Pay off mortgage & invest instead?
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Id use the money to increase your pension pot tbh. You can always use the tax tree lump sum to clear the mortgage0
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Fatbritabroad wrote: »Id use the money to increase your pension pot tbh. You can always use the tax tree lump sum to clear the mortgage
Thanks - but luckily/unluckily the mortgage will be just gone when I'm 55...
I forgot to add, yes 2 teenage kids, and like most people wonder where on earth they're going to live, so it would be nice to be able to help them out when the time comes in this area...0 -
Thanks to all for your very useful replies.
Yes my mortgage is a repayment mortgage, so repay the principle plus the interest of c £1500 pa = £7200 pa or so. It has 8 years or so to go. I can overpay without penalty, and in theory can get it all back should I want it.
I would probably look to pay off 'a bit' to save you the hassle of looking around for a better rate than the PBs are offering on a sum of money as large as £50k. For the first £20k or so between you, it is relatively easy for a couple to get PB-beating instant access rates on their cash with high interest current accounts, regular saver accounts etc but it gets progressively tougher the more you have and many people will not have the appetite to do it on larger sums. If you only had £25-30k of cash instead of the £50k, you'd have a decent emergency buffer and not too much trouble getting decent rates.Yes, the £200k is in S&S.
Between us we have around £300k in pension pot at present = probably not enough, I know... Currently putting £10k pa into it.
Unless you expect to be a higher rate taxpayer in retirement it might be worth you/spouse also doing further pension contributions at lower tax relief rate too - as getting 20% tax relief now, getting a tax free lump sum out of it, and paying 20% tax on the rest in retirement, is still a net gain. But obviously locking the money away til yor late 50s is more restrictive than having free access to the ISAs whenever you like, so don't go OTT.
If you don't want to move a huge proportion of your entire ISA stash into pension, then don't 'waste' contributions to pensions at 20% tax relief rate, because then you'll be less able to afford those important contributions at 40% tax relief rate year after year.
If we're talking about moving money from S&S ISAs to Pensions to grab the tax relief, it doesn't particularly need to be a concern that you perceive the markets to be high or low at the moment because if they are high, the ISAs funding the pension will be at a nice big value making the contributions easier to afford.0 -
Thanks - but luckily/unluckily the mortgage will be just gone when I'm 55....
Then extend it if you can. If you plan to take your TFLS at 60, extend it to 60. We paid ours off with a TFLS which meant extending the original mortgage by 6 or 7 years. It was dead easy.Free the dunston one next time too.0 -
Thanks Bowlhead - very useful information. Yes I have done £7k of overpayments into the mg.
Pension payments make a lot of sense, but they do lock money away, in my case, for 9 years.
I am cautious - I was stony broke in living memory and know what it's like to not have money when you need it - and thus am willing to pay a bit for that caution.
As someone once said, we have to live life in the present, but only really understand it in retrospect - and like many investors, I would love access to a crystal ball.0 -
You dont need to worry about locking the money away if you hace 250K in cash and S&S isas about.
Pay more into pension. pay the mtg off with your S&S isa pile or your TFLS when you retire. I didnt know you still were paying HRT on 15K/0 -
A 3% mortgage rate with such a low LTV also seems pretty high.0
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Yes, what are the costs of refinancing?0
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You can either
A. Pay your mortgage off i.e. save £600/months as a result
B. Don't pay off mortgage but invest somewhere else where you can get a better return.
If A > B, then pay off mortgage
If B > A, then invest where you get better return and carry on mortgageHappiness is buying an item and then not checking its price after a month to discover it was reduced further.0 -
Have you thought of re-mortgaging? There are several attractive options that MSE's mortgage calculator shows up (but do your own research!).
You could move to a 5 year fix with First Direct at 1.84% . Your monthly payments come down to 560 (there's a 490 setup fee).
Or move to that deal but reduce the mortgage term to 5 years, and you'd be paying £872 a month, but would pay the mortgage off in 5 years not 8. And have the certainty of fixed payments for the rest of the mortgage.
Or, as someone else has suggested, move to an offset mortgage. Coventry are offering 1.84% variable.
If you decide to keep the mortgage in some form or other, it definitely looks worth finding a new deal, unless you've got onerous penalties in your existing one.0
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