Mortgage V AVC - whici is best

mr_ottermole

All

I wonder if anybody knows whether it is better to put all my spare cash into overpaying my mortgage or to put it into an AVC?

brief backgroud - my mortgage has 22 years to run but I am already overpaying and plan to be shut of it before I reach 60. The value of the house is increasing and with luck when I renegotiate my mortgage I will be in the 60% bracket.

I am currently in the civil service ALPHA pension and am looking at buying CSAVC's - the charge is 0.60%.

Sooooo - is it better to feed spare cash into the mortgage or the AVC or even spread it between the two?

I am aged 42 and only have about £50 - £100 spare each month.

Advice welcome!!

Thanks:T

bigadaj

Key question is what interest rate ar you paying in your mortgage?

Do you have an emergency fund set up, if I were you I'd want cash in high interest current accounts to £10k before looking at mortgage overpayments or additional pension.

If you are looking at mortgage rates of less than 3% you can put over £50k into current accounts paying a higher rate, as well as several thousand per month into regular savings.

Would the avcs allow you to take a higher pension amount by forming some or all of the lump sum?

What is the scheme retirement age, and how does that compare with when you might want to retire, if earlier then saving into a personal pension or isa might be better to get flexibility.

bigadaj

Duplicate post!