im going to inherit some £110,000 very soon, unfortunately it coincides with me being unemployed with a mortgage of £156,000 !!!! some say plough it direct into your mortgage and reduce it now , others say put it in the bank ? but interest rates are so low it wont make anything for me ,its a quandary , a good one fortunately but advice needed and needed soon

thanks

It's got to be your decision and not anyone elses's but factors to consider are:

A large amount of savings will reduce your benefits

£110k is enough to buy a business which may or may not appeal as an alternative to unemployment. Daltons Weekly lists businesses for sale but you do need to be cautious with your money.

Usual disclaimers: I am not an expert; this is not financial advice; it is my opinion and take it or leave it at your own risk.

1) If you plough it into the current mortgage and then can't keep up with the payments, you stand as much chance of being repossessed for £46k as you do for £156k. Therefore, the question is whether you can remortgage and reduce your monthly payments to an affordable level; this may not be simple while you're unemployed. It is worth finding out whether any early repayment penalties apply and whether your current provider will offer a remortgage if you want to pay off £110k.

2) If you're claiming income-based JSA or Council Tax benefit, you should be aware that capital over £6,000 reduces what you get and capital over £16,000 renders you ineligible in most cases. Assuming JSA of £3354 & CTB of £1,500 (per annum), that loses you £5k per year as compared with not having the capital and having a lower mortgage debt. The figure could be higher if you live with a partner in a similar situation; his/her benefit could also be affected by your capital. If you expect to be in work again very soon, or can stay on contribution-based JSA until you are, this may not be an issue, but if you plan on remaining unemployed until the market improves, then bank interest pales into insignificance compared with the benefits that you give up.

I am not in a position to give financial advice, but my reading of the above is that you'd have to have a very good investment to justify losing your benefit and paying Council tax when you don't otherwise have to. I would seek to use the money to reduce your mortgage in some form, keeping back £5,000 as a reserve (which doesn't affect your benefit entitlement). At such time as you're back in stable employment you could always remortgage again to release some of that equity if you need to, by which time hopefully the housing market might have recovered. Meanwhile, you've hopefully had all the benefits you're entitled to and carried on paying the mortgage at a much reduced rate.

This is a sufficient sum of money that you would be well advised to consult with a financial advisor as opposed to take my (or anyone else's) word for it online - but, you should factor your eligibility for benefits into the equasion.