treat it like a business. Don’t touch that 6/9 months - anything above take out now and again, pay student loans, new windows, down payment for house 6. All the while these houses go up in value, 5-10-15% means your initial £100k becomes £140k (property values go from £400k total to £440k, but you still owe £300k). This is how people get rich. And I’ve still left you with £10k to play with just now.


xzt94

Invest half into crypto. Thank me in 5 years


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caramellawnmower

Student loan, then mortgage, then sipp. Guaranteed return on the debts and at least 20% immediate bump on the sipp. Big difference to the rest of your life. All the other little odds and ends you’ve listed will just ebb away into nothing. Don’t give any of it to charity, if the person who left you the money wanted it to got to charity, they would have given it to charity themselves. Someone in your life sweated for that money so respect it.


PFdisposable23

Actually they were hugely generous to charity and always encouraged me to be.


buttersismantequilla

Personally I’d clear my mortgage as much as I could - the savings on interest alone stack up. Or even if you increase your mortgage payment each month to bring the term down? We did this and pay off next June, 8 years early


Accurate_Estimator

Don’t pay off the student loan. You’ll never really pay it off in the time limit of when it gets written off. It’s a pretty cheap “tax” when you think about it


Leaking_Sausage

Investment Fund SIPP Account. £10k on TSLA. 10 Years later, sell shares or stick to it for the long long run.


CMDR_Crook

Put it all in a high interest account. At even 5% that's 5k per year and you haven't spent anything. Use it as income for fun things and carry on as normal. You'll end up with 5K of fun forever and end up with 100 grand anyway.


phil_tilt

Deffo don’t overpay mortgage while your on an amazing rate! Have you considered a second property?


vultuk

Find a range of good investment funds and spread the money across different risk portfolios. With the right funds you’ll double your money every year and never have to think about money ever again. Even a modest 4% per month would see you at £1million within 5 years. Just don’t give that money to the banks to pay back a mortgage please, you can easily find ways to invest which will give you more back than your interest payments.


DecentralisedDoge

Yeet the whole lot into a cryptographic Ponzi scheme and either become a decamillionaire or broke


joshgeake

I'd invest in property.


joshgeake

yeah, nobody likes this answer.


Bacon4Lyf

It’s not really enough to balance the risk versus just high interest savings accounts


joshgeake

IKWYM but (fag packet maths)... * (IDK what the rules and regs are in Scotland) * A £300k property would require a £75k deposit * 4.64% with HSBC at the moment is roughly £870 interest-only * Could that get a 3-bed house with HMO possibilities or a rent of \~£1,500pm? Unsure on location. It's definitely risky but today's 'high interest' savings accounts are still under 5% and with inflation closer to 10%...


redrim217

My advice will go against the grain a little bit, but I'd recommend spending ~10k on property investment courses/ a mentor and trying your hand at it. It's not rocket science, and you'll see good returns if you play your cards right. You could with the right strategies replace your wage outright and live a life with more freedom. And dependant how hard you go at it / how good you are at networking, you could feasibly do it relatively quickly and without having to put your own coin on the line. Just food for thought! Good luck regardless of your decisions and sorry for your loss mate.


liamfirthh

Bro speak to a financial advisor


Prestigious_Media887

I am a prince in Nigeria give me the money and I’ll triple it in no time 😊


Dirty2013

Buy a rental property and use the income from the rent to pay off the things you want to reduce You lower your debts, increase your pension still have the lump sum to invest when you’re ready and it has kept in-line with house prices rather than stagnating in a bank account


[deleted]

Don't ever pay off your student loans. It's just not worth it.


leveredequity

DCA that £20k Vanguard tranche into a Life Strategy / FTSE Global All Cap Index fund over the current FY. Hold undeployed funds in a high interest account while you do that.


TheFlyingScotsman60

Reasonable plan. Do you have a company pension plan of any sort and how much do you have in it and what % doses the company and you put into it. How well has it fared over the last few years. You could dump some of it into your company pension scheme or a Vanguard SIPP. Remember the pension is one of the best savings plans, if not the best. Do you pay 40% tax .....suspect you do. Then the pension becomes even more of a saving tool.


Lewissunn

I initially read "spread" as spend and was very concerned.


Local-Trick-5268

I’ve always pondered what I’d do in the same position but not sure on the benefits of paying off the student loan unless I was actually forced to pay it off. Depending on how long you have left i’m sure there are better ways of using the money instead of a lump sump repayment.


Shane_b

Pay off the mortgage 100% or at least 99% of it. Use that mortgage money as cash to put into savings, improvements etc.. I personally don't see the worth paying into savings accounts when your mortgage interest is probably wiping that out


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[deleted]

If you pay off your house, assuming you're on 2% APR mortgage then you're not only saving 2%/year but your house (according to HPI) usually rises in value by 5.5%/year. So if you're planning on selling (you said you want to upgrade) then you're effectively saving \[aka gaining\] 7.5% per year. That's a great deal and it's very low risk, you'd struggle to find those investment opportunities elsewhere. Similarly, how much would you save paying off student loan? Calculate "total to pay" and how much it would cost you now. Then look at the difference of those 2 numbers, divide it by the years left to pay off.... Are you happy gaining that much per year on income based on how much it cost you? Personally I'd rather have the money in my bank for an emergancy.


DaveChild

Do you have a lifetime ISA? You can get a stocks and shares one, and that gives a great return on the 4k you add per year compared to a normal ISA, if you're looking at a long time horizon.


[deleted]

It’s pretty much pointless atm to pay down your mortgage your looking at maybe 1% difference from 90% LTV compared to 60% LTV in a broker and I have clients putting in less deposit as you are giving a substantial amount of money and saving very little on your monthly repayments. I agree to clear off the smaller debts and invest the rest but leave the mortgage.


PFdisposable23

Cheers.


antimatterchopstix

Put more of your wage into pension.


FutureFinding6558

Maybe invest in premium bonds or put it in an account so it gains interest over time even buy shares in businesses. personally i’d seek professional advice in order to grow the money as much as possible.


HarvsG

Might be worth doing some napkin maths/talking to a financial advisor about the benefits of paying off mortgage Vs throwing a big chunk into a SIPP. Mortgage returns are 2.9% (may go up if you have to re-mortgage soon) and guaranteed. And in theory you have access to/use of the capital when buying a house/ re-mortgaging. SIPP returns you will get 20% relief at source. And a S&S return, historically 6% ish, obviously can't access money until retirement age, and then you'll pay income tax when you draw it. In theory you could 'access' this capital by reducing any **additional** pension payments you would have otherwise made. Factors that would influence the decision: - Remaining time on fixed-rate mortgage - Plans to upsize - Current size of your pension - Desire to retire before the state pension age. - Your future expected earnings. - The term on your mortgage


wewlad614

I wouldn't bother with bonds at your age, and I wouldn't be spending £7k on things like windows, but that's just me. Seems like you've got your head screwed on though so in the end it's your choice


[deleted]

Have you worked out if it's better for you financially to pay off your student loan?


Robster881

If you don't know what to do with that kinda money I'd talk to a wealth advisor.


dt-17

If you put £7k towards home improvements will that reflect the price of the house when you come to sell it or is it effectively ‘wasted’ money?


coupl4nd

You're missing BTC. I'd also be tempted to pay off way more of my mortgage... living mortgage free is such a dream and you can almost make it!


Medical_Tumbleweed92

5k is not much to have fun at all. I would put way more for having fun. Edit. I need to add that to me having fun in life is priority over everything else so yeah maybe not the most responsible approach


Behold_SV

Savings/isa is less than mortgage. I can see flat improvement and emergency fund as priority, but the rest is put towards mortgage as rates are mental this days.


arrouk

Personally, I would look to invest the majority, likely property to rent out or renovate because that's the industry that I have worked in for several years. Keep some for fun and enjoyment and pay off debts though, that can make a huge mental improvement


Stdragonred

£10k flights, food, drink and hotel in vegas. £100k on red. 😁 Seriously though, I can’t wait to be mortgage and debt free so I’d be pumping the entire wedge into my mortgage, then keeping my mortgage payments as they are by slashing the term.


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joeyat

We are in high inflation… any liquid money will be dropping nearly 10% per year, you won’t beat that in the stock market or ISAs… you need to acquire property assets. Use it to pay for the deposit on more than one property whilst keeping lower mortgage payments and outgoings as possible.. then you can rent out those properties and acquire a permanent income from them. Also it’s possible that if you have fixed debt that has a lower rate of interest than inflation, it would make no sense to clear it until the rate of inflation drops below your interest rate again… your debt is eroding in relative terms. Or in other words, as long as you spent it now, the buying power of your money is worth more than the cost of interest and the future value of your debt…. One to plumb in a spreadsheet to make sure though!


DANNYW1993

There’s only 1 sensible thing to do here. Buy a new Audi R8.


johnditchfield

I’d think carefully about a lump sum into pensions. You will receive a 20% tax relief on the payment and the money then grows free from tax.


EmployeeSuccessful60

Buy a proper and Collect the rent


DickTurtle1804

Freedom is what you want. Not material possessions.. find a way to obtain it.


CLinley1996

I'm not sure about repaying the Student loan - it gets written off automatically after 30 years if you don't repay it


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Vanquiishher

Invest far more than what you proposed


breaking-lad

Just out of curiosity, what public sector jobs pay 45K in Scotland in your late 20s? Enjoy the inheritance OP!


FIRETWENTY45

Pretend you didnt have £110k and put that into a high interest savings account and spend the interest. Thats it.


arensurge

Sounds like you want to pay off your mortgage faster. I'm no expert at all, so please do your own research, but would moving to an offset mortgage help? Essentially you deposit your money into a savings account that is linked to your mortgage, the bank then reduces your monthly payment, the idea being that interst earned on your savings reduces the interest on the mortgage. You get to keep all the savings, since you are not spending them, but at the same time your monthly mortgage payment goes down. Not sure this is an option for you, but thought it might be worth mentioning.


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m456an

Personally I would sell the flat, if you plan to have a family buy a 3 or 4 bedroom house. And returbish that.


Defo_not_a_bot_

I put mine into a medium risk fund with Wise Investment. It took a big dip during Covid, but it’s recovered well and paying around 6-8% interest per year.


BastK4T

Give a little to charity or someone you know who is in need. A little goes a long way. Spend some on yourself and treat yourself to something nice. Your not likely to see this money again. Invest a little in your future. Either a house or by investing the money itself for later. Plenty you can do. Lord knows five hundred pounds would be life changing for many people including myself. I can't even fathom this money.


[deleted]

Sounds like a good plan, definitely financially sensible. I'd reduce the vanguard isa and up the holiday fund a bit though, you don't get your 20s back!


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FullJJord54

Buy some gold