Martin Lewis mortgage payment advice

Pat38493

I was just listening to the Martin Lewis podcast.  He did a long segment illustrating the amount people can save by overpaying their mortgage and shortening the term (rather than reducing their payments).  He was advocating that this is better than investing the money as you won't get the same return.

That's debatable, but more importantly he never mentioned that if you could put the same overpayments into your pension with 20% or 40% tax relief you will be even better off in the long run.

IdrisJazz

I will listen to that carefully, as that doesn't sound right.

Of course, overpaying regularly on your mortgage can save you thousands compared to making a lump sum overpayment and reducing your monthly payments.

But he usually makes it clear that if you can get a better savings rate you'll be even better off using that instead.

However, I agree with you that he tends to have a pensions blindspot. I was listening to an older episode recently, and a gentleman had received an inheritance. Martin advised to retain an amount for spending, and putting the rest into savings. No mention of pensions at all!

dunstonh

 He was advocating that this is better than investing the money as you won't get the same return.

Did he actually say that or is that your interpretation?

Martin rarely delves into investing.  He had issues in the past when he tried and now generally avoids it.     

Also, you need to remember his brand and target market.   A lot of his success built from the early days was based on overpaying the mortgage.  So, he is largely playing to his crowd.

Also, as he has said himself many years ago, he has to pack his information into very short time segments and keep it snappy.  Adding caveats and alternatives would prevent that result in people turning off.  So, if he is focusing on a particular subject then only expect that subject to be covered.

Simon11

I have to agree with you and yesterday I wrote a post in the mortgage board which was discussing over-payment -v- saving. I suggested, what about considering saving into your pension and there was no response!


However for my personal situation, we are lucky to still have nearly 3 years left on our cheap mortgage rate however based on current mortgage rates we may need to find an extra £1,400 per month to cover the extra interest if things stay as they are.

Thus, unless things improve in the next three years, I am starting to outline a strategy:

• We maintain our existing lifestyle for now in hope things getting better but may need to reign in spending like on holidays
• After an emergency buffer pot, any available spare cash and savings will be thrown at the mortgage when switched to a new deal
• Pension contributions may need to be reduced heavily to just take advantage of employer contributions to ensure we have enough spending money month to month despite the tax savings.

Interesting to know if anyone has changed (or not) their pension contributions as a result of mortgages and other bills going up.

Pat38493

dunstonh said:

Did he actually say that or is that your interpretation?

Martin rarely delves into investing.  He had issues in the past when he tried and now generally avoids it.     

Also, you need to remember his brand and target market.   A lot of his success built from the early days was based on overpaying the mortgage.  So, he is largely playing to his crowd.

Also, as he has said himself many years ago, he has to pack his information into very short time segments and keep it snappy.  Adding caveats and alternatives would prevent that result in people turning off.  So, if he is focusing on a particular subject then only expect that subject to be covered.

He might have said savings rather than investments, but in any case a lot of folks would argue that even now, you might get a better long term return by investing the money, even without tax relief.  

Simon11 said:

I have to agree with you and yesterday I wrote a post in the mortgage board which was discussing over-payment -v- saving. I suggested, what about considering saving into your pension and there was no response!


However for my personal situation, we are lucky to still have nearly 3 years left on our cheap mortgage rate however based on current mortgage rates we may need to find an extra £1,400 per month to cover the extra interest if things stay as they are.

Thus, unless things improve in the next three years, I am starting to outline a strategy:

• We maintain our existing lifestyle for now in hope things getting better but may need to reign in spending like on holidays
• After an emergency buffer pot, any available spare cash and savings will be thrown at the mortgage when switched to a new deal
• Pension contributions may need to be reduced heavily to just take advantage of employer contributions to ensure we have enough spending money month to month despite the tax savings.

Interesting to know if anyone has changed (or not) their pension contributions as a result of mortgages and other bills going up.

My deal runs will August 2025 so I will take the view then on whether to take tax free cash to pay off the mortgage or just keep paying it for the moment.  Depends on deals available in 2025.  With the current deal that I have, it seems like it's pretty much a wash in the long term whether I pay it off or just let it run down until 2038.  However higher interest rates will obviously alter the equation.

MallyGirl

Pat38493 said:

My deal runs will August 2025 so I will take the view then on whether to take tax free cash to pay off the mortgage or just keep paying it for the moment.  Depends on deals available in 2025.  With the current deal that I have, it seems like it's pretty much a wash in the long term whether I pay it off or just let it run down until 2038.  However higher interest rates will obviously alter the equation.

Similar approach here. I am on 1.16% till October 2026 which may be the point that we retire and use the TFLS to pay if off. It will depend on the rates available

RogerPensionGuy

MallyGirl said:

Pat38493 said:

My deal runs will August 2025 so I will take the view then on whether to take tax free cash to pay off the mortgage or just keep paying it for the moment.  Depends on deals available in 2025.  With the current deal that I have, it seems like it's pretty much a wash in the long term whether I pay it off or just let it run down until 2038.  However higher interest rates will obviously alter the equation.

Similar approach here. I am on 1.16% till October 2026 which may be the point that we retire and use the TFLS to pay if off. It will depend on the rates available

1.16% till October 2026 is a great place to be, well done. 

Can I ask how long was this deal/when you started it?

MallyGirl

RogerPensionGuy said:

MallyGirl said:

Similar approach here. I am on 1.16% till October 2026 which may be the point that we retire and use the TFLS to pay if off. It will depend on the rates available

1.16% till October 2026 is a great place to be, well done. 

Can I ask how long was this deal/when you started it?

It is a 5 year fix with a less than 50% LTV.

Albermarle

Simon11 said:

I have to agree with you and yesterday I wrote a post in the mortgage board which was discussing over-payment -v- saving. I suggested, what about considering saving into your pension and there was no response!


However for my personal situation, we are lucky to still have nearly 3 years left on our cheap mortgage rate however based on current mortgage rates we may need to find an extra £1,400 per month to cover the extra interest if things stay as they are.

Thus, unless things improve in the next three years, I am starting to outline a strategy:

• We maintain our existing lifestyle for now in hope things getting better but may need to reign in spending like on holidays
• After an emergency buffer pot, any available spare cash and savings will be thrown at the mortgage when switched to a new deal
• Pension contributions may need to be reduced heavily to just take advantage of employer contributions to ensure we have enough spending money month to month despite the tax savings.

Interesting to know if anyone has changed (or not) their pension contributions as a result of mortgages and other bills going up.

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Do higher interest rates change your thinking on investing vs paying down mortgage debt — MoneySavingExpert Forum