Pay down my mortgage or continue saving?

Chucklechops

Hi there,

I suppose this is a what-would-you-do question.

I'm 52 years old, single, and have the following -

£58k mortgage (4.26% fixed for 5 years, ending at age 65)
£40k in savings (4.31% variable rate)
House worth £350,000
No debts
Salary around £32,000 (plus approx £1,750 overtime per month)

I have a work personal pension, a work defined benefits pension, and a separate personal pension & I'm currently paying -

- Approx £750 per month into my work pension (plus the company pays 14% into it)

- £225 per month into my personal pension (I do this because I can't pay any more into my work pension; my employer says that if I did so, I would technically be being paid minimum wage!)

My defined benefits pension will give me around £4,600 p.a.& my other 2 pensions should be worth between £600-700,000 in value at my intended retirement age of 63.

I stand to inherit approx. £500,000 one day (I'm  not wishing for this to happen, I'm simply stating a fact as it's relevant for my circumstances).

My goals are to keep on saving money into my pensions, and my cash fund. I also want to move into my 'forever' home.

With regard to my house position, I think I would need around £150-£200k to be able to buy my new home. Clearly, a mortgage provider wouldn't come close to lending that, nor do I wish to borrow any more money. So I think I will wait for my inheritance and make the best of the home I currently have.

In the meantime, I will continue to save into my pensions and my cash fund. I will be converting my pensions into drawdown at age 55 (luckily, my birthday is a few weeks shy of the pension age increasing to 57).

I have been tempted by the stock market (especially America), but I've decided against this as I am already invested through my pensions, and they're returning 9% year on year which I can't hope to beat.

Do people generally agree with my decisions? And would it be wise to use some of my cash savings to reduce my mortgage (keeping, say, £15k back for my emergency fund)?

I feel like I  am doing the right things, but there's a nagging feeling that I could be missing something important.

Many thanks for any guidance.

penners324

You need to move some of those savings into an ISA or you'll be paying tax on the interest.

You could consider having an Stocks & Shares ISA as well as a Cash ISA. For the money not needed in the next few years, use the former.