Amount outstanding on your mortgage: 200k (22 years remaining) Current interest rate 2.3%
Current monthly mortgage repayment: 1045
The house we are in is suitable for our needs and we don't intend moving or upgrading in the future.
Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month? Yes.
Do you own any investment or other property? No
Ages of children: 2 kids, 9 and 4 (Ages not names).
Savings: None and approx 10k in current account all of which is making near 0% interest.
Pension Scheme:
Current Pension scheme I contribute 3% and the company contributes 3% (Poor, needs addressing). Approx total contributions to date 55k
Partner/Spouse:
No pension scheme
What specific question do you have or what issues are of concern to you?
At the moment we can afford to pay approx. £500 a month extra into either our mortgage or into my pension.
What is the wisest option? Looking at the overpayment calculator an extra £500 a month would reduce the mortgage term from 22 to approx. 13 yrs.
However, I have my concerns that the amount contributed to date by both of us into pensions is not adequate for our age profile and we should send it that way to avoid the 40% tax with the view to taking 25% tax free when I hit 55. Alternatively should we invest in any type of fund or direct debit the amount to a savings account every month.
No to spend spend spend ! Come on, this is AAAM !
Yes to the pension, do the figures on the tax benefits and max that out
You might still be able to overpay the mortgage, ie do both.
Your equity is high, mortgage terms ends when you're both 60, you've no other borrowings, I'd also increase the savings. And think about an insurance policy that pays out if you lose your job. How would you pay for a new car or college?