Retire with a mortgage

kevcarling

Hi folks. 

Due to ill heath (need a new hip) and general sick of my job, is it feasible to retire with a mortgage? I have currently £62k left on my flat. I am single, recently split (18 months from ex) I have approximately £280k in two pensions. I am really thinking of jacking it all in and just going for it. I have just over 2 years on my fixed rate at 1.2% (I know it’s a great deal) so I’d have to take enough pension to continue to pay that then cross the bridge of about £50k in a few years. With my declining health both physically and mentally I feel this would be a good option. I could always go back to work albeit in a far less physical job. 

Thoughts appreciated. 

saucer

Hi Kev

You dont say how old you are and therefore how far off the state pension you are.  A key consideration with the mortgage is how you are going to pay it off.  Do you mean that you would take a lump sum to pay off the mortgage, or that you are planning on drawing down to pay off gradually?  Either way 280k is a decent starting point but I don't think you would want to be dipping into it if you are relatively young and it has to do you a long time and you could avoid it.  Your mortgage interest rate is very good and likely to cost you less than you would gain from the money being invested elsewhere but albeit it would not be as secure as paying down the mortgage.  More details would help people comment from a more informed position

kevcarling

saucer said:

Hi Kev

You dont say how old you are and therefore how far off the state pension you are.  A key consideration with the mortgage is how you are going to pay it off.  Do you mean that you would take a lump sum to pay off the mortgage, or that you are planning on drawing down to pay off gradually?  Either way 280k is a decent starting point but I don't think you would want to be dipping into it if you are relatively young and it has to do you a long time and you could avoid it.  Your mortgage interest rate is very good and likely to cost you less than you would gain from the money being invested elsewhere but albeit it would not be as secure as paying down the mortgage.  More details would help people comment from a more informed position

Thanks for the reply saucer. 

I am 56, 57 this year so pension wise relatively young. I was going to pay it off after the fixed rate ends. 

Although I said I am single, I do have a partner/girlfriend but we are still in the early stages (7 months) but everything’s nag is going really well. So that may have had an impact as to my thinking. 

bluenose1

If mortgage interest rates still high (which they probably will be)  worth considering.. As long as you have calculated  you have enough left in your retirement pot to live on after paying it off. Most people on here work out a Budget of how much they will need each year and factor in State Pension etc at 67. Also worth checking you have paid enough contributions for full state Pension.  
This is quite a good guide to what you will be expected to need in retirement, though obviously different for everyone, plus think need to add on 10% for inflation as dont think it has been updated this year yet,
https://www.retirementlivingstandards.org.uk/

I use this as well to put my figures in to see how much I could get in retirement, www.guiide.co.uk
If you are in poor health due to your hip, could you not consider going off sick in the interim while you make your mind up?

Albermarle

kevcarling said:

saucer said:

Hi Kev

You dont say how old you are and therefore how far off the state pension you are.  A key consideration with the mortgage is how you are going to pay it off.  Do you mean that you would take a lump sum to pay off the mortgage, or that you are planning on drawing down to pay off gradually?  Either way 280k is a decent starting point but I don't think you would want to be dipping into it if you are relatively young and it has to do you a long time and you could avoid it.  Your mortgage interest rate is very good and likely to cost you less than you would gain from the money being invested elsewhere but albeit it would not be as secure as paying down the mortgage.  More details would help people comment from a more informed position

Thanks for the reply saucer. 

I am 56, 57 this year so pension wise relatively young. I was going to pay it off after the fixed rate ends. 

Although I said I am single, I do have a partner/girlfriend but we are still in the early stages (7 months) but everything’s nag is going really well. So that may have had an impact as to my thinking. 

Have you checked you will get a full state pension?
Check your State Pension forecast - GOV.UK (www.gov.uk)

I have approximately £280k in two pensions.
How the investments in the pensions perform, will have a significant effect on what level of income can be generated.
In two years time for example , that £280K could be just £200K, or it could be £350K . So you need a plan to cope with short/medium term volatility
Of course you can not control/predict how financial markets will behave, but having an appropriate mix of investments in place will help. Plus a certain level of cash savings is usually recommended.