Mortgage or Pension Dilemma

smiffy

I'm not sure if this question should be here or the pension section. I realse that you will offer opinions rather than "advice".... The scenario...

A 29yr old family member has just started a new job paying £15k, which is more money and with the option of a company pension scheme. If you join the scheme they will pay an additional 7% on top of the 7% deduction made from basic salary.

However this single person only has a mortage of £47k and has been paying an extra £2k a year over the required repayment. Monthly mortage payments are £360.

The new job pays about £100 a month over the old so should the £100 be used to make the pension contribution, or would it be better spent in making the mortgage repayments - thus reducing the amount of interest charged?

The provisional plan is to pay off the mortgage as soon as possible, and then invest in another property to rent out to provide an additional income.

Whats the best approach from a financial point of view?

EdInvestor

Making the pension contribution to get the free money would be best.

There's no rush getting into the BTL market, rental yields are currently barely covering costs, you can often do better in the bank.:(

Joe_Bloggs

This looks good value. What existing pension provision did your family member have? Move the question over to the pension board so that those with far more expertise than me can advise what to look out for. If you are ahead on the mortgage and you have a reserve of savings then why not sort out the pension with free money from your employer ?
J_B.

dunstonh

On the one hand you have the BTL which is such poor value at this time and giving very low yields (and likely to continue for some time) and on the other you have free money at a rate that is higher than most BTL current net yields.