Pay off mortgage in full? Or invest?

ian1246

Is your husbands pension a defined contribution scheme or a defined benefits scheme? If its a DC scheme even if he died, you would get it all since it is just a pot of money which you can either draw down or exchange for an annuity.

Defined benefit scheme however is different (I.e. such as a Police Pension)

Simon11

Unless I missed it, how have you ended up on a tracker mortgage and what appears to be a few years to go on this mortgage?

Have you looked to see if you can get any fixed rates for 5 years which have a far lower percentage? No idea of rates, but if you can get a new rate of say 3-4% it may slightly change your decision here?

xylophone

I know this is an uneducated thing to say but I'm always worried if we over pay his pension and he died I won't get out what we put in. 

You mention  your husband's Aviva workplace pension - this will be DC (money purchase) unlike yours which is DB,

Your husband should have some sort of Guide to his scheme with details of death before taking benefits etc but in general

See https://www.aviva.co.uk/retirement/help-and-support/what-happens-to-your-pension-when-you-die/#:~:text=If you're under 75,tax on what they receive

A defined contribution pension – a pension that’s based on how much has been paid into it – will normally make the value of your pension pot available to your dependants or other beneficiaries. This could be as a lump sum or a kind of pension, depending on what your pension provides. If you die before age 75, benefits under money purchase schemes can usually be passed on to your beneficiaries free of tax.

Presumably you/your children are named as beneficiaries in his Letter of Nomination?

You have a defined benefit pension and should have full details of benefits available to your widower/children still in education or training.

https://www.gov.uk/government/publications/benefits-of-the-police-pension-scheme-2015/the-benefits-of-your-police-pension-scheme-accessible-version

happymum37

xylophone said:

I know this is an uneducated thing to say but I'm always worried if we over pay his pension and he died I won't get out what we put in. 

You mention  your husband's Aviva workplace pension - this will be DC (money purchase) unlike yours which is DB,

Your husband should have some sort of Guide to his scheme with details of death before taking benefits etc but in general

See https://www.aviva.co.uk/retirement/help-and-support/what-happens-to-your-pension-when-you-die/#:~:text=If you're under 75,tax on what they receive

A defined contribution pension – a pension that’s based on how much has been paid into it – will normally make the value of your pension pot available to your dependants or other beneficiaries. This could be as a lump sum or a kind of pension, depending on what your pension provides. If you die before age 75, benefits under money purchase schemes can usually be passed on to your beneficiaries free of tax.

Presumably you/your children are named as beneficiaries in his Letter of Nomination?

You have a defined benefit pension and should have full details of benefits available to your widower/children still in education or training.

https://www.gov.uk/government/publications/benefits-of-the-police-pension-scheme-2015/the-benefits-of-your-police-pension-scheme-accessible-version

Ah yes it is a DC one then - it's just a big pot of money. 

I can over pay as much as I want until mine and so can he.  I think we will get the pot of savings back up and over pay into his for a bit.  If all we have in the world is the 14k ish left after paying the mortgage off I would like a bit more "just in case"

My pension goes to him & the bairns but I'm not sure he has told them about me as he opened it before we married - I will check.  

Thank you 😊 

happymum37

Simon11 said:

Unless I missed it, how have you ended up on a tracker mortgage and what appears to be a few years to go on this mortgage?

Have you looked to see if you can get any fixed rates for 5 years which have a far lower percentage? No idea of rates, but if you can get a new rate of say 3-4% it may slightly change your decision here?

I think it's called a tracker? So our fixed rate ended a couple of years ago and we just went onto 0.75% above the base rate? It's not fixed now so we have unlimited over payment 

We are with santander and when I did a very rough check against others we had to get a product fee and valuation done.. didn't seem worth it?

bostonerimus

Do you have any debt other than the mortgage?
How much do you have in your cash emergency fund?

kipsterno1

Not knowing your flexible working plan this might be off the wall but here goes. Could you put money towards child care, after school, summer club and up your working hours? This would give you more take home pay and plug some of the pension gap you are working towards. As I said, off the wall.

Bimbly

happymum37 said:

I think it's called a tracker? So our fixed rate ended a couple of years ago and we just went onto 0.75% above the base rate? It's not fixed now so we have unlimited over payment 

We are with santander and when I did a very rough check against others we had to get a product fee and valuation done.. didn't seem worth it?

I have exactly the same mortgage, so just confirming this is a thing. I also didn't fix as the rate was better than any available fix until the base rate started to go up in a crazy manner.

Just to echo everyone else - pay off the mortgage! You still keep the asset of the house and you don't have to worry about it any more. Put the rest into a decent savings account(s) as a rainy day fund. Use the money you were spending on the mortgage to add to your pensions.

happymum37

bostonerimus said:

Do you have any debt other than the mortgage?
How much do you have in your cash emergency fund?

No debt what so ever. 


We will have 13.5k left I think after paying off mortgage and will start saving the 550 immediately after paying it off

bostonerimus

happymum37 said:

bostonerimus said:

Do you have any debt other than the mortgage?
How much do you have in your cash emergency fund?

No debt what so ever. 


We will have 13.5k left I think after paying off mortgage and will start saving the 550 immediately after paying it off

So do you have anything in a cash emergency fund right now? In your situation I would have at least 6 months spending in the bank for emergencies. After that is done I would put half of what's left towards the mortgage and the rest into extra pension contributions to get the tax advantage.