Hi, would appreciate your advice on the best use of 200euro per month: overpay my large negative equity mortgage or enter an AVC pension scheme.
Am a public sector worker, 42 yo, will have 35 years worked by 65 so an AVC would certainly benefit by topping up the amount I could withdraw tax-free on retirement. Public Sector Union-AVC gives option to put remainder into an ARF, so with tax relief on the way into the scheme, coupled with a state-independent savings pot, this would seem a good option.
However, I have a 420k mortgage (house worth ~330k) with 27 years to run, so wondering if the 200/mth would be better spent overpaying this instead? I calculated that I would save 53k on interest payments alone if I overpaid my mortgage by 200/month, and reduce the term by approx 4 years. If I saved the mortgage equivalent (2200/month) for these 4 years I could save a further 106k. Certainly a less risky strategy, but would I lose out considerably compared to the AVC option?
any thoughts most welcome!
Am a public sector worker, 42 yo, will have 35 years worked by 65 so an AVC would certainly benefit by topping up the amount I could withdraw tax-free on retirement. Public Sector Union-AVC gives option to put remainder into an ARF, so with tax relief on the way into the scheme, coupled with a state-independent savings pot, this would seem a good option.
However, I have a 420k mortgage (house worth ~330k) with 27 years to run, so wondering if the 200/mth would be better spent overpaying this instead? I calculated that I would save 53k on interest payments alone if I overpaid my mortgage by 200/month, and reduce the term by approx 4 years. If I saved the mortgage equivalent (2200/month) for these 4 years I could save a further 106k. Certainly a less risky strategy, but would I lose out considerably compared to the AVC option?
any thoughts most welcome!
