Over pay pension or mortgage?

Wrongers

My mortgage rate is currently 2.64% but I'm hoping to get it down to 2.44% in the next month as that's when my fixed rate ends after 2 years. That would be staying with the same mortgage company. As the term is still 19 years I am concerned that I will have trouble getting a new mortgage with another lender.


I don't know is my mortgage is flexible, I will have to ask.

crux

Wrongers wrote: »

There is only me, my partner who was contributing to the household left a few months ago so its down to me to provide the extra income needed.

Is it a completely clean break financially? Meaning ex-partner is not on the mortgage or part owner of the house and has no possible claim on your assets through marriage etc?

Not interested in prying into your personal business - it's just the amount of people on this forum who pay/overpay a mortgage and all the house bills for years after a split - then get surprised/annoyed when an ex with a financial interest later comes back with demands for their share is a recurring theme.

Before you lock up your money - make sure it's going to remain yours.

RuleTheWorld

If a 40% tax earner go for the pension imo
if a 20% tax earner go for the mortgage imo (or rather it is not a clear decision in this bracket).

Happier_Me

I am (almost) 41 and aim to retire at 55 so retirement planning is definitely something I have given some serious thought to recently.

The eye opener for me was calculating my NUMBER, which is a popular thread on here. In order to plan for retirement you really need a good idea of the annual income you need (in today's money) and when you want to retire. When you know this, you can work out your retirement income gap and take action to close it.

You may find that, irrespective of whether you overpay your mortgage or pay into a pension, that you need to invest more to make adequate provision for your retirement.

Personally I wouldn't pay more into your pension though until you know if you will benefit from any pension related tax changes. Like someone else suggests, maybe save into a higher interest monthly saver instead.

bigfreddiel

Wrongers wrote: »

Thanks for the reply's.


When I started my pension years ago I would have been advised on what to pay in order to get a liveable income at retirement. Therefore I have paid the increments of 5% yearly believing this to be correct. Now having taken stock of my financial situation I see that I need to make some changes.

Well it looks like you were badly advised, so get back to your advisor and male a claim, I believe advisors are fully liable and have insurance to cover for bad advice, good luck. fj

RickyB2000

What is your target income in retirement (I.e. What did you define as livable)? Does that include state pension?

dunstonh

bigfreddiel wrote: »

Well it looks like you were badly advised, so get back to your advisor and male a claim, I believe advisors are fully liable and have insurance to cover for bad advice, good luck. fj

They are not liable for people not topping up their pensions.

atush

Wrongers wrote: »

There is only me, my partner who was contributing to the household left a few months ago so its down to me to provide the extra income needed.

Are there any children>how many bedrooms?

Would you be better off to sell and buy smaller/elsewhere?

atush

Pinner_Ram wrote: »

Pay off the mortgage as fast as you can without incurring charges for doing so. It's a great feeling to be mortgage free - no-one can take your house off you!


Then pile future spare cash into pensions and isas.

given todays low interest rates, you could do better by pension than overpaying.

It may be a great 'feeling; but may or may not be better financially?

there is a big difference between feeling good, and being better off?

jamesd

Pinner_Ram wrote: »

Pay off the mortgage as fast as you can without incurring charges for doing so. It's a great feeling to be mortgage free - no-one can take your house off you! ... Then pile future spare cash into pensions and isas.

And after doing that you will never be able to recover from all the years of lost compounded growth that you missed, having condemned yourself to a poorer future life.