Best way to pay off mortgage?

kevfils

Hi, looking for advice. I have a variable rate mortgage with 1% over base, really good, and have 11 years left. At the end I will still owe about 75k as part on interest only. I have two options to clear this down a bit, either pay extra off each year from net salary, approx 3,500 per year or pay gross into a pension scheme, approx 6,000 per year and use the tax free lump sum option to pay off mortgage and have larger pension pot. Any suggestions as to which option is best? Thanks

getmore4less

third option at base +1% you could just save the money in savings accounts at higher rates.

£75k @ 1.5% over 11years needs and extra £523pm

£3500py will still leave you £33k short.

kevfils

I know I'll still be short trying to decide how to get greatest value from each £1, salary 40% tax, pension hopefully will grow but only get 25% lump sum. 66,000 over 11 years lump sum 16,500. But then more pension monthly. Will inherit at some point so actually paying off not an issue

TrickyDicky101

How old are you? You won't be able to access any of the pension cashuntil you are at least 55 years of age.

getmore4less

You will need to review the term if you won't have enough to pay it off.

Pension is probably the most wealth creating with the tax relief.

Review pension options you may not be limited to only 25% of he extra pot.

kevfils

48 yrs mortgage finishes at 60 retirement at 65 and take pension. I guess the question is what's the best return per £ mortgage or pension as either way got a shortfall which I'm confident will be made up with inheritance or pension lump sum as enough in pension already that 25% will cover short fall but not much left of lump sum after.

Thrugelmir

Save into an ISA. Then you have flexibility as to when to pay the mortgage off. Obviously save\invest into low risk investments which return more than 1.5%.

getmore4less

kevfils wrote: »

48 yrs mortgage finishes at 60 retirement at 65 and take pension. I guess the question is what's the best return per £ mortgage or pension as either way got a shortfall which I'm confident will be made up with inheritance or pension lump sum as enough in pension already that 25% will cover short fall but not much left of lump sum after.

You have a 5 year gap to sort out, don't leave it too long circumstances could change making a change of term difficult.

if you line it with the pension lump sum then you reduce the risk.