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Pay Mortgage up and put money in Pension ?
eastie_2
Posts: 42
Forumite
Hi,
I have just been left some money from my late mother and as I am hoping to retire in 2 years .
Question I am asking is
Should I clear my Mortgage of £25,000 off at the end of my deal in April 2022 saving me £400 a month and pay the £400 into my Post Office Pension for the 2 years , or wouldn't it be worth it with only 2 years before retirement.
Many thanks
I have just been left some money from my late mother and as I am hoping to retire in 2 years .
Question I am asking is
Should I clear my Mortgage of £25,000 off at the end of my deal in April 2022 saving me £400 a month and pay the £400 into my Post Office Pension for the 2 years , or wouldn't it be worth it with only 2 years before retirement.
Many thanks
0
Comments
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Only you can weigh up which is best. In terms of return
Your mortgage gives you certainty - if you pay it off - it's done. You know exactly how much £ a month that would free up.
If you put it into your pension if you are a basic rate tax payer - you will get roughly 25% uplift from the government in tax relief- far outstripping the interest rate your mortgage costs. So that would be around £6.2K If you are a higher rate tax payer the uplift is even more.
The risk with putting it into your pension if you are on a Defined Contribution pension is that your pension could go down or up and there is no way of knowing which it will do over a 2 year time frame. If you were able to buy added years as part of a Defined Benefit pension scheme - and the additional money was guaranteed - then that could be a real winner. You've not really given enough information.
Do you have any debt? Do you have a 6-12 month emergency fund? These are also important things to consider.
Only you know your personal circumstances and how much risk you can afford to take. I am not an IFA.Achieve FIRE/Mortgage Neutrality
1) MFW Nov 21 £202K now £165K Equity 38.88% 6/9/26
2) £1.5K Net savings after CCs 29/8/26 (but owed £130) so £1.6K
3) 47/82K @29/8/26 = 57.31% AVC Goal by mid 20280
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