Over pay mortgage or pension

neilatstorth

Hi, i am just about to move our mortgage to a full repayment one having paid a lump sum off from a maturing endowment payment. The mortgage will be about £120K over a 10 year period as I being 55 I want it to end at 65. However, I am now in the position where I can either afford to over pay the mortgage or put this money in my pension (SIPP). I can pay into the pension via salary sacrifice (saving 40% tax and NI contributions). So trying to work out the best options and looking for advice, please? Thinking of paying £300 (net after TAX) extra a month as an over payment. Thanks in advance.

constantinouBros

Of course and It's better to get rid off the loans.

mrginge

£300 off the mortgage or £500 into a pension...

Notfarfromtheborder

mrginge wrote: »

£300 off the mortgage or £500 into a pension...

Could be more if employer gives back 13.8% employer NI contribution

Thrugelmir

How confident are you of stock market performance over the next 10 years?

What rate of interest are you paying on your mortgage?

neilatstorth

Thanks for the responses, may be worth adding a bit more details:

I am looking a mortgage 2 year fixed at 1.39% before moving onto SVR 4.74% giving an average of 3.8%. Which I put into mortgage calculator and added a £300 over payment. With the no over payment in 10 years it will cost £144,449 with over payment it would be paid in 7 years 9 months with a cost of £138,562, a saving of £5,887 and finishing 2 year 3 months early.

But if I was to put the equivalent of £300 net, this would be about a £567 monthly contribution and over a period of 7 years 9 months (93 months) would be £52,731, without any growth in the pension pot over that period as I have no idea how the stock market will perform.

So to me the pension pot seems more sensible, and depending on my tax status (no longer on 40%) in 7 - 8 years time then perhaps I would take some of my pension out to pay off the remaining mortgage then?