Am I crazy?

andys15

People are saying I am crazy for overpaying they mortgage to the extent I have. 

My plan is to retire at 50, so I need to save 7 years money, as I cannot get my pension until I am 57. 

For about 3 years I have been overpaying by about £4K a month. I then remortgaged in order to do some renovations. I also used that remortgage money to clear my pcp on 2 cars. ( I was probably crazy having cars on pcp and overpaying my mortgage). 

I now an overpaying my mortgage by £6k a month. 

My idea being that when it’s paid, I can then save £7.5k a month for nearly 4.5 years in order to pay myself when I retire. 

The argument is that my mortgage rate is only 1.19% with unlimited overpayments, so I shouldn’t overpay but save at a better rate. I cannot see any better rates to save at, unless I try and get a lot of bank accounts. My argument is that I don’t have any savings, so if I start now, I am getting very little interest on a small amount, where as everymonth I overpay the amount of interest I pay gets smaller. Currently only costing me about £2.50 a day. 

Maybe I am too far along to even start doing anything different anyway. 

dimbo61

Well you could pay the Max into your pension.
You can build up a pot of £1,050,000 over your working life.
Why 57 for your pension ?
Have you paid enough NI to get full state pension ?

andys15

About 3 years ago I pulled out of my final salary pension and put it into a managed Sipp as I was approaching my LTA. That is currently over a million ( even after the Covid crisis). I am 44 so the rules have changed and I need to be 57 before I can touch the pension. Even when I was setting it up 3 years ago, it stated 57. 

I assume I will be all paid up national insurance wise. I have worked since I was 16, but I am not sure.

dimbo61

We have had Offset mortgages for the last 15+ years and enjoy having savings offset the mortgage which can be used in emergencies if needed ( think Covid19 mess )

We have also overpaid our mortgages over the last 10+ years.

tacpot12

Get a forecast of your state pension. 

I would continue to overpay the mortgage then start saving into any savings account. I wouldn’t bother chasing interest rates. 

andys15

To be honest I haven’t even factored state pension into my calculations.  That is well off. I am pretty certain by the time I come to state pension age, I won’t be entitled to any. 

andys15

Just done my forecast. It says another 9 years to get full whack which is not going to happen. 

At the moment it’s says £133 a week based on April 2020 figures. If I work another 5 years I suppose that goes up a bit.