Pay Mortgage up and put money in Pension ?

 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


  • savingholmessavingholmes Forumite
    23.6K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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.
    Target 1) Prioritise health & social connection 2) Write regularly 45,509/70,000 words Book 2 and 10,787/70,000 Priestess book, 44,000/95000 Memoir Prep 3a) Get to £10K EF/Savings Now £5,777 3b) £1.6K Savings for DD Car (Achieved) 4) MFW starting at £201,999 Nov 21 with 264 248 payments to go. Now £191,648) Mortgage neutral progress via pension £2,787 invested since Nov 21 6) Declutter 7) Invest in fun and frolics - and not just future self! 8) CC Debt free April 22 (now stay that way!!)
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