paying off mortgage v pension plan?

dimbo61

Can you overpay the Interest Only mortgage?
Saving you 6% a month tax free if that is your mortgage rate ?
Ring your lender and ask !!
£9,000 a year overpayments would make a HUGE hole in the debt in the next 16 years

scousedave

dimbo61 wrote: »

Can you overpay the Interest Only mortgage?
Saving you 6% a month tax free if that is your mortgage rate ?
Ring your lender and ask !!
£9,000 a year overpayments would make a HUGE hole in the debt in the next 16 years

This is really my initial idea but was trying to gauge if it is better to make £750 a month mortgage overpayment or to put that money into a pension.

nearlyrich

AnotherJoe wrote: »

Oopsy my maths not up to even fail level this morning LOL.


Hmm, so that does make it possible to regard putting money in your pension to pay off the mortgage as long as the tax free lump sum is that large. Just another possibility.

Who knows if the tax free lump sum will be available in the future, successive governments could scrap it. Also dangerous to rely on pension funds to pay off a mortgage what is the OP going to live on in his "old age"? especially when he doesn't have a massive pot to start with.

Thrugelmir

Tax free lump sum is 25% of fund value. Unlikely your pension fund is going to be anywhere near the required level to repay the mortgage in full at the end of the term.

scousedave

Just phoned my mortgage company.
They can transfer me onto a fixed deal of 2.9% for 2 years paying £332 then 3.4% for 3 years paying £388 and then 5 year at 3.9% paying £443
Presently I pay £650.
The main problem I can see is they want 8k up front to exit my present mortgage fixed term but the difference more than compensates for this .
Any thoughts pls?

AnotherJoe

scousedave wrote: »

Just phoned my mortgage company.
They can transfer me onto a fixed deal of 2.9% for 2 years paying £332 then 3.4% for 3 years paying £388 and then 5 year at 3.9% paying £443
Presently I pay £650.
The main problem I can see is they want 8k up front to exit my present mortgage fixed term but the difference more than compensates for this .
Any thoughts pls?

Because they are making you pay the £8k ERC you should look around and see what other lenders would do you. You are likely to get much better I'd have thought.

And if the difference more than compensates the ERC in either case, then you should do it, its free money.

justme111

As another Joe said. One observation : you do not even mention whether it is a repayment mortgage or interest only. Short termism does not go well with control of finances

nearlyrich

justme111 wrote: »

As another Joe said. One observation : you do not even mention whether it is a repayment mortgage or interest only. Short termism does not go well with control of finances

He did say in the original post it is an interest only mortgage..

justme111

I am referring to the new one he discussed with his provider and written about in the last post with numbers and terms

dimbo61

Mortgage £132,000 and Interest only payment £332 at 2.9% because NO WAY is that repayment.
The question is can you afford to go onto Repayment mortgage and pay the £8,000 fee ERC to get a better deal.
Again ring your lender back and ASK CAN I REPAY 10% of my mortgage reach year without paying any ERC,s