Overpay mortgage or put money into pension?

kittykat51

I am a very late starter with my pension. I'm in my 50s and only started paying into one about 5 years ago. I'm self-employed and contribute on an ad-hoc basis. There is around £15k in there. 

I have a flexible mortgage which I really like because I can draw down money if I ever need to (roof repairs, new car etc) without having to apply for a loan or anything. But the interest is high - currently 5.4%. Monthly payments are around £550.

I do have around £400 a month at the moment that I can save. I don't know whether to overpay the mortgage to get the interest down or put the money into my pension, given that this is tax free and would in essence - if I understand it correctly - make each £400 deposit worth £480. 

Any corrections or suggestions? 

Thanks 😊 

Archerychick

I would honestly be putting that into my pension, given the tax benefit and the fact that it will grow over time. Your future self will thank you I think. 

I agree your mortgage rate is high but it sounds like you’re paying for the flexibility that you like so it’s a trade off I guess. 

edinburgher

I don't think we have enough information to go on about your circumstances - your age, when you want to retire, how long is left on your mortgage etc. It might not feel like it but you could probably benefit from some independent financial advice to help plan your future.

Archerychick

I just went on the fact the OP is 50 with very limited pension - I think even if the mortgage was significant it would still be what I’d recommend  

edinburgher

@Archerychick - I wasn't criticising just think the fact that OP has got to 50s with minimal pension might warrant some advice to consider all options. 

Archerychick

edinburgher said:

@Archerychick - I wasn't criticising just think the fact that OP has got to 50s with minimal pension might warrant some advice to consider all options. 

I agree Consider all the facts is best for sure 

kittykat51

Thanks both. I'm 50, have 8 years left on my mortgage, and atcthis rate will probably be working up to 65 and part time beyond that. Self-employed so will just retire when I can!