mortgage or pension?

iwblue

I'm trying to decide what would be better. !I currently pay £115 per month to a civil service pension to buy additional years. !I currently have £30800 outstanding on my mortgage, which has 3 and half years left on a fixed rate of 3.99%.

I can suspend purchasing the additional years on my pension for a period of time and wondered whether it would be better to use the £115 per month to help reduce my outstanding mortgage.

Does anyone know how I would go about trying to work out this problem, or have any thoughts?

Many thanks in advance.

TrickyDicky101

How many additional years will you purchas in the next 3 years? I *highly* doubt it would be in your interest to suspend the purchase of these and overpay into your mortgage. For a start you are getting tax relief almost certainly at your highest marginal rate on the contributions, and final salary schemes are *extremely* valuable (especially ones with a cast iron tax-payer funded guarantee). I take it you are a higher rate tax payer (expensive mortgage if not)?

iwblue

I'm not a higher rate tax payer, unfortunately. If I was too suspend my extra years contributions for 3.5 years I think I would lose out on purchasing approx 9 months worth of extra reckonable pension.

dunstonh

You cant buy added years any more (IIRC). So, if you pull out of those, you wont be able to buy them again in future.

Does anyone know how I would go about trying to work out this problem, or have any thoughts?

Not a problem. Its a just a case of working out which option is best. Typically, its more than one option. For example, i am currently overpaying the mortgage, maxing out my S&S ISA and have increased the pension contributions. No point restricting yourself to one or the other.

iwblue

I'm in the Classic scheme and last time I looked there was an option to suspend purchasing these for a period of time. I can't afford to do both, as in overpay the mortgage and buy additional years, and wondered if one of these offered better value for money.

Cheers

dunstonh

generically and based only on the information we have to hand and some guess work, I would say the pension wipes the floor with overpaying the mortgage.