Your help would be greatly appreciated

Hello and thanks to anyone who can give me some help with working through the logic of these issues. As they span both mortgage and retirement planning, I'll post in both boards, my apologies in advance if this is incorrect, and please moderators feel free to move /delete if necessary.

I'm 53 years old this year. Nearly 4 years into a 15-year £35,000 mortgage with Woolwich. (I bought my ex-husband out, house was valued at £135,000 at the time, value has definitely gone up since, not sure by how much).

For the first two years the offset mortgage was fixed at 3.95%, it's now at 5.95% offset with no penalties for overpayment and £10,800 left to repay. (I saved and put savings towards the mortgage when the fix came off). I have £6,000 in the offset account - my rainy day fund.

I've become unwell and had to go part-time permanently since January, with a 40% reduction in salary. I won't be able to work full time again in my current occupation - too stressful.

My earned income is £940, lodger pays me £330, total £1,270, of which £805 goes towards bills and cost of living, plus ££445 toward mortgage (my choice to overpay). It's a bit tight for comfort, but I would like to pay down the mortgage asap and not have to worry about it any more. How best to do it and cover all bases? This is where I would greatly appreciate some expert views

I have an ISA which was formerly an OEIC (Henderson Preference & Bond Fund, all profits re-invested). It is valued at approx £10,000. As it's a unit trust package I know its performance is relative to the stock market, but would appreciate it if someone can comment on how this fund is viewed. Bearing in mind I'm looking for a safe-ish investment due to my age and circs, but need a reasonable level of reinvestment to help it grow.

At the moment I'm only paying £53 per month (6% of salary) into my stakeholder pension (Standard Life) which was started 3 years ago and was projected to build to £20,000 by retirement at 65 - but obviously will not do so on 40% of the original contributions! I need to get back to a decent level of payment with this, and indeed if I can build a bigger pension pot so be it.

I have another pension pot of £46,000 (frozen - I can't add to it) with the Scottish Pensions Agency - my ex is a teacher.

I know it's a similar question to others posted here, so sorry if this is boring - I find it much easier to work out what might be best for others, not so easy for myself!

Should I cash in the ISA, pay off the mortgage and then throw a decent amount at the pension?

Or keep the ISA as my rainy day fund and use the £6,000 in the offset towards the mortgage?

Other options?

Re saving for retirement, at this stage in life am I better to put spare income into the stakeholder pension or into ISAs? The risk level for the stakeholder is moderate and there are various pots within it. Can I invest in both and still have a worthwhile return? I have to bear in mind I might not be able to keep working till 65.

My plan would be to move and release capital from the house nearer to whatever date is retirement. I reckon probably £50,000 equity would be released.

All suggestions welcome! And thanks for your interest and time.

Best wishes
GQ
If you have a talent, use it in every which way possible. Don't hoard it. Don't dole it out like a miser. Spend it lavishly like a millionaire intent on going broke.

-- Brendan Francis

Comments

  • Dithering_Dad
    Dithering_Dad Posts: 4,554
    Mortgage-free Glee!
    Forumite
    Hi, I'd carry on as you are, but in proportion to your new income. By this I mean, carry on with the overpayment but at a decreased amount, carry on paying into the company pension scheme (I'm assuming it is one) at 6% of your new income and continue with the 6k offset and the 10k ISA. If the worst happens and you can no longer work, then you already have enough to pay off your mortgage.

    I wouldn't worry too much at the moment, you seem to have all your bases covered.

    Hope this helps!

    p.s. if the stakeholder pension is not a company policy then you may want to look at investing into your ISA and using this as a retirement vehicle instead.
    Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
    [strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!! :)
    ● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
    ● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
    Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.73
  • Thanks, DD. It isn't a company stakeholder, it's one I took out myself. My employer gives me 6% of salary in lieu with no stipulation about where it goes.

    GQ
    If you have a talent, use it in every which way possible. Don't hoard it. Don't dole it out like a miser. Spend it lavishly like a millionaire intent on going broke.

    -- Brendan Francis

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