Over paying mortgage , savings or pensions.

[Paranoidmarvin]

If you can do this ( I’m aware lots of people cannot ). Which one do u make a priority. Or do you split the money?

Pension and overpaying the mortgage.
Tax breaks for one and saving on the interest for the other.

Overpaying the mortgage as much as we can. Savings earn nothing, pensions are as secure as they can be at this point.

We've always focused on over paying the mortgage and have had £2k in savings which we don't touch. Our mortgage is now around £20k. Dh is 42 and I'm 39. Covid has made me realise how we really need more money saved to fall back on so we're now going to concentrate on savings instead. We'd always wanted to clear the mortgage but the monthly payments are low now and I'd feel more secure with a chunk of money in the bank.

Overpay the mortgage, but only after you have 3-6 months worth of expenses banked in savings, depending on how secure your income/job is.

Pension for the tax break and then overpaying mortgage. Already have a healthy amount of savings.

@Speckledhen617. Our mortgage is £60k. My husband wants to over pay. I want to make sure we have savings. We both pay into savings. But I agree with u. We have savings. But I really want to have as much money around me at the moment because of how the world is at the moment. Dh wants to pay more off the mortgage.

My son wants to go to university in a few years and I want to have the extra money for that. Rather than paying extra off the mortgage at that point as it will be harder to pay for that.
Trying to find a balance in everything.

You need to make sure you have enough savings to be able to live on in case of a disaster - I would say at least six months’ living costs. Plus you need savings for small to medium sized irregular costs and, if you own a property, big infrequent costs. This is partic the case if you have kids. Once you’ve got your short term, medium term/property related and longterm (emergency/disaster) pots of savings, then yes, seek to add to your pension and pay down your mortgage roughly equally. I’m assuming you’re saving a moderate amount in some kind of private or work pension already btw. If not then get one and put the rest towards savings until you’ve got the three pots ... etc etc.

In order of priority I would
-Make sure to have 3-6 months expenses in savings

• Maximise employer contributions to pension, as far as possible, depending on your scheme
• Overpay mortgage

I have enough in savings for wages for dh and I. I have some savings for a rainy day. Just trying to figure out what if any one pot deserves more than another.

Yeh there's a balance to be found isn't there and for us, savings are now taking priority. DS is 11 and I know we've got some expensive years ahead so I want money in the bank for that too.

@Speckledhen617 yup. In my head. I want to get my son off and on his own life and then over pay. University is expensive. But when it is the two of us it will be easier to overpay. That’s my theory.

We got ds through university. Dh already had a pension, and we used his last years of earning to pay off all debt and the mortgage. We have a lot in savings as well. He retired at 58, last year.

Have you considered an appointment with an IFA to go over numbers?

You need to work out how much pension you already have, how soon you want to retire, what tax bracket you’re in to see what’s tax efficient etc.

If you’ve already got rainy day savings and have spare income every month, you should be able to help your son through uni anyway. Your mortgage is v small so I wouldn’t see it as a priority given the low interest rates.

@Speckledhen617

Yeh there's a balance to be found isn't there and for us, savings are now taking priority. DS is 11 and I know we've got some expensive years ahead so I want money in the bank for that too.

I have two kids in uni now at the same time, in the US where the costs are much higher. It's a nightmare.

We set up a separate savings pot for uni when they were toddlers using a tax-advantaged account. We'd be wrecked now if we hadn't.

When you work on over 25 years how much interest you pay back on a mortgage it’s frightening, I worked like a dog to pay off our mortgage and was free by 40 . I went in and paid off lumps when I could and the last 20 grand in one go
Best thing I ever did ( the wife didn’t think so 🙄)
It’s not just the debt but once it was paid I seemed to make life a little , well simpler 😀

When you work on over 25 years how much interest you pay back on a mortgage it’s frightening

The rates are under 2% so investing will generally generate a lot more money that you save by overpaying. Probably wasn’t so straightforward in the days of high interest rates, though.

We overpaid our mortgage - we didn't have much money but when the interest rates dropped we continued paying the same amount. They went down and down and we paid off our mortgage before we were 50. we now put our 'mortgage money' into savings. neither of us earn even average wage so I think we've done really well.

Yes the rates are low now so it’s a lot cheaper to repay back.
The interest rate was about 7% back then .
I have some old paperwork for my current house the bloke who built in in 79,80 had a mortgage or 50.000 and the interest rate was 13% 😮