Nearly 30 and planning

theerroll

Hi all, Please excuse the long post but any help, guidance or info would be appreciated.


After combatting foolish debts and finally having a credit report I am proud to look at, I have just been accepted for a mortgage with a mainstream lender borrowing £80,000 over 20 years, I aim to clear this in 10-15 years however.


By the end of the year I will have around £90,000 to £100,000 in the bank. I am nearly 30 years old I really want to get a grip of myself and ensure that I live as close to debt free as possible and make sure that I have a comfortable retirement.


I have 2 private pensions the first with Scottish Widows with a current worth of £42,000 which I have not made any payments to for 6 years.


A new online pension with Virgin money which I have so far made 2 payments of £30 each into.


I also have a military pension where by I have accumulated 6 years worth.


I will also be opting into any pension I might be offered with my next employer as I leave the military in December.


So my main questions are.


Should I use the money I will have in my bank account to clear my mortgage? - they will charge me 2% on any payments over 10% of the outstanding balance, where as the interest rate is 2.4%.


Do I wait for the mortgage package to end in 24 months and pay the outstanding balance off interest free?


Do I look at further investment options such as a second property to let?


Next regarding my pensions (I appreciate that my given detail is vague)


They each are charging me a fee Virgin are charging 1% and I am unsure what SW are charging me.
Should I merge the 2 private pensions into 1 to save paying the fees to two separate companies.


Stick with both pensions and up my payments to 15% of my annual salary (my age divided by 2).


Use the money in the bank and dump it into one of or both pensions and enjoy the tax benefits of this?




I will fill up my ISA once I have these funds and will continue to pay in at around 7% of my annual salary as I already do.


I really appreciate that this is a long post but yet very vague. However I didn't want it to be any longer!


Thanks in advance everyone.


:money:

atush

first of all, Virgin money is not a very good pension. They are not cheap, and there are other better options. but at least you are saving.

What is your loan to value (ie LTV)?

Generally speaking, with todays mtg rates so low, you'd be better off putting more of that money into a personal pension, and S&S isas than overpaying. As these would grow and eventually (ie over time) beat inflation. 30 quid a month is ok, better than nothing, but isn't going to help you be comfortable in retirement. Ideally you should be putting in 10% or more of your income. 15% is great if you can afford it.

So do find out the charges of both pensions as then you can compare them with modern pensions. there is a platform charge, but funds have charges too so it is important to see both of these.

theerroll

Hi atush!


The LTV is 44% as have a large deposit of 56%.
I appreciate that the £30 pm is low at the moment, but I am still accruing funds into my Navy pension, and I as I have no formal offer of employment yet I'm unsure about a workplace pension although I know that at least 2 of my potential employers have very generous schemes, so I'd sooner make the most of their contributions and pay more into that. (make sense?)


I will make some enquiries with Scottish Widows. It was originally with Clerical Medical, and was moved to SW 3 or 4 years ago, so it may be quite a modern pension. I guess I need to seek an IFA, this is quite a minefield to me at the moment and I consider myself 'financially savvy' but I thought I'd ask on here before I part with my hard earned!
As you can see I do have substantial capital, I need to find the best way to make it work hard for me. Thanks very much.

atush

Yes, always pay in enough to get the max employers contribution.

I would not get an IFA just yet. Check your charges, and keep paying into your forces pension for now. Fill your S&S isa allowance for this year.