Long term plan for when my mortgage is finished

Floyd_Pink

I've just done my annual financial review I think I'm doing okay but a fresh perspective is always welcome. I'm 50 years old and live on my own.

• Property value £280k

• Salary £35k (currently have £500pm additional as a side hustle)

• Outstanding mortgage balance £25k, 7 year fix @ 2.69% ends May 2025 (£555pm)

• No other debt (took many years to achieve this)

• Pension pot £243k (100% equities)

• Saving 21% pm to employee scheme (6% me Sal Sacrifice and 15% employer)

• £4.5k in company shares held in S&S ISA (I buy annually at a discount through sharesave schemes)

• £2k in T212 S&S ISA (I make ad hoc payments when funds allow) opened in April.

• £8K Vanguard S&S ISA (DD for £130pm) opened June 2020.

• Approx. £15k on paper in company share schemes that I don't have access too (covers next 5 years)

I am hoping to have enough saved across my ISA's that by May/June next year I should be able to clear the mortgage balance as this is when my deal ends (official end date is August 2028). Besides treating some friends to a meal out to celebrate I have no special plans for the the freed up £555 each month I'll have- this is where I could do with a second opinion, I'm thinking of paying half into my Vanguard SIPP which has about £38k in it but I don't contribute too it (only pay into current company scheme - been there for 20 years) and the rest into building back up my S&S ISA. My thinking is an additional £3300 (annually) in to my pension + tax relief will really help turbo charge it and come the next 8 years I may have some retirement options and by building up some more accessible funds in an ISA I'll have a bridge to retirement as I think at best I've got 5 years left at work before A.I. comes for me rather than stick the full £555 in to the pension which I know on paper will offer the best value.

Or should I just go back to looking at Porsche Boxers on Autotrader? (joke- but a constant dream)

Thoughts and ideas welcome.

Mark_d

You're doing ok with your pension but are you sure you want 100% in equities?  I've recently moved to put 20% of my pension fund into gilts/bonds to give extra stability whilst we have the US elections and WW III around the corner.

Do you have any cash savings and/or stable element to your S&S portfolio?  I aim to keep 10k in cash savings and I use premium bonds as the stable side to balance equity risk in my portfolio.

With the cash flow you free up after paying off your mortgage, you can put the money in to pension (pay tax when you get the pension payments rather than now) - or you can pay tax now and benefit from tax-free growth if you use an ISA.  My advice would be to max your ISA allowances.

Looking at cars on Autotrader might have been a joke but it's not necessarily a bad idea.  You never know when health will take a turn for the worse so it's important to enjoy yourself as you go through life.

vacheron

Floyd_Pink said:

I've just done my annual financial review I think I'm doing okay but a fresh perspective is always welcome. I'm 50 years old and live on my own.

• Property value £280k

• Salary £35k (currently have £500pm additional as a side hustle)

• Outstanding mortgage balance £25k, 7 year fix @ 2.69% ends May 2025 (£555pm)

• No other debt (took many years to achieve this)

• Pension pot £243k (100% equities)

• Saving 21% pm to employee scheme (6% me Sal Sacrifice and 15% employer)

• £4.5k in company shares held in S&S ISA (I buy annually at a discount through sharesave schemes)

• £2k in T212 S&S ISA (I make ad hoc payments when funds allow) opened in April.

• £8K Vanguard S&S ISA (DD for £130pm) opened June 2020.

• Approx. £15k on paper in company share schemes that I don't have access too (covers next 5 years)

I am hoping to have enough saved across my ISA's that by May/June next year I should be able to clear the mortgage balance as this is when my deal ends (official end date is August 2028). Besides treating some friends to a meal out to celebrate I have no special plans for the the freed up £555 each month I'll have- this is where I could do with a second opinion, I'm thinking of paying half into my Vanguard SIPP which has about £38k in it but I don't contribute too it (only pay into current company scheme - been there for 20 years) and the rest into building back up my S&S ISA. My thinking is an additional £3300 (annually) in to my pension + tax relief will really help turbo charge it and come the next 8 years I may have some retirement options and by building up some more accessible funds in an ISA I'll have a bridge to retirement as I think at best I've got 5 years left at work before A.I. comes for me rather than stick the full £555 in to the pension which I know on paper will offer the best value.

Or should I just go back to looking at Porsche Boxers on Autotrader? (joke- but a constant dream)

Thoughts and ideas welcome.

Looks like you are well on the way! My only thoughts are: 

Why the rush to pay off the mortgage, it's the cheapest money you'll ever borrow.  Have you looked at rates to re-mortgage, (appreciating the amount is small so could be destroyed by fees)?

With a long enough timeframe, borrowing against the house and investing the funds could yeild better returns over the timeframes you have? But I know many people just want rid of them asap. 

100% pension equities sounds risky especially as all of your company shares are also equities, are these all classic "stocks and shares" or does this just mean no bonds? Also are these global or regional?

Finally, I'd just splash out and buy the Porsche Boxers, they're only £55 a pair. 

If you want a Boxster though, that could be a bit more expensive! 



 

Albermarle

You're doing ok with your pension but are you sure you want 100% in equities?  I've recently moved to put 20% of my pension fund into gilts/bonds to give extra stability whilst we have the US elections and WW III around the corner.

There are many reasons to have 100% equities, and many reasons to be more cautious, but current events should not really be the defining reason.
At many points in the past, and no doubt at many points in the future, there will be US elections and/or WW3 looming.
If the latter happened then being in 100% equities or not, would be the least of your worries.
Otherwise stock markets often shrug off all the bad news in the world ( not always) and are more interested in interest rates, and how many iphones have sold this month.

pterri

No wise advice, others above have answered that better than I could. I paid off my mortgage very early when interest rates were v low. With hindsight it probably wasn’t the best use of the overpayment. I could have got better returns investing it but like you, the idea of being mortgage free really appealed. 

On the boxster. I bought a used Porsche Cayman (hard top boxster in effect). Fantastic car, the first tyre change and a leaky steering rack made me realise that I was heading toward money pit territory so flogged it and put the money in my SIPP.

mortgage overpayment, heart over head  
cayman, head over heart 

Floyd_Pink

Mark_d said:

You're doing ok with your pension but are you sure you want 100% in equities?  I've recently moved to put 20% of my pension fund into gilts/bonds to give extra stability whilst we have the US elections and WW III around the corner.

Do you have any cash savings and/or stable element to your S&S portfolio?  I aim to keep 10k in cash savings and I use premium bonds as the stable side to balance equity risk in my portfolio.

With the cash flow you free up after paying off your mortgage, you can put the money in to pension (pay tax when you get the pension payments rather than now) - or you can pay tax now and benefit from tax-free growth if you use an ISA.  My advice would be to max your ISA allowances.

Looking at cars on Autotrader might have been a joke but it's not necessarily a bad idea.  You never know when health will take a turn for the worse so it's important to enjoy yourself as you go through life.

I'm quite happy with my appetite for risk, I learnt my lesson clearing out my PEP after 9/11. Got ignore the news- or so im telling myself, maybe in 5 years I'll look to de-risk a bit. Maybe. I think I will spilt any spare capital I have between both my Vanguard ISA and my Vanguard pension then get to take the benefits from both. I know its a nice problem to have. Might have another look on Autotrader too- you are quite right about health etc and you are a long time dead. 

Floyd_Pink

vacheron said:

Floyd_Pink said:

I've just done my annual financial review I think I'm doing okay but a fresh perspective is always welcome. I'm 50 years old and live on my own.

• Property value £280k

• Salary £35k (currently have £500pm additional as a side hustle)

• Outstanding mortgage balance £25k, 7 year fix @ 2.69% ends May 2025 (£555pm)

• No other debt (took many years to achieve this)

• Pension pot £243k (100% equities)

• Saving 21% pm to employee scheme (6% me Sal Sacrifice and 15% employer)

• £4.5k in company shares held in S&S ISA (I buy annually at a discount through sharesave schemes)

• £2k in T212 S&S ISA (I make ad hoc payments when funds allow) opened in April.

• £8K Vanguard S&S ISA (DD for £130pm) opened June 2020.

• Approx. £15k on paper in company share schemes that I don't have access too (covers next 5 years)

I am hoping to have enough saved across my ISA's that by May/June next year I should be able to clear the mortgage balance as this is when my deal ends (official end date is August 2028). Besides treating some friends to a meal out to celebrate I have no special plans for the the freed up £555 each month I'll have- this is where I could do with a second opinion, I'm thinking of paying half into my Vanguard SIPP which has about £38k in it but I don't contribute too it (only pay into current company scheme - been there for 20 years) and the rest into building back up my S&S ISA. My thinking is an additional £3300 (annually) in to my pension + tax relief will really help turbo charge it and come the next 8 years I may have some retirement options and by building up some more accessible funds in an ISA I'll have a bridge to retirement as I think at best I've got 5 years left at work before A.I. comes for me rather than stick the full £555 in to the pension which I know on paper will offer the best value.

Or should I just go back to looking at Porsche Boxers on Autotrader? (joke- but a constant dream)

Thoughts and ideas welcome.

Looks like you are well on the way! My only thoughts are: 

Why the rush to pay off the mortgage, it's the cheapest money you'll ever borrow.  Have you looked at rates to re-mortgage, (appreciating the amount is small so could be destroyed by fees)?

With a long enough timeframe, borrowing against the house and investing the funds could yeild better returns over the timeframes you have? But I know many people just want rid of them asap. 

100% pension equities sounds risky especially as all of your company shares are also equities, are these all classic "stocks and shares" or does this just mean no bonds? Also are these global or regional?

Finally, I'd just splash out and buy the Porsche Boxers, they're only £55 a pair. 

If you want a Boxster though, that could be a bit more expensive! 



 

It was never my plan to pay off the mortgage early, its really only a coincidence that come May next year I might have saved pretty much exactly the remaining balance. I have had a quick look at re-mortgage rates and I can see today 3.79% (Coventry Building Society) which would be paying an additional £63 per month- not a huge amount (I don't know what I could get from my current lender, Santander, as they wont quote until about January- maybe once they do and I can see what is on offer I may look again at my choices to settle or stay invested- as I too think long term this would be a better choice financially but all of a sudden having the thought of being mortgage free dangled in front of me is a strong pull.

My funds are all passive global trackers except for a bit of "fun" in an Indian FTSE tracker. My employee share schemes are all bought at a discount so essentially its free money, the one that matured in January just gone I more than doubled my money but normally I would never but single stocks- got burned in the 90's!

Off to Google race car underwear now....

Floyd_Pink

pterri said:

No wise advice, others above have answered that better than I could. I paid off my mortgage very early when interest rates were v low. With hindsight it probably wasn’t the best use of the overpayment. I could have got better returns investing it but like you, the idea of being mortgage free really appealed. 

On the boxster. I bought a used Porsche Cayman (hard top boxster in effect). Fantastic car, the first tyre change and a leaky steering rack made me realise that I was heading toward money pit territory so flogged it and put the money in my SIPP.

mortgage overpayment, heart over head  
cayman, head over heart 

Can't disagree with anything here. I may scratch the car itch by doing a weekend hire as a bit of a splurge once the mortgage is paid. There is a part of me now that fears becoming mortgage free will be an anti-climax simply because I've focused on it a lot over the last two years since Liz Truss crashed the economy and mortgages became a lot more expensive and once paid off I'll be (in a thankful daze im sure) thinking "what next?"

NedS

Floyd_Pink said:

pterri said:

No wise advice, others above have answered that better than I could. I paid off my mortgage very early when interest rates were v low. With hindsight it probably wasn’t the best use of the overpayment. I could have got better returns investing it but like you, the idea of being mortgage free really appealed. 

On the boxster. I bought a used Porsche Cayman (hard top boxster in effect). Fantastic car, the first tyre change and a leaky steering rack made me realise that I was heading toward money pit territory so flogged it and put the money in my SIPP.

mortgage overpayment, heart over head  
cayman, head over heart 

Can't disagree with anything here. I may scratch the car itch by doing a weekend hire as a bit of a splurge once the mortgage is paid. There is a part of me now that fears becoming mortgage free will be an anti-climax simply because I've focused on it a lot over the last two years since Liz Truss crashed the economy and mortgages became a lot more expensive and once paid off I'll be (in a thankful daze im sure) thinking "what next?"

That part is simple - after paying off debts, build assets. Whether it's in a pension or an ISA is all in the fine detail, but now is prime time to turbo charge your retirement planning that will pay for the next phase of your life.

pterri

NedS said:

Floyd_Pink said:

pterri said:

No wise advice, others above have answered that better than I could. I paid off my mortgage very early when interest rates were v low. With hindsight it probably wasn’t the best use of the overpayment. I could have got better returns investing it but like you, the idea of being mortgage free really appealed. 

On the boxster. I bought a used Porsche Cayman (hard top boxster in effect). Fantastic car, the first tyre change and a leaky steering rack made me realise that I was heading toward money pit territory so flogged it and put the money in my SIPP.

mortgage overpayment, heart over head  
cayman, head over heart 

Can't disagree with anything here. I may scratch the car itch by doing a weekend hire as a bit of a splurge once the mortgage is paid. There is a part of me now that fears becoming mortgage free will be an anti-climax simply because I've focused on it a lot over the last two years since Liz Truss crashed the economy and mortgages became a lot more expensive and once paid off I'll be (in a thankful daze im sure) thinking "what next?"

That part is simple - after paying off debts, build assets. Whether it's in a pension or an ISA is all in the fine detail, but now is prime time to turbo charge your retirement planning that will pay for the next phase of your life.

Yep, I piled into my AVC, SIPP, ISA. Now have around £340k in those on top of my DB pension I can claim from 60. Mind you I did get a little luck on house buying, bought relatively cheaply when prices were not insane and traded up with little extra borrowing. 

Floyd_Pink

pterri said:

NedS said:

Floyd_Pink said:

pterri said:

No wise advice, others above have answered that better than I could. I paid off my mortgage very early when interest rates were v low. With hindsight it probably wasn’t the best use of the overpayment. I could have got better returns investing it but like you, the idea of being mortgage free really appealed. 

On the boxster. I bought a used Porsche Cayman (hard top boxster in effect). Fantastic car, the first tyre change and a leaky steering rack made me realise that I was heading toward money pit territory so flogged it and put the money in my SIPP.

mortgage overpayment, heart over head  
cayman, head over heart 

Can't disagree with anything here. I may scratch the car itch by doing a weekend hire as a bit of a splurge once the mortgage is paid. There is a part of me now that fears becoming mortgage free will be an anti-climax simply because I've focused on it a lot over the last two years since Liz Truss crashed the economy and mortgages became a lot more expensive and once paid off I'll be (in a thankful daze im sure) thinking "what next?"

That part is simple - after paying off debts, build assets. Whether it's in a pension or an ISA is all in the fine detail, but now is prime time to turbo charge your retirement planning that will pay for the next phase of your life.

Yep, I piled into my AVC, SIPP, ISA. Now have around £340k in those on top of my DB pension I can claim from 60. Mind you I did get a little luck on house buying, bought relatively cheaply when prices were not insane and traded up with little extra borrowing. 

Thanks! I'll do the assets as much as I can from next summer.