Should I use an inheritance to pay off my mortgage?
When using inherited money to clear the mortgage can suit you, and what to check before paying anything off.
When using inherited money to clear the mortgage can suit you, and what to check before paying anything off.
Paying off the mortgage is simple and certain. It removes the largest monthly bill and feels like a sensible use of money that arrived unexpectedly.
It can be the right thing to do. Check first, because money used on the mortgage is hard to get back out.
Many fixed-rate deals charge for paying off more than a set amount while the deal lasts.
Money in the house cannot pay an unexpected bill.
Credit cards and loans usually cost far more than a mortgage.
For some people, particularly higher-rate taxpayers, part of the money may do more in a pension.
Whether any inheritance tax has been dealt with on the estate, and whether the money itself will produce taxable income if invested.
No, but it can leave you with no savings to fall back on, so check that first.
If charges would apply, often yes.
Yes. The larger the sum, the more there is to consider before deciding.
Ask your mortgage broker what clearing or reducing the mortgage would cost and save, including any charges. What else the money could do is investment advice, and your broker can introduce you to a financial planner to look at that half.
This article explains how things work. It does not take your circumstances into account. Your mortgage broker can introduce you to a regulated financial planner at Equity & General where the question needs one.
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