Pension vs Mortgage

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  • 1980ds
    1980ds Posts: 57 Forumite
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    Exactly what I’m doing in terms of AVC pension payments to ensure I fall under the 100k
  • 1980ds
    1980ds Posts: 57 Forumite
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    Can someone explain how an ISA works??
  • dunstonh
    dunstonh Posts: 116,316 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    1980ds wrote: »
    Can someone explain how an ISA works??

    Same as a pension except you dont get tax relief on the way in and its tax free on the way out.

    It is likely to be significantly worse off for you compared to a pension (subject to information we don't know about you)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • atush
    atush Posts: 18,726 Forumite
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    Op- as a HRTaxpayer who will lose his PA, penion for sure.
  • planteria
    planteria Posts: 5,321 Forumite
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    dunstonh wrote: »
    Same as a pension except you dont get tax relief on the way in and its tax free on the way out.)

    ..but also an ISA allows flexible access: we can access most cash ISAs and S&S ISAs whenever we want to, rather than having to wait until 'retirement age'. this, in some circumstances, could be considered a negative rather than a positive.:)
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    1980ds wrote: »
    Would I be better paying into pension than trying to draw my mortgage down?

    Details are high tax earner, approx 120k with bonus.

    If you love paying 60% income tax overpay the mortgage.

    As for pension contributions, you want to read this fellow carefully, either for now or for the future.

    https://3652daysblog.wordpress.com/2018/03/05/pension-allowance-taper/
    Free the dunston one next time too.
  • 1980ds
    1980ds Posts: 57 Forumite
    First Anniversary First Post
    Thanks, aware of the >100k tax impact so already ensure I stick under this, just seeing if best to keep going and put 30-40k into pension per year or go for mortgage reduction. I’m 38 and didn’t really pay into pension until 10 yrs ago so only a £75k pot at present. Company put 8% towards pension.
  • Clive_Woody
    Clive_Woody Posts: 5,852 Forumite
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    1980ds wrote: »
    Thanks, aware of the >100k tax impact so already ensure I stick under this, just seeing if best to keep going and put 30-40k into pension per year or go for mortgage reduction. I’m 38 and didn’t really pay into pension until 10 yrs ago so only a £75k pot at present. Company put 8% towards pension.
    One point to note is that you may be restricted on how much you can overpay your mortgage if you're on a fixed term deal, often you can make over payments up to 10% of the original balance without penalty.

    I'm a few years further down the line (43 years old) and have just under 2 years until we're mortgage free. I took the approach advised by some on here of balancing what I went after, with over-paying 10% on the mortgage each year, maximising pension contributions to ensure full employer contribution and also build up ISAs and savings pots.

    In a couple of years when the mortgage is gone I will re-assess plans, most likely throw a lot more at my pension to avoid the 60% tax band which next year's bonus will most likely take me into. Potentially I will look at speaking with an IFA to review my plans and to get some professional advice. I enjoy reading up and DIY finance, but I don't doubt there are folk far better qualified than me who could help the money work harder.

    Being debt free will be a great milestone and I should have a reasonable pension pot by then with plenty of time to build it significantly more before I call it a day and become a man of leisure.

    One final tip - don't forget to live your life, you have a good salary so enjoy the moment (you never know when you might get hit by a bus). Take the holidays, buy the big TV, savour the fine wine, do what makes you happy :beer:
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • 1980ds
    1980ds Posts: 57 Forumite
    First Anniversary First Post
    Best advice at the end! These are top of the list for sure!!!!
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