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Over payments to Mortgage vs Secured Loan, plus pension

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
8 replies 925 views
rezarfrezarf Forumite
100 Posts
Part of the Furniture 10 Posts Combo Breaker
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Hi,

We have a Mortgage with NRAM (approx 15 years remaining ) and a secured loan with First Plus (approx 18 years remaining ) (now Elderbridge ). I currently have my pension with NEST.

We pay about an extra £50 towards our mortgage each month and I pay about the same into my pension.

I'm wondering is it better to pay the extra towards secured loan which has higher interest rate? Also is it still best to pay towards my pension or divert that money also towards my secured loan.

We are both full time aged 34 & 32.

Any other information needed I will try provide.

Thanks
Rezarf

Replies

  • mikenolanmikenolan Forumite
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    Certainly divert your mortgage overpayments to the higher interest secured loan, assuming there's no penalty to do so. If the interest rates on both aren't great and you're not in a fixed term deal then it's worth speaking to a mortgage advisor about remortgaging to consolidate the two.
  • rezarfrezarf Forumite
    100 Posts
    Part of the Furniture 10 Posts Combo Breaker
    Thanks for the information.

    Any ideas regarding my pension payments?
  • edinburgheredinburgher Forumite
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    Assuming £50/m is your total payments into pension, best be planning a very quiet retirement! :eek:
  • mikenolanmikenolan Forumite
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    Part of the Furniture Combo Breaker
    I've not looked into pensions too much as I have a good scheme from my employer but £50/month doesn't seem like a huge amount so I'd probably try to keep that up as long as the other debts are manageable.
  • edinburgheredinburgher Forumite
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    mikenolan wrote: »
    I've not looked into pensions too much as I have a good scheme from my employer but £50/month doesn't seem like a huge amount so I'd probably try to keep that up as long as the other debts are manageable.

    If it's OPs only provision, it's not enough. £50/m from age 34 to 67 is something like £50k assuming a 5% real return each year.

    Ok if you have other pots etc., but will only safely return in the region of £150/m.
  • rezarfrezarf Forumite
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    Part of the Furniture 10 Posts Combo Breaker
    Looks like I've got my numbers wrong, my employer has the following on pension contributions,
    My contribution is 4% of annual salary
    Employer contribution is an amount equal to 10% of annual salary.
    Government's contribution is tax relief equalling 1% of annual salary.
  • edinburgheredinburgher Forumite
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    That's more like it - can you increase your contribution to get a higher employer match - or is that as much as they will pay? A good rule of thumb is to always pay as much into your pension as your employer will match (as a minimum) :coffee:
  • rezarfrezarf Forumite
    100 Posts
    Part of the Furniture 10 Posts Combo Breaker
    That's more like it - can you increase your contribution to get a higher employer match - or is that as much as they will pay? A good rule of thumb is to always pay as much into your pension as your employer will match (as a minimum) :coffee:
    ....

    That is the max they will contribute, so I will probably just keep paying into my pension as I'm not sure if my employer will continue paying 10% if I stop paying in.

    Thanks for thd input
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