I have a couple of Endowments maturing later in the year that were supposed to pay off some my mortgage which actually runs for another 10 years.. I’m thinking with rates the way they are am I better to reduce the mortgage and get some interest savings or would it be better to pay into my personal pension and get the additional tax relief ( I’m a high rate payer) plus growth….hopefully. What do you people think would be best best?

Depends on your mortgage size and rate, current pension pot and age.

Having an easily manageable mortgage is nice but might be good to put money into a pension at the moment (SIPP/Unit Trusts) to build that up – stock market has dropped a little recently but has been strong overall this year.

Reduce mortgage. Stocks are going to crash again within the next two years.

How secure is your income? If not very, then mortgage ought to be first priority to my mind.

EDIT: This should not be construed as advice nor am I licensed to give any financial advice.

Reduce mortgage. Stocks are going to crash again within the next two years.

And what is that pearl of wisdom based on? 😆

wallop – Member
Reduce mortgage. Stocks are going to crash again within the next two years.
And what is that pearl of wisdom based on?

I day trade for a living.

edit. Tho I’m not a qualified financial expert and this is only my opinion.

Without knowning all the facts…I’d pay off the mortgage and then pay the monthly mortgage amount into my pension!

Also depends on family history. If everyone in your family tends to die of a heart attack in their fifties, I wouldn’t put a penny in a pension. Extreme example, but you get the idea.

wallop – Member
Reduce mortgage. Stocks are going to crash again within the next two years.
And what is that pearl of wisdom based on?
I day trade for a living.
edit. Tho I’m not a qualified financial expert and this is only my opinion.

You’re a trader – great. But what is your opinion actually based on?

I had this dilemma a few years ago and stopped paying into my pension and used all available funds to pay off the capital on the mortgage. As my house is my only real investment, if nothing else crops up, I will probably have to down size and use the capital as a pension.

Of course the benefit of that is that I am in control of the cash rather than having to buy an annuity that will be lost if I died suddenly.

You’re a trader – great. But what is your opinion actually based on?

the market is at a high right now, so with the economy in the state it is, its only natural to expect a dip in the coming months etc

Pay off the mortgage, it’s a good feeling knowing you’re always got a roof (if nothing to eat).

@wallop – based on the opinion of people who are hugely more experienced than me, based on near certainty that China’s growth will massively reduce soon and based on the huge nerves everyone has every time any EU country even whimpers about being broke.

Do you know otherwise? If so, what is your opinion based on?

I suppose with the fact you’re higher rate taxpayer shares could still drop quite a bit (and you could invest in global Investment Trusts or similar to spread the risk, or cautious fund managers) and you’d be up on the deal.

But focus should be on repay the mortgage. Everything else is gambling.

When I bought a flat, my solicitor (also an uncle) gave me priceless advice (this when endowments were all the rage) – “you’re taking out a loan. you should aim to repay that loan. if there’s cash left over to invest in the stock market, fine”. Can’t say I’ve really had cause to question what he said since..

Rockape63 – Member
You’re a trader – great. But what is your opinion actually based on?

the market is at a high right now, so with the economy in the state it is, its only natural to expect a dip in the coming months etc

Take Japan as a prime example

mortgage – how many pensions actually do well, or even don’t lose money.

You may get tax relief on paying into a pension, but look at the differential in the amount of interest you pay over the term of your mortgage if you pay some off early – it is a lot.

And with the amount of debt this country has it could easily get really messy soon, and at least your mortgage burden will be less.

I’m a trader as well … and I’m going to say the opposite of the fella above (kind of) …. thats what makes a market people.

Leave the mortgage … not all dedt is bad, despite what you hear on here… rates aren’t going anywhere… it’s virtually free money.

Put max contributions into yours and Mrs share ISA rest into pension (if there is enough, leave some back to max out next year’s ISA monies as well) … then you can always get at the/some money if you need it

@wallop – based on the opinion of people who are hugely more experienced than me, based on near certainty that China’s growth will massively reduce soon and based on the huge nerves everyone has every time any EU country even whimpers about being broke.
Do you know otherwise? If so, what is your opinion based on?

No, I know nothing. I just wondered what the rationale behind your opinion was, that’s all.

I’m currently trying to decide whether to cash in my FTSE 100 tracker which would pay off the mortgage but as that only actually costs me £28 a month in interest it’s not as obvious to pay it off as when interest rates are high and at my current level of repayment it will be paid off in less than 3 years.

Normally I’d always take the cautious approach with money but everything in my tracker came as handouts from demutualising building societies and I’ve never actually had the money in my hand or in the bank. For those reasons I’ve always been willing to take more risks with it that my normal savings.

Lots of commentry saying quantative easing is leading to an asset bubble, stocks are over valued and a crash is on its way.

As sure as night follows day boom follows bust. I just hope it happens next August.

I would agree with R05ey, all depends on the interest rate of your mortgage. If its low then the tax relief on your pension contributions is attractive.
To many people criticise pensions but given the tax relief and the free money if your employer contributes then they would have to underperform in a dramatic way to lose that benefit. Mine has actually performed OK over the last 6 years.
Use your ISA contributions and do your homework on a fund

Well, this thread certainly helped me decided where the few hundred spare quid I have should go. I was going to put some more into my pension and try and get some more into my mortgage, but now it would seem that just overpaying into the mortgage is the way forward.

Lots of commentry saying quantative easing is leading to…. very low rates on bonds so much so that even Goverments are now buying equities for the dividend yield (unheard of before)… of course QE also leads to inflation… which’ll make your mortgage more affordable and increase company profits, leading to higher dividend payments and stock price rises…

But hey …. lets really put to cat among the pigeons and say …. OP use your lump some to take out a buy-to-let.

of course QE also leads to inflation…

Not always

ALWAYS over pay the mortage whenever possible pay off loans before saving..

Well yeah it does… thats the point…. is it not being used to inflate the economies of countries that are using it ?

“ALWAYS over pay the mortage whenever possible pay off loans before saving.. “

NOT when you are being charged… and I used the term loosely… 3%

Credit card/personnal loans of course… when you are being charged 10/15/20%

And don’t save … invest

Well yeah it does… thats the point…. is it not being used to inflate the economies of countries that are using it ?

It depends on a large number of other factors within the economy in question. It depends on latent demand and potential manufacturing capacity, it also depends on international factors.
QE is used to generate growth not to increase prices as long as the additional money stock (M0) is used to increase production and not just chase scare resources.

ALWAYS over pay the mortage whenever possible pay off loans before saving..

Again agree with Ro5ey on this point. Do the sums, there is a “opportunity cost”

I would agree with R05ey, all depends on the interest rate of your mortgage. If its low then the tax relief on your pension contributions is attractive.

You see that is very reasonable….however (There’s always a however!) I’ll give my situation as an example:

I have a ridiculously low tracker rate, so I can actually make more interest in a savings scheme at present than I can save by paying off the capital on the mortgage. However….the capital still needs repaying and at some point in time the rates will go up and the mortgage will still need paying off. Therefore, I could build up a lump sum in such a savings account, ignore the mortgage and convince myself that its nice to have the lump sum in case of emergencies etc.

However…..one starts looking at Autotrader and imagines what one could buy with said lump sum etc…..so the moral of the story is leave a little for emergencies and pay off your f******g mortgage!

Your right Rockape63 you have to know yourself!

Form a purely financial point of view it makes sense to look objectively at all the options. I once took out a credit card on interest free. Bought a house at auction, refurbished it sold it on all before the end of the interest free period.

Wasting money on cars, the very worst investment decision ever

The ££ lost on cars makes that nice man, who contacts us all from time to time from Nigeria, investment idea alomst a sound one compaired to a cars

I have a ridiculously low tracker rate, so I can actually make more interest in a savings scheme at present than I can save by paying off the capital on the mortgage. However….the capital still needs repaying and at some point in time the rates will go up and the mortgage will still need paying off. Therefore, I could build up a lump sum in such a savings account, ignore the mortgage and convince myself that its nice to have the lump sum in case of emergencies etc.

I’m in exactly the same position and can even withdraw more money from the mortgage if I want to due to past overpayment and could reinvest that with my lender and they’d pay me more than they are charging me in interest! I really ought to look into this!