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Mortgage or pension extra payments?
Babbacheez
Posts: 5 Forumite
Hope someone can help, thanks in advance.
Since turning fifty this year I have become obsessed with the thought of paying off our mortgage, we currently owe £150,000, and are in a ten year fixed deal, with nine years to go, at a rate of 2.45%, and have found it fascinating entering different amounts into my lenders mortgage calculator and seeing the debt decrease, we currently overpay £400 a month.
My wife is a 40% tax payer, and from next year will receive an annual bonus of around £20,000, our first thoughts were to use that money each year to overpay on the mortgage, but would get hammered by tax, I mentioned this to a colleague who suggested paying it all directly into my wife’s pension, she has a dc pension, also I am due to start a dc pension in January after being in a db for thirty years, with a pot of worth around £400,000, I currently also pay £350 into avc’s a month. I am a 20% tax payer.
My colleague also suggested stoppping our mortgage overpayments in January and put that into our pensions through our employers and also the £350 that I was paying into avc’s into my pension, then when reach 55 I have the option of using a 25% tax free sum from my pension to pay a very large chunk or even clear the mortgage.
Is this achievable? Do I need to buy my colleague a pint?
Since turning fifty this year I have become obsessed with the thought of paying off our mortgage, we currently owe £150,000, and are in a ten year fixed deal, with nine years to go, at a rate of 2.45%, and have found it fascinating entering different amounts into my lenders mortgage calculator and seeing the debt decrease, we currently overpay £400 a month.
My wife is a 40% tax payer, and from next year will receive an annual bonus of around £20,000, our first thoughts were to use that money each year to overpay on the mortgage, but would get hammered by tax, I mentioned this to a colleague who suggested paying it all directly into my wife’s pension, she has a dc pension, also I am due to start a dc pension in January after being in a db for thirty years, with a pot of worth around £400,000, I currently also pay £350 into avc’s a month. I am a 20% tax payer.
My colleague also suggested stoppping our mortgage overpayments in January and put that into our pensions through our employers and also the £350 that I was paying into avc’s into my pension, then when reach 55 I have the option of using a 25% tax free sum from my pension to pay a very large chunk or even clear the mortgage.
Is this achievable? Do I need to buy my colleague a pint?
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