How did you do it?

kezzygirl

Hi everyone,, I am keen to start over paying our mortgage, but we still have some outstanding debts that are interest free for approximately the next 2 years. Obviously, we are paying interest on our mortgage of about 3.4%- should I wait to pay off the debt THEN focus on the mortgage overpayments or over pay and reduce the mortgage whilst servicing the debt? Thanks in advance!

AnotherJoe

Once I wised up, I let time and inflation reduce my mortgage and put more into my pension.


And, somewhat in contrast to that logical approach, though it may seem wrong mathematically I would work on getting rid of the interest free loans first because its easy to forget about them, so overpaying mortgage or pension gives you a false picture how much you owe* as that debt fades into the background, and what happens if you cant roll them to another card in a couple of years time? Most likely they will jump to 15 or 20% or some such.


* Its not uncommon to have someone here post something like "I saved up £20k for my deposit" and then find they owe say £20k in 0% rate cards. Well heck you didn't save anything at all then, you just borrowed it at 0% !

kezzygirl

Thanks anotherjoe. I have a pension with the nhs that comes out of my wages monthly but plan to open a lisa next tax year and put some cash in there.

AnotherJoe

kezzygirl wrote: »

Thanks anotherjoe. I have a pension with the nhs that comes out of my wages monthly but plan to open a LISA next tax year and put some cash in there.

The NHS is a great pension but the downside is the age you can take it so yes I agree a LISA or some other personal pension is a good second plan to bridge that gap. FWIW if you will be a high rate taxpayer, then a personal pension beats a LISA hands down. PLus you can take a personal pension 5 years earlier than a LISA.