Advice needed - overpay mortgage or buy teachers past added years.

DWB_2

I am 58 and I am buying back just over 4 past added years - I will be doing this for another 6 years - I pay £3600 a year in contributions(tax deductible) over and above my normal pension payments into the teachers scheme. I have a 125000 mortgage for the next 9 years at £1230 per month some of which is at 6.99 per cent- repayment all of it.
Should I stop paying what will be £24000 more for what will be roughly 6k more lump sum if I retired at 65 ie 34 k lump sum cf 40k along with 2 k extra per year pension?????????????I am fit and intend to work till 65 with my current employer hopefully.

CLAPTON

however does a mortgage of 12,500 cost 1,230 per month over 9 years?

DWB_2

Left out a zero!thanks

Niggles

Very much a personal choice.
In similar circumstances we took the decision to buy the 4 years, we are hoping to live till 80 and have 20 years of extra pension but who knows.
If I understand your figures correctly I think the tax relief on your pension contributions means they only cost you £19,200 not £24,000.
You still get the £6k tax free, (unless the Govt change this as some rumours suggest) and the £2k per year is taxable but indexed linked in some form. £19,200 less £6,000 means you need to recoup £13,200 which would only take about 6 years.
You would pay off your mortgage early with taxed income. How much you can then save once the mortgage is paid off to help produce extra pension then becomes the question you need to consider.

dunstonh

Very much a personal choice.

it is but what is best financially will come into it as well. However, a lot of that will also depend on personal choice and opinion as you say. Tax position now and future, savings and investments now and future, spouse/partner provision (thinking of their personal allowance), death benefit requirements.....etc will come into play. Often you have to look further and more holistically than the pension or mortgage in isolation.

property.advert

If you really owe £125k and are paying £1230 a month then your average rate is only 1.35% which makes me thing your sums are wrong somewhere if you have some of it on 6.99%.

And your term to maturity at 67 years old is more than your retirement age so there is another maths issue to deal with.

Are you sure you have the right figures ?

dianne268

Niggles wrote: »

Very much a personal choice.
In similar circumstances we took the decision to buy the 4 years, we are hoping to live till 80 and have 20 years of extra pension but who knows.
If I understand your figures correctly I think the tax relief on your pension contributions means they only cost you £19,200 not £24,000.
You still get the £6k tax free, (unless the Govt change this as some rumours suggest) and the £2k per year is taxable but indexed linked in some form. £19,200 less £6,000 means you need to recoup £13,200 which would only take about 6 years.
You would pay off your mortgage early with taxed income. How much you can then save once the mortgage is paid off to help produce extra pension then becomes the question you need to consider.

Thanks - the 24000 is after tax relief not before. that is as far as I can think at the moment. I couldnt seem to log on as DWB so am now dianne268!

dianne268

property.advert wrote: »

If you really owe £125k and are paying £1230 a month then your average rate is only 1.35% which makes me thing your sums are wrong somewhere if you have some of it on 6.99%.

And your term to maturity at 67 years old is more than your retirement age so there is another maths issue to deal with.

Are you sure you have the right figures ?

88000 is at 2.00 variable, 25000 is at 6.99 for rest of term. Mortgage ends when I am 67 - two years after I officially have to stop work.