To Pay off Mortgage Y/N?.

billesniper

dimbo61 wrote: »

My first though was to say clear the mortgage in the morning BUT you need to think long term and retirement plans.
ISA,s are long term investments and one of the few TAX free savings vehicles.
Now if you clear the mortgage and use some of your ISA,s will you have the problem of SAVING! more than £5340X "2 ( You and the wife ) ISA,s allowance each year ?
I am working hard to clear the mortgage and then build up savings in ISA,s

Thanks for that.
Perhaps I should have mentioned (and I'm sorry If I have mislead anyone) that I retire on the 13th of April 2013, when I will recive a Company pension with the option of a lump sum, which would result in a lower pension, or a smaller lump sum and again a lower pension, or take no lump sums resulting in a just a good yearly pension.
I should get the state pension as well, because as I have been with the compay since 1970 and we opted out for a number of years then opted back In, as the company's scheme changed, I hope I've got that right.
The figure that you quote £5340X 2 could be met, saving the Mortgage money I'm now paying plus topping up to your £5340X2 figure between now and April 2013 If I paid off the mortgage today.

Once again thanks for your help.
Bill.

getmore4less

you realy need to look at the bigger picture.

Whats the comutation rate o nthe pension?

Whats the smallest lump sum you can take?

Whats the pension?

Whats the current salary and spend patterns

etc.

Have you done any forward planning?

katejo

There is one good reason for keeping the mortgage account open. If it is a good deal and transferable to a future property, you could use it if you decide to move. I have a lifetime fee free base rate tracker and will probably keep it open for the same reason to avoid future mortgage fees.

JimmyTheWig

Paying off the mortgage will make you £225 a year better off. Sounds good to me.

The only questions, as far as I am concerned, are...
* Can you shop around and get a better rate on your savings that you pay on your mortgage? I doubt it, but might be worth checking.

* If you use money from your ISA, there is a limit to how much you can put in an ISA tax free each year and so you may end up with non-ISA savings. If your wife isn't a tax payer then I don't see this being a problem.

* Might you want the money in the future? Sounds like you won't.

billesniper

getmore4less wrote: »

you realy need to look at the bigger picture.

Whats the comutation rate o nthe pension?

Whats the smallest lump sum you can take?

Whats the pension?

Whats the current salary and spend patterns

etc.

Have you done any forward planning?

Thanks for your comments. I have looked at all my pension options and I will be happy to go for the lowest or highest Lump sum, or even go for the full pension only.
If we move which we are looking at doing, the property we would go for is around the same value as our current property, or If we move to the area we are thinking of moving to would be less than our current value property, so I would not have the problem of paying off the Halifax Mortgage and If we have sold our existing house I would be in the position of a cash purchase.
Thanks.
Bill.

getmore4less

How much will you be saving a year on the pension income?

billesniper

JimmyTheWig wrote: »

Paying off the mortgage will make you £225 a year better off. Sounds good to me.

The only questions, as far as I am concerned, are...
* Can you shop around and get a better rate on your savings that you pay on your mortgage? I doubt it, but might be worth checking.

* If you use money from your ISA, there is a limit to how much you can put in an ISA tax free each year and so you may end up with non-ISA savings. If your wife isn't a tax payer then I don't see this being a problem.

* Might you want the money in the future? Sounds like you won't.

I have worked it so that we can top up our Isa's between now and the end of the financial year with cash payments plus the payment we used to make to the Halifax Mortgage.
I think the strong thing coming over here Is for me to switch all the savings we have and are going to make over the coming months, apart from my Isa which I would like to keep, to my Wife which I feel happy about, and I now have a number of good alternative's thanks to you nice people on here including JimmyTheWig.

Just to let you know the Wife and I went to the B/Society this morning and she drew a cheque in my name for half of the outstanding mortgage, so tomorrow we have to go to the Halifax B/S pay the cheque In, wait till I hope it clears by Friday, transfer my half of the payment from my Isa to my current acccount, get the final redemption figure, and then transfer that figure from my current account to the Mortgage Account and Bingo job done.

billesniper

getmore4less wrote: »

How much will you be saving a year on the pension income?

Enough to have a comfortable living, without overstretching ourselves.
Thank you.
Bill.

getmore4less

billesniper wrote: »

Enough to have a comfortable living, without overstretching ourselves.
Thank you.
Bill.

I think yOu are missing the point if you won't be able to save more than the cash ISA limits then you don't need keep some of the ISA savings back.


on the pension lump sum it is down to the costs of converting pension into lumps sum(that you don't seem to need) and life expectancy.

for every £1000 lump sum how much pension do you lose.

RenovationMan

You could always take the 25% tax free lump sum from your pension and use it to pay off your mortgage, leaving your ISAs alone. This would effectively mean you are removing your 25% tax free lump sum and putting it into a tax free investment, something you'd struggle to do if you have a large pension pot given the relatively small limits on payments into S&S ISAs.

For example, I plan to have a 300k pension pot and so a 25% withdrawal would net me 75k. With current limits for ISAs set to 10.5k it would be 7 years before I could put my tax free money away from the tax man. However, if I had a 75k mortgage debt and 75k in ISA savings, I could keep the ISA savings and use the pension lump sum to pay off my mortgage. The net result is that I am now mortgage free and I have 75k of tax free savings.

Something to think about if you are considering removing the 25% lump sum.