Advice Needed - should I overpay my mortgage or Pension?

Pritesh_2

Hello All,

This is my first ever thread, not really sure if this the right place or I should have to put this on the pensions board (apologies).

I have worked out that I can spare about £100 a month. Now the question is do I overpay my mortgage every month or increase my Stakeholder Pension?

The figures are as follows:

Age:32

Mortgage £129,000 (23 years left)
Stakeholder: Pension with Norwich Union £50 (monthly DD)

My mortgage interest is calculated on a daily rate.

Many Thanks for your help

starkj

I asked a similar question a few weeks ago and got no help.

I would say £50 pound a month for your pension is on the low side, unless you have been paying this for a very long time, say ten years or more.

I would say increase your pension payments or split the money between pension and mortgage.

SammyD_2

Why not split it - your pension gives you the tax breaks, meaning the extra £50 actually gets more than that into your pension pot, but the mortgage has the guaranteed "return" of not paying interest...

tee_pee_2

personally I overpay my mortgage but thats just my opinion plus it helps that my husband has a good pension and mine isn't too bad. Plus you could die before you get to pensionable age. Morbid thought but nevertheless true.

Pritesh_2

Hey Everyone,

Thanks for the suggestions, I have decided that I'm going to split it for now. £75 into my mortgage and £25 into my pension. When I have a little more money (hopefully in 3 or 4 months) I'll make sure my pension is about £100 too.

Thanks -

ads_2

I would recommend you check what your pension will provide when you retire and confirm this fits with your plans.

I don't know your full circumstances but even if you are paying £100 per
month into a pension that could prove to be on the low side.

jwoods_2

should I pay off my mortgage or put it into my pension/
J Woods

Gingham_Ribbon

Hi Jwoods, I've added your question to the thread already covering this topic, so hopefully you'll get some more answers.

Thanks.

Thenotsowyzewun

I think this is a question for a calculator.
I'll be darned if I can find one though (a specialized one!)

hazelize_uk

Dont all scream at me at once :O but i have not taken out a pension and have been concentrating on overypaying my mortgage. The thing is i noticed that the comments thought £100 a month was a bit low for a 32 year old and as thats my age i was wondering how much people thought was about right!

What i was planning to do was - i currently pay about £700 extra on top of my £400 mortgage and hope to get it cleared in 2 1/2 to 3 years. I was then going to sort out investing in something or other as a pension.

Trouble is the more i research the more confused i get! My first thought was once the mortgage is clear to invest £500 a month in each of my and my husbands names.

Also my husband does have a pension sorted but we are trying to get them all sorted as he has about 5 different schemes due to changing jobs which is in the hands of a financial advisor.

Anyway what im trying to say is - Am i wrong to wait another 2 years while i finish the mortgage or shall i panic now and get things sorted, and is there anything to calculate how much is enough!

Pritesh_2

hazelize_uk - Excellent question, I too want to overpay my mortgage (not complete it in the same time frame as you, but reduce it by 6/7 years and once I have more money to play with I'd love to pay a lot more into my pension! A very similar situation, look forward to some replies.