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Pension or Mortgage????
smiffy
Posts: 173 Forumite
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 future income.
Whats the best approach from a financial point of view?
Take the extra free money for the pension or make extra mortgage repayments?
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 future income.
Whats the best approach from a financial point of view?
Take the extra free money for the pension or make extra mortgage repayments?
0
Comments
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I thought I saw a similar post to this the other day. Anyway, the money is best spent on the pension.
Pension has free money from employer at 7% p.a. which, when invested will grow around 7% p.a. (using mid rate FSA projection). It also has tax relief on that contribution.
Mortgage is costing around 6% so the free money alone is beating that.
As for buy to let, that is a poor investment at this time. Rental yields are very low, legal responsibilities are increasing and its just as risky as having all your money in a single stockmarket share.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
You did dunstonh - but it was suggested to move it to the pension forum...
thanks for you comments...0
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