Author Topic: The old 'pay off the mortgage or pay into pension' question...  (Read 558 times)

cyclelove

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The old 'pay off the mortgage or pay into pension' question...
« on: November 19, 2018, 12:40:41 AM »
Hello Mustachians, long time reader/lurker from Glasgow, Scotland here :)

I'm 37 years old, and have 68k left on my mortgage. Tracker at 0.48% above BoE rate, so currently 1.23%.

A couple of years ago I discovered MMM and started paying into a neglected pension pot (blame my freelance rollercoaster lifestyle) which now sits at just over 50k in LifeStrategy 80%. My salary is also currently 50k pro rata but I'm only working 3 days/week, increasing to full time for a few months of the year. Quite like this setup.

Currently I have around 10k in cash, half of which is earmarked for a new kitchen (not an indulgence, I removed a partition wall myself and currently have exposed bricks and cables in places!)

My heart tells me to get the mortgage paid off, as it's almost equal to a year's salary. My head tells me to put extra cash into my pension, given my mortgage rate is low (though it's likely to keep increasing). I don't currently have any other debts, or a car, or kids.

Thoughts/advice?

Cheers.
« Last Edit: November 19, 2018, 12:45:33 AM by cyclelove »

AnswerIs42

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Re: The old 'pay off the mortgage or pay into pension' question...
« Reply #1 on: November 19, 2018, 02:51:21 AM »
Paying off the mortgage doesn't seem worthwhile with rates that low (I have a similar rate, it's great, isn't it!), as a higher rate taxpayer the pension seems the better idea.

Once you've made enough pension contributions to nearly take you down into the lower tax band, if you still have spare money, how about option C, the stocks & shares ISA?

There's also the lifetime ISA to consider as an option, but you'd have to open one before you're 40. May be worth opening one with a token amount of money just in case you wanted to contribute later.

cyclelove

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Re: The old 'pay off the mortgage or pay into pension' question...
« Reply #2 on: November 23, 2018, 11:43:26 AM »
Quote
Once you've made enough pension contributions to nearly take you down into the lower tax band

What does this mean?