Pay off mortgage in full? Or invest?

Albermarle

happymum37 said:

Albermarle said:

Bimbly said:

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.

Reading through the thread, this might be the best option for the OP.
Pay off the mortgage and then the husband to increase his pension contributions via his employer, but by a significant amount , not just a couple of per cent. Also she can maybe increase her police pension contributions as well. 

OP - You mention that the Aviva pension is rubbish. In fact it is not the pension itself that is the problem,  but the low amounts going into it . To have a decent retirement/ not work until you are 70 , you need some decent pension provision on top of the state pension. 

How much would you say we should be putting in? I pay the standard police percentage plus 125 extra per month. 

Hubby thinks he is now putting 8% into a pension.  I think.  I need to check on Monday . His boss puts 3% in

You both have totally different types of pension.
The Police pension is a Defined Benefit ( DB) scheme. You get a guaranteed income when you retire , approx based on how many years you work and what your salary is . Presumably by adding extra, you are improving the way the calculation of final income works out. However the Police pension will have its own specific rules, so difficult to be sure how it works. 
Your OH has a Defined Contribution ( DC) scheme. It is basically a pot of money, that you use when your retire to provide an income.  It sounds like both him and the employer are adding the legal minimum , which is 5% from employee and 3 % from employer. Normally this far below what is needed to build up a big enough pot, so any increase in contributions is good. He should check whether the employer will increase their contribution if he increases his ( some do and some don't) . If you tell us how big the pot currently is, and approx how long before retirement, and approx how much he earns , then you should get some useful guidance.

Worth noting that a public sector DB scheme, like the Police Pension, is a much better pension than a standard DC one. To get the same/similar  benefits from a DC scheme, it probably needs about 30% of salary going into it for 30 years.

bostonerimus

FYI you can put some money into a pension plan and some into the mortgage. There's no need to make a binary choice. I would do a little of both. You don't need to risk it all on one thing...

GunJack

Simon11 said:

GunJack said:

I'd pay the mortgage off now and then add to pensions with the mortgage saving.

plus, no-one can reposess your house if it's paid-for

Quite a few people here waving the flag to pay off the mortgage now, rather than focus on your pension.

For most people (particularly people in the 40% tax bracket), it will be financially better to pay into your pension than to pay off the mortgage (which is most likely to be the cheapest loan that you ever get).

However, the OP has a DB pension, not a DC one, so in a totally different situation to you. When your main provision is DB, you're better off having no mortgage, as your required monthly income will be lower, and that fits better with the majority of DB pensions. If the mortgage money is put in a SIPP to go alongside the DB, that would be the OP's best outcome...

happymum37

Albermarle said:

happymum37 said:

Albermarle said:

Bimbly said:

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.

Reading through the thread, this might be the best option for the OP.
Pay off the mortgage and then the husband to increase his pension contributions via his employer, but by a significant amount , not just a couple of per cent. Also she can maybe increase her police pension contributions as well. 

OP - You mention that the Aviva pension is rubbish. In fact it is not the pension itself that is the problem,  but the low amounts going into it . To have a decent retirement/ not work until you are 70 , you need some decent pension provision on top of the state pension. 

How much would you say we should be putting in? I pay the standard police percentage plus 125 extra per month. 

Hubby thinks he is now putting 8% into a pension.  I think.  I need to check on Monday . His boss puts 3% in

You both have totally different types of pension.
The Police pension is a Defined Benefit ( DB) scheme. You get a guaranteed income when you retire , approx based on how many years you work and what your salary is . Presumably by adding extra, you are improving the way the calculation of final income works out. However the Police pension will have its own specific rules, so difficult to be sure how it works. 
Your OH has a Defined Contribution ( DC) scheme. It is basically a pot of money, that you use when your retire to provide an income.  It sounds like both him and the employer are adding the legal minimum , which is 5% from employee and 3 % from employer. Normally this far below what is needed to build up a big enough pot, so any increase in contributions is good. He should check whether the employer will increase their contribution if he increases his ( some do and some don't) . If you tell us how big the pot currently is, and approx how long before retirement, and approx how much he earns , then you should get some useful guidance.

Worth noting that a public sector DB scheme, like the Police Pension, is a much better pension than a standard DC one. To get the same/similar  benefits from a DC scheme, it probably needs about 30% of salary going into it for 30 years.

Thank you!

His wage is 40k
Ideally 15 years before retirement but at a push would work 17. But that's not what he wants
93k in his pot.

We have no debt once the mortgage is gone however will only have 13k ish savings.. we should get inheritance of both parents but who knows what they will need / if any left

happymum37

GunJack said:

Simon11 said:

GunJack said:

I'd pay the mortgage off now and then add to pensions with the mortgage saving.

plus, no-one can reposess your house if it's paid-for

Quite a few people here waving the flag to pay off the mortgage now, rather than focus on your pension.

For most people (particularly people in the 40% tax bracket), it will be financially better to pay into your pension than to pay off the mortgage (which is most likely to be the cheapest loan that you ever get).

However, the OP has a DB pension, not a DC one, so in a totally different situation to you. When your main provision is DB, you're better off having no mortgage, as your required monthly income will be lower, and that fits better with the majority of DB pensions. If the mortgage money is put in a SIPP to go alongside the DB, that would be the OP's best outcome...

Never thought of a sipp.

We were going to build our savings to about 25k as soon as possible (so a further 12k) and then put some into an isa / some type of savings and over pay into his work pension more

Do you think we should do a sipp as well as his work one?

Thank you

xylophone

Ideally 15 years before retirement 
93k in his pot.

Then he needs to start beefing up his pension pot.

Do you think we should do a sipp as well as his work one?

I'm not sure I can see the point unless he wants to choose investments not available in his workplace pension.

In your situation I think I'd go for paying off the mortgage and splitting the monthly  amount as suggested in my previous between a regular saver and his pension.

Once satisfied with your emergency/security blanket, you could increase the pension savings.

When your children are early teens you might consider increasing your hours?

happymum37

xylophone said:

Ideally 15 years before retirement 
93k in his pot.

Then he needs to start beefing up his pension pot.

Do you think we should do a sipp as well as his work one?

I'm not sure I can see the point unless he wants to choose investments not available in his workplace pension.

In your situation I think I'd go for paying off the mortgage and splitting the monthly  amount as suggested in my previous between a regular saver and his pension.

Once satisfied with your emergency/security blanket, you could increase the pension savings.

When your children are early teens you might consider increasing your hours?

Thank you so much. 

Yep the plan is to get the kids through secondary and then I will go full time . That will leave me with 10 ish years of full time work. 

We are planning on splitting the mortgage money we have each month and putting some into his and since into a safety net. 

Thank you again.  We have always focused on getting rid of the mortgage and now it's time I think for the retirement planning to commence

happymum37

So I got husband to check. 

He had ncreased his pension to 10%  last year sometime and only this month went up to 11%
. With that in mind I'm going to get him to build up to 15% once we have the savings sorted

Albermarle

happymum37 said:

So I got husband to check. 

He had ncreased his pension to 10%  last year sometime and only this month went up to 11%
. With that in mind I'm going to get him to build up to 15% once we have the savings sorted

Sounds like a plan. Not sure it has been mentioned before, but it could be a good time to start to look at the details of how his pension is invested . Feel free to ask questions when you find out.

happymum37

Thank you Albermarle 

I think there is a chance we have to retire later than we hoped but that's OK if it means we get to live a bit before we retire.  I don't want to save so much we don't enjoy life now . We can make that decision when the time comes but for now will get the mortgage sorted and get saving