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Use pension Lump sum to pay Mortgage?

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Use pension Lump sum to pay Mortgage?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
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GeordieBriGeordieBri Forumite
4 posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
We have a mortgage of currently around 48k I am now nearly 54. when i get to 55 i believe I could get at some of the funds. Would I be wise to use some of these funds to pay off the mortgage. my pension pot is currently around 150k. Or am i best off just paying the mortgage?

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  • Bump. as no one replied come on, someone must have an idea?
  • pramsay13pramsay13 Forumite
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    Maybe because your question is too vague.
    What are the details of your pension and mortgage for starters?
  • Like I say I currently have a pension pot of around £150k & the mortgage has around £48k left to pay . I believe when I'm 55 I will be entitled to draw some of my pension ? Should I use this to help payoff the mortgage, or should i let leave it be and keep paying the mortgage?
  • p00hsticksp00hsticks Forumite
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    If you withdraw more than the 25% tax free lump sum a) you'll pay income tax on the extra and b) you'll be restricting any future pension contributions to no more than £4k a year - so not necessarily a good idea if you are still working and paying into a pension.

    As to whether digging into your pension to pay off your mortgage is a good idea - a few points that may influence things

    Do you have any other pensions - £150k isn't an awfully big pot to eke out for 30+ years of retirement?
    Have you got a state pension forecast and know how much you can expect ?
    Do you intend to carry on working beyond 55 ?
    What is your income 'number' that you will need to feel comfortable in retirement ?
    Are you married / have dependant kids and will they be able to manage financially if you die in the near future ?
  • MallyGirlMallyGirl Forumite, Board Guide
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    if you remove 25% of your pension pot - which you can tax free - what proportion of your overall pension provision is it? Is this your only pension or do you have others? If it is your only one then you have going to have a pretty lean retirement.
    If you took out more than the 25% you would be limited in what you could pay in to pensions for the rest of your working life - just £4k per year - unless you are also in a defined benefit pension scheme (aka final salary).
    What is your mortgage rate?
    what returns are you seeing on your pension investments - if in medium risk investments then it is likely in the long term that these will out perform the interest charged on a mortgage.

    why do you want to do this?
    I'm a Board Guide on the Debt-free Wannabe, Loans & Credit Cards boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to [email protected]
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  • Do you have any other pensions - £150k isn't an awfully big pot to eke out for 30+ years of retirement?
    Have you got a state pension forecast and know how much you can expect ?
    Do you intend to carry on working beyond 55 ?
    What is your income 'number' that you will need to feel comfortable in retirement ?
    Are you married / have dependant kids and will they be able to manage financially if you die in the near future ?


    I will get a state pension too, but i don't know how much!
    How can i ask for or get a forecast for the state pension anyone?

    I just like the the though of not having to worry about a mortgage. listening to your advise i think the best thing t do do is to keep paying the mortgage. I am actually over paying a fraction anyway so it should be cleared in five or six years anyway.
    thank you so mauch for this advice.

    how do you get a state pension forecast?
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