Should I bother contributing myself?

WLITC

pathtofreedom wrote: »

If you're talking about only having £100 a month spare for a pension though, I don't think they'd think you're going to have enough affordability to do OP's on the mortgage too, not unless you're already saving 500+ a month towards your deposit/fees.

Have you talked to any brokers about this as you might find you can't afford a mortgage anyway, if your budget is that tight especially on that long a term. From what you've said above you'd only get a few grand as a lump sum as well, so that wouldn't be enough, unless you're looking at crazy cheap houses up north or somewhere.

I can afford a lot more than £100 its just for now my focus is on getting as big a deposit as possible and with my age and rising property prices I don't want to leave it much beyond the end of next year. I'm currently saving around £1200 a month. I am planning to buy fairly cheap though, circa £170-180K with approx £25-30K deposit. Haven't spoken to a broker yet, was advised on the mortgage forum to wait until this time next year as I'm not buying for prob close to 18 months and lots might change by then.

mark5

You could use the 25% tax free lump sum from the pension to pay down your mortgage.

sandsy

mark5 wrote: »

You could use the 25% tax free lump sum from the pension to pay down your mortgage.

That's if Osborne doesn't get rid of it first! I see a lot of unpaid mortgages if he does.

bowlhead99

Rumours of the 25% tax free lump sum's demise have been greatly exaggerated. Since they first came into existence decades ago people have been saying don't trust them, but they are still here with every person of working age who has a work or personal pension, expecting to get one.

It would be a brave chancellor that took it away or restricted it when it's something that affects so many (especially those just about to retire, when the "grey vote" is important) when they can simply play with other rates and allowances - including how much you can put in and what tax rates you pay on the non-tax-free bit -without changing that fundamental expectation which made it worth your while saving in the first place.

Given the choice, if you're an uncertain type of person, it makes more sense to use your pension contribution allowances while they are here, rather than *not* use them for fear that something will be taken away off the back end...

WLITC

mark5 wrote: »

You could use the 25% tax free lump sum from the pension to pay down your mortgage.

So would a mortgage lender currently accept a pension projection and the 'lump' sum as sufficient funds to pay off the remaining balance on a mortgage or would they want to see the pension projection give you close to your current salary to allow it?

mark5

WLITC wrote: »

So would a mortgage lender currently accept a pension projection and the 'lump' sum as sufficient funds to pay off the remaining balance on a mortgage or would they want to see the pension projection give you close to your current salary to allow it?

I wouldn't have thought so but what do I know!

My thinking was that if you paid off a mortgage faster now, you would have paid a minimum 20% tax on the money.
If the money was invested in a pension though you would ideally gain from some growth until your at an age when you can take the 25% and not pay tax on it, you then use the 25% to reduce your mortgage.

atush

don't want to spend all my 50's scrimping and going without to pay a large payment into my pension each month

If you dont scrimp a little, then you will be scrimping far more in your late 60s to 70s 80s etc. And that will be pretty grim.