Paying Mortgage in Retirement

Curious how many readers of this forum are expecting to be still paying a mortgage into retirement and what your story is, how you plan to deal with it, or if it isn't a concern. My mortgage will still be active into retirement. Unfortunate divorce scuppered my plans to be mortgage-free by retirement as I had to start again, although I'm doing my best to overpay.

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  • happymum37
    happymum37 Posts: 314
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    Fingers crossed I will be mortgage free minimum 10 years before I retire x
    Part time worker.
     Plug that SAHM pension gap & Retire in style in 20 years. 
  • Chiglepig
    Chiglepig Posts: 611
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    I suppose @Whiterose23, whether it is a concern depends on how you have planned for retirement, what sort of pension for you have, DC or DB? Do you expect to have a lump sum that might clear some or all of the mortgage? Will your pension amount cover the mortgage? - don't forget, once a DB and/or the state pension are in payment, they are much more reliable forms of income than a job.

    My mortgage is due to end when I am 67 (2039), I had to provide evidence my Teacher's Pension would cover it because the end date is two months after my birthday! But I have been over paying for quite a few years now for a number of reasons, some or all of which might strike a chord with you:
    • Saving interest - less to payout in the long run.
    • I don't want to work until 67, my job is too intense. (although I could cover the payments, I want more freedom in what I spend on).
    • My overpayments are set to lower my monthly payments so even if I decide not to finish it early, if I stopped overpaying at some point in the future the monthly payments would be very low.

    If you look at the savings and investment boards, you'll see lots of them would never consider overpaying, because interest is low and investing currently gets a better return. For me, that's an extension of not spreading the risk! My strategy (I'm fortunate to be in the position to do it) is every month; something to OPs (see reasons above) and if interest rates go up before my current deal ends, I will be in a better position to absorb the rise; a little to cash savings; some to a S&S ISA - this is currently beating my mortgage interest, but it's an unrealised gain and could go down; and I contribute to two pensions, but that's not accessible.

    I would hope to be mortgage-free thanks to OPs by 2029.

    It's grim having to start again (I've done it), BUT you are now completely in control of your finances, no compromises, if you want to OP you can, if you want to go into extreme frugal mode to allow OPs, you can. The best answer is the one that feels right for you.

    2014 starting mortgage £165,000
    2015 second charge £20,000 - Jan 2021 paid off in full
    Current outstanding balance - £115,856



  • Whiterose23
    Whiterose23 Posts: 172
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    Chiglepig, thanks for your post, I’m in a similar position. I took out a 20 year mortgage at age 49 and was surprised that I didn’t have to provide evidence my pension would cover my mortgage. 

    However I did borrow only around 60% of the property as I had a sizeable deposit due to the divorce settlement. Still a scary thing to do at the time.

    I have a couple of deferred DB pensions that will hopefully pay out a total of around £8k a year with a lump sum and a current DC pension which is quite small. Also I have full contributions for the state pension. So I hope if it came to it I could afford the mortgage payment if I haven’t managed to pay it down by then.

    As for overpayment I am currently overpaying £100 a month with the aim of bringing down the term to 67 if I can. But it’s hard to say whether I will be able to continue to do this as I have teenagers who want to go to university in the next few years!

    Ive only recently started reading this board as I’ve normally read the Pensions board with growing concern when seeing the huge sums people are planning to retire on! I thought it would be interesting to see if others were in a similar position to myself and how they are planning ahead.
  • bluenose1
    bluenose1 Posts: 2,629
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    Chiglepig, thanks for your post, I’m in a similar position. I took out a 20 year mortgage at age 49 and was surprised that I didn’t have to provide evidence my pension would cover my mortgage. 

    However I did borrow only around 60% of the property as I had a sizeable deposit due to the divorce settlement. Still a scary thing to do at the time.

    I have a couple of deferred DB pensions that will hopefully pay out a total of around £8k a year with a lump sum and a current DC pension which is quite small. Also I have full contributions for the state pension. So I hope if it came to it I could afford the mortgage payment if I haven’t managed to pay it down by then.

    As for overpayment I am currently overpaying £100 a month with the aim of bringing down the term to 67 if I can. But it’s hard to say whether I will be able to continue to do this as I have teenagers who want to go to university in the next few years!

    Ive only recently started reading this board as I’ve normally read the Pensions board with growing concern when seeing the huge sums people are planning to retire on! I thought it would be interesting to see if others were in a similar position to myself and how they are planning ahead.
    I know the temptation is to pay your mortgage off but I am instead made additional contributions to my  pension pot. In theory won’t pay my mortgage off until my late 60s. With interest rates being so low the advantage of putting into my pension outweighs it for me, especially as I am 55 and can start withdrawing anytime.
    If your employer offers salary sacrifice then for every £68 your salary is reduced then £100 goes into your DC pension pot. The trick is to get out what you can paying as little tax as possible. I am hoping to go by 56 and will be able to take out over £16,000 per year tax free. This will reduce when my DB pensions start at 60. 
    Definitely worth doing comparisons of the different option of saving in your pension or overpaying your mortgage.


    Money SPENDING Expert

  • Whiterose23
    Whiterose23 Posts: 172
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    Bluenose1 … this is something I’ve pondered for a long time. Im
    currently paying 5% into my current DC pension and my company pay the basic minimum, so I am hoping with time I will end up being ‘mortgage neutral’
    although I realise these contributions aren’t great.

    I also pay £200 into an ISA every month. I’m naive when it comes to investing money and don’t really understand the pros and cons of investing. It always feels too risky to me.

    Im hoping to close the gap by overpaying the mortgage, not taking anything from my pensions (I’m also 55), and by saving so that eventually, when I do get a tax free pension lump sum, I can use it to pay off the mortgage all being well.

  • SandyShores
    SandyShores Posts: 1,437
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    edited 29 June 2021 at 10:05PM
    We started again in our mid/late 50's Whiterose, and if we make just the planned payments we will probably be in our early/mid 70's when its paid off.  That's the worst case scenario - we have/pay into a couple of pensions each, plus we'll have around £9k pa from our state pensions each so would be possible to keep paying into retirement. 

    We made small mortgage overpayments last year, but will start larger overpayments soon.  Using these calculations we plan to have repaid the mortgage by the time I reach state pension age, using my DB lump sum as a final payment if necessary.

    Edit - there are all kinds of what ifs, and we might be in a position to pay off even earlier e.g. DH could take a lump sum from his personal pension or my premium bonds might come up :smiley:

    Having such a large mortgage has made me strive to get a better job - which is a good thing as I'm really enjoying learning and a bit of variety.  Sometimes our situation does make me go 'eek', and when I think about working until state retirement pension age it often makes me want to lie down in a darkened room sometimes :neutral:  But we aren't the only ones in this kind of position and my attitude is to keep on keeping on - our life is good, we are comfortable, have our own home, enough food, hobbies etc. 

    I spent a lot of my younger years worrying about stuff, and it all worked out in the end, so the worrying was pointless.  And of course I do the lottery from time to time, just in case :smile:

    No-one knows what is around the corner - so no point worrying and it will all work out I'm sure :smile:
    Mortgage £186,550 £244,947, End date Feb'38  Jun'39 (target Feb'31)
    H2B Loan Estimated: £73,657 (according to NW) saved so far £2.52

    EF £6,325; Personal savings (PBs/ISA new car fund): £2039
    Checking seven goals regularly; Work-life balance.
    Celebrate being 60; Be 'Good Enough'
    Books Read: started on no.4
  • Nurse2047
    Nurse2047 Posts: 374
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    Hi 
    I’m in similar position however doing 50/50 now with overpaying and investing.I found these helpful

    https://youtu.be/m8aQUUwVsTQ

    https://youtu.be/80b5SFnZgoM



    Nurse striving for financial freedom
  • Whiterose23
    Whiterose23 Posts: 172
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    Great to see others in a similar position so I don't feel so lonely. SandyShores it's great that you feel motivated to get a better job, but  I know what you mean about lying down in a darkened room - I feel that way too at times!

    I do enjoy my job but I'm getting painfully aware that as I get older I'm more at risk of being 'let go' and not finding another so easily, but as you say, no point worrying. Worse case scenario I could downsize eventually although I hope I won't have to.
    I think being single isn't helpful either when it comes to finances and security, but i don't see why I should change that as I'm happy as things are.

    MFW2026 thanks for the links, I shall look at those for sure to see if I can better my position.

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