No mortgage, now what?

Alexland

DFWATTS wrote: »

Knowing my luck though I'll put all this money into my pension and get run over by a bus on my 55th birthday....

As aj23 mentioned it is unlikely you will be allowed to access your private pension at 55 the government have announced their intention to increase this age so I would suggest you plan for somewhere around age 60. So if you want to retire before that then S&S ISAs are useful to bridge the gap. It's worth doing some reading on how many hundreds of thousands of pounds are required to fund even a modest private pension.

Alex

atush

andy001 wrote: »

The peace of mind it may give OP by paying off the mortgage may far outweigh the Financial benefits! My 2 cents!

If it is financially worse, that is a false peace of mind.

Emotional investing is not good investing.

busybee100

For us, nothing beats being motgage free.

We paid ours off when I had to give up work then a few years later my husband could hand in his notice although we had no income (or benefits) when his job became stressful and he thought the river looked attractive. If we'd put that money into a pension what good would it have done then. He would never have reached 55.

It's good to educate people but there are more important things than money.

enthusiasticsaver

I think it does need pointing out too that there are no guarantees with investing. An investment portfolio and pension are not always easily accessible either so whereas from a tax point of view pensions are attractive you cannot access them until age 55 which is likely to increase and if the stock market is in a slump you would not want to sell investments. Imagine a scenario where you have an equal amount in investments to your mortgage and mortgage rates start increasing or the mortgage holder loses their job. A combination of the following is best I think. Overpaying mortgage(to secure the roof over your head and reduce outgoings), building up pension (tax advantages and to secure future income), reasonable cash emergency fund (in event of stock market slump or loss of job) and stocks and shares isas (back up to pension for early retirement for example and to repay mortgage principal if stock market not low). Yes the OP seems to have done the first with scant regard towards the others but equally building up investments/pensions without looking to reduce outgoings by repaying or reducing mortgage and secure their home would also be a mistake I think. Past performance is no guarantee of future performance.

I also think the peace of mind which comes from owning your home is important.

enthusiasticsaver

atush wrote: »

I cant believe you cant do the maths and see that it was foolish? Ie [aying 40% tax on income to pay off a mtg at say 2%

Foolish

No guarantee mortgage rates would stay at 2% or that investment rates would remain high. Pensions are not accessible to repay a mortgage and governments have a habit of tinkering with pensions legislation. Harsh to call someone foolish for securing the roof over their head.

enthusiasticsaver

atush wrote: »

If it is financially worse, that is a false peace of mind.

Emotional investing is not good investing.

There is no guarantee that investing will give better returns than overpaying mortgage. Irresponsible to declare otherwise even allowing for tax advantages of paying into pensions. The OP would not be able to access pension to repay his mortgage if needed.

FatherAbraham

bostonerimus wrote: »

It's true that not everyone does A or O level maths, but my parents both left school at 15 and seemed to understand relative interest rates and the benefits of long term saving.

O-level!

Thanks, for a massive trip down Memory Lane, Bostonerimus!

I normally daren't even mention my "O-levels" these days, in case people think I washed up with Noah's Ark.

Still, almost everyone I work with has at least A-level mathematics (and quite a few have a doctorate in Astrophysics or Cryptanalysis), and yet very few understand such elementary financial topics as:

• Compound returns
• Using a pension to defer taxation
• Using salary exchange to manage National Insurance liability
• Smoothing income level to retain Child Benefit

I feel I should quote something from Nassim Taleb, about successful CBOT traders, at this point, but whatever.

crv1963

The psychological advantage of owning outright the roof over your head is a great one to have in my view and is not irreversible. If need be the OP can take out another mortgage if that is advantageous to his situation. At any given point it is all about weighing up the risks- but if everything goes wrong with employment, health or the economy it is one less thing to worry about.


The truth is few people plan efficiently even less so with the dire education about savings/ pensions/ future planning. I do think that we're in the minority that use any of these forums. How many of us at school would have been interested in sitting in a classroom at age 15 or 16 being told that we'd need to save close to a million pounds to have a retirement income that meant we would be comfortable?


Well done to OP and if others learn that there's a more efficient way of doing it at a slower pace while building assets elsewhere great. At 38 there's still time to make plans and ensure a reasonable pension pot, look at early retirement and any other personal plans.


My advice to my sons (22 and 21 respectively) is to try to ensure that pensions are sorted, savings for a property are started and that they enjoy life and being young.

crv1963

FatherAbraham wrote: »

O-level!

Thanks, for a massive trip down Memory Lane, Bostonerimus!

I normally daren't even mention my "O-levels" these days, in case people think I washed up with Noah's Ark.

Made me smile too, I mentioned O-levels to someone much younger at work and they thought I was joking. Then I told them I had a CSE in Arithmetic at grade 1 so the equivalent to an O-level grade C and they thought I needed a rest in a darkened room! Then they realised I gained my professional qualification before they were even born.

DiggerUK

enthusiasticsaver wrote: »

There is no guarantee that investing will give better returns than overpaying mortgage. Irresponsible to declare otherwise even allowing for tax advantages of paying into pensions. The OP would not be able to access pension to repay his mortgage if needed.

Concentrating somebodies attention on the potential upside of a financial plan, is the well worn trick of financial advisors. The downside of pension investment risks has to be taken on board as well.

A mortgage paid off is a no risk outcome..._