Advice Please - Using Pension Savings to Pay Debts?

LJB290

Advice Please - Should we use Pension savings to Pay Debts?

My husband and I have an age gap of almost 12 years.

He will be 56 in April and has been saving into a private pension for some time. The majority of the pension is in the form of a managed ISA.

We think that he may be able to take advantage of his pension now (from age 55) which started us wondering if it would be wise to use some of it to pay off our credit card debt of around £25K.

We have 2 credit cards. We cannot transfer both of the cards to 0% or lower rates due to poor credit history. We might be able to transfer one as my credit history is ok (but affected by my husband's).
We currently have several rates of interest on each card due to past deals.

Important information for consideration:

Our mortgages will be paid off next April, May and June (2018).
We currently pay around £1,200 per month for our mortgages.

We had intended to use this £1,200 per month to pay off our credit card debts once the mortgages were paid.

Question / Solution:
Should we “borrow” some of the ISA pension money to pay off the debts (and get rid of the % interest too) and then (once mortgage paid off next year) pay the same £1,200 per month back into either the ISA pension scheme or a bank account to build funds back up?

Would this be a sensible and plausible option to solving our debt problem sooner rather than later before we drown?
Once the mortgage is paid off, and as long as we are both working, we will be much better off (as long as we are sensible about our spending of course).

Your thoughts would be greatly appreciated.
Thanks

another_casualty

Interesting question . The great news: your mortgage will be paid next year
Not so great news: you have unsecured debt.
Good news : you have pensions. Many haven't . A couple of my friends haven't , and they are web designers/ have own business etc.

I wouldn't touch the pensions if I were you . Having said that , you may have to go into a d m p or similar. This may mean your mortgage may take longer to clear. Others will be along to give better advice, but think hard before going into your pensions.
I just re read your question. If it's not a huge amount ,and you can top up your pension eventually , it may not be too bad an idea.
As I say , someone will more of an idea . Over to them...
Best of luck

sourcrates

Hi,

Once the mortgage is gone you could clear your debts in around 2 years or less, at £1200 a month.

Really it's swings and roundabouts, either option you can recover from fairly easily, which puts you in a good position.

Can't really recomend one course of action over another, down to you in the end and what's more important to you.

LJB290

Thanks for your replies - we are certainly going to look into this further.

What we are able to borrow as a tax free lump sum (from pension pot = 25%) won't cover our debt completely but it will wipe out over half so it may well be worth it. We can then begin saving into a bank account, ISA or pension to build it back up again ready for my husband's retirement.

Having this as a possible back up is some weight off my mind.

MrsTinks

When it comes to pensions the please take professional advice before you withdraw anything