I’ve inherited some money – should I save it or renovate my house?

·2-min read
<span>Photograph: Loop Images Ltd/Alamy</span>
Photograph: Loop Images Ltd/Alamy

Q I have inherited some money and am wondering whether to save it or spend it on renovations around my house.

The mortgage is paid and I took early retirement so although I have a pension I do not yet have a state one, plus I have a private pension worth £125,000 which I have not yet touched.

My concern is the rising cost of living and the thought that if I spent the money I may not have enough income and I wouldn’t want to do the house up then have to sell.

I’m a bit puzzled. If you have an untouched private pension of £125,000, why would you have to sell your house – done up or not – to top up your income? Surely you would use the currently untouched pension to supplement your income. As to whether you should save or spend your inheritance, a lot depends on what you already have in savings and on how much the renovations are going to cost you. If your savings are already enough to bail you out in times of prolonged financial crisis, you probably don’t need to top them up. But you should if they are not.

As to whether you should spend the money on renovations, it depends on whether they are essential or merely cosmetic. Essential renovations include anything that makes your property watertight, weatherproof and in line with current safety standards. The reason for this is that when you come to sell, your property needs to be in a mortgageable state if you are going to attract buyers who need to borrow to buy. I know this because the house l am currently trying to sell (my mother’s) has been declared unmortgageable because of the substandard state of the electrics.

If you don’t need to do anything to bring your house up to scratch and so your renovations will be purely cosmetic, whether you should go ahead is entirely up to you. But it doesn’t have to be an all-or-nothing approach as you could put some of your inheritance into your savings and spend the rest on improvements.