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


  • savingholmes
    savingholmes Posts: 27,270 Forumite
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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 by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF) plus spent £10K+ on home improvements/emergency repairs
    2) Mortgage neutral by June 2030 AVC £8.063/£127,466 AVC target 6.32%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
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