Very small frozen pension, no further provision

stevekent71

Hi

I have a frozen pension with around £60k in it, and no further pension provision. I really want to be putting £500 per month into a pension to stand any chance of having a reasonably sized pot, and the sole bit of good news is that I've finally paid off a large amount of debt, which gives me about £400-£500 "spare" per month.

Ideally I'd obviously start pumping that £400/month into a new pension.

The major problem is that I have an interest only mortgage with Santander for £145,000, which expires in 8 years. Some time ago I cashed in the the endowment policy I had, which is a long story but down to illness and not being able to work for a while.

I'm thinking that I need to remortgage asap, getting a repayment mortgage and setting a 20 year term (I'm currently 48), which I imagine will soak up that £400 per month I have available.

The issue then, is that I can't afford to address both the mortgage and the pension, and I'm feeling extremely concerned and stuck.

I'm feeling like my finances are in really poor shape, with the mistakes I made in my 30's becoming all too real. I've thought about going to see a good IFA, but honesty I'd be pretty embarrassed about the state of where I'm at.

Any thoughts, ideas or recommendations would be most welcome.

Best
Steve

molerat

No current employer pension ?
The mortgage situation needs addressing fairly urgently.

Albermarle

Firstly probably no mileage in seeing an IFA in this case , as what you really need is increased income.
It will help if you can say what your salary is and how secure does the job feel ? Also any possibilities for getting more income ; second job; better job etc
Any possibility of inheriting any money at some point ?

Regarding your pension pot of £60K , it will not be 'frozen' and will hopefully will still be growing .
Can you supply details of this as well?

Socajam

Me personally, I would address the mortgage problem first.
Try and get a repayment mortgage, extend the terms and also a fixed rate if you can for say 5 years, then address the pension.

xylophone

I have a frozen pension with around £60k in it,

What kind of pension is this?

Is it a deferred DB pension?

Or a DC pension in a former employer's scheme to which you can no longer contribute?

Does your current employer not offer a pension?

Look for the best possible terms for a new repayment mortgage asap - you might try a broker?

fronty

I'm 50, also have an interest only mortgage with 8 years left to go, but despite the temptation to cash it in I kept the endowment running (it provides life cover + critical illness cover etc., stuff I would have had to sort out separately if I cashed it in). There is a predicted shortfall but I've been putting extra into an ISA so I'm confident I'll have it covered.

I would really focus on the house if I were you, you don't want to be homeless in 8 years time. I wonder how easy it'll be to get a 20 year mortgage at age 48, have you made any enquiries yet?

If you bought your house around the early 00's (I bought mine in '97 for 118K), you should have quite a bit of equity in it (mine's worth about 400K now), and 145K bought quite a lot back then, do you really need that 5th bedroom? ;-) Maybe you can downsize, release some equity and put that towards your retirement pot?

DairyQueen

stevekent71 wrote: »

Hi

The major problem is that I have an interest only mortgage with Santander for £145,000, which expires in 8 years. Some time ago I cashed in the the endowment policy I had, which is a long story but down to illness and not being able to work for a while.

You will be 56 when the Santander mortgage is due to be repaid. That means you may qualify for a 'retirement interest only' mortgage. If you can afford to pay the interest in retirement then this may be a solution. The interest will be higher than a standard mortgage but not onerous whilst rates stay low.
https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/retirement-interest-only-mortgages-explained-a9z9k0h9lbfy

Or, as has been mentioned, you could downsize.

Both options would allow you to add the cash to the pension.

LHW99

Try some of the online mortgage calculators - eg https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/ (there are others) to see what the monthly payment would be if you could swap to a repayment.
If its more than you can afford, it may be possible to swap part onto repayment and leave part interest only - you may need to talk to a broker rather than DIY, but some lenders can be helpful so see what your own lenders approach would be.
Many fixed mortgages allow a certain level of overpayment, even during the fixed period. We dealt with our by making small overpayments, and larger ones at the end of a fix if we could before re-fixing. That helped bring things down to a manageable level. We will have to fund maybe a couple of years repayments after we retire, but at a level where we could use the pension TFLS to pay the remainder and still have a bit left over.