Should I used an inherited SIPP to pay off my mortgage?

Albermarle

Rudyson said:

One option: pay off the mortgage and put the repayment amounts into a SIPP of your own every month, getting a further 25% top up in tax relief.

The ability to do this depends on the OP's earned income, which so far we do not know. Also we do not know how old they are/near retirement , or whether they currently already have their own pension or not .

Rudyson

Zopa_Trooper said:

When I was 18 I was given the advice to pay as much as I could afford a month towards my mortgage and pay it off as soon as I could. I followed that advice, nearly lost my house thanks to Margaret Thatcher but my Mortgage was paid off when I was 46, since which time I've never worried about money again. I'm now 67. Obviously there will have been ways I could have been richer but I've enough to ensure that when I die there will be money in the bank so from my own experience, that would be the way to go. There is something very satisfying knowing you don't owe anybody any money.

Not just satisfying, it gives you a lot more flexibility going forward

LHW99

If (as appears to be the case) you can withdraw from the inherited SIPP tax free, and if you are not inthe middle of a morgage fixed rate, you could:

Withdraw from the ISA tax-free, pay off most of themortgage and swap the small remainder to a repayment (hopefully at a smaller monthly payment) which would ensure it is fully paid off in the end.

Keep the inherited SIPP as a tax-free income source.

Add some / all of the saved monthly payments to either your workplace pension, a separate SIPP or a new ISA.

Depends on how much you want the whole mortgage paid off, and how old you are, as new mortgages tend not to run beyond SPA at most.

jimjames

Rudyson said:

Zopa_Trooper said:

When I was 18 I was given the advice to pay as much as I could afford a month towards my mortgage and pay it off as soon as I could. I followed that advice, nearly lost my house thanks to Margaret Thatcher but my Mortgage was paid off when I was 46, since which time I've never worried about money again. I'm now 67. Obviously there will have been ways I could have been richer but I've enough to ensure that when I die there will be money in the bank so from my own experience, that would be the way to go. There is something very satisfying knowing you don't owe anybody any money.

Not just satisfying, it gives you a lot more flexibility going forward

I preferred the flexibility of having a large investment portfolio immediately available should I need it to pay for anything rather than having all money tied up in the house.

jzdarko

Albermarle said:

Rudyson said:

One option: pay off the mortgage and put the repayment amounts into a SIPP of your own every month, getting a further 25% top up in tax relief.

The ability to do this depends on the OP's earned income, which so far we do not know. Also we do not know how old they are/near retirement , or whether they currently already have their own pension or not .

I'm a top rate tax payer (just), 52 and I've got lots of company pensions but no SIPP of my own.

AlanP_2

What type of company pensions? Defined Contribution or Defined Benefit?

If they are DC that is the same as a SIPP to all intents and purposes.

You could use either the SIPP and/or the ISA to pay off the mortgage and pay the equivalent of the mortgage payment into a DC pension in your own name. Whether that should be a SIPP or your employer scheme depends on various other factors but the overall effect will be to avoid some of that top rate tax (60%?).

BTW - The inherited SIPP can pass on to the next generation so my personal preference would be to use the ISA for that reason.

Hoenir

jzdarko said:

To repay the current mortgage I have an ISA which has a similar amount as the SIPP but not quite enough to pay it off.

Held in cash or investments ? 

jzdarko

Lots of lovely comments thank you. My pensions are DC type with a small DB from my first employment.

ISA is investments much like the SIPP. The SIPP has some direct share holdings and some funds. My ISA is all funds because I proved in the dotcom era that my stock picking skills are terrible.

Albermarle

jzdarko said:

Lots of lovely comments thank you. My pensions are DC type with a small DB from my first employment.

ISA is investments much like the SIPP. The SIPP has some direct share holdings and some funds. My ISA is all funds because I proved in the dotcom era that my stock picking skills are terrible.

@jzdarko Just for info, you can often restart contributions to old DC workplace pensions if you want to, as an alternative to adding more to your current workplace pension or setting up a new one. You would have to check first with the provider as it depends how they were set up.

It will be easier to manage your pensions when you retire, if you have less of them, so probably worth thinking about some consolidation down to a smaller number at some point. You can either merge them into each other, or into your current workplace pension or into a new SIPP ) or a mixture) Some of the SIPP providers offer regular cashbacks for transfers in , although this should not be the only reason to transfer.