Mortgage or pension

[RunningJo]

If you were in a position where you could put extra money into a pension, or pay extra towards paying the mortgage off, which would you do?

it isn’t a huge amount of money, and it may only be for a short amount of time I can do this (2-3 years). I’m not sure which would be better.

For info: I’m mid 50’s and still working, no plans to retire for a long while yet.

Depends if you have a decent pension already, your mortgage interest rate and crucially if you are likely to be still paying your mortgage in retirement. If the latter overpayment should be a priority as should it be if the rate is over 5%. Pension returns currently are volatile which definitely is colouring my opinion. So on balance id overpay as long as you have a decent pension pot

At mid 50s I’d say put it in the mortgage.

If you were 30/-40 I’d have said pension as you’d have more time for compound interest.

If you already have an adequate pension the. Mortgage, and then once mortgage is paid off save what was mortgage money into ISAs .

It depends if you have "enough" pension without it.

I'd probably do the mortgage, just becuase I hate debt and want to be debt free ASAP, but financially it probably makes more sense to do the pension, with the tax benefits and low interest rates.

That said does it need to be either of those? Do you use your full ISA allowance every year?

But the compound interest argument isn’t going to improve and OP has ‘no plans of retiring soon’ so lock in the compound interest now and it could still be a substantial amount over 15 years. Plus if you’re paying tax you get a 20% or even 40% booster for pension payments that you don’t get on your mortgage.

although obviously knowing your current pension pot and mortgage rate would be useful as it could drastically change my advise

Thank you all.

I haven't actually thought about an isa so this is something to look at.

Re mortgage, I would like to be debt free, but the overpayments wouldn't achieve that, but would certainly reduce the term and interest paid.
I have looked on Martin Lewis website and that states I would be better saving the money rather than paying it off the mortgage due to interest rates.

Re pension, my thinking is adding to it is better than not in terms of interest etc, I guess I am a little 'old school' in that it is always wise to pay into a pension, which makes me lean that way.

There is a fine line between saving for old age and living now isn't there & I guess I just want to use the money where it has the most impact so maybe an isa would be a better option.

Thanks again

I was saving rather than overpaying too. I then used the savings to clear my mortgage. I am now putting my mortgage payment into my pension.

I should have probably hedged my bets and overpaid some and added more to my pension. The tax relief on a pension is a massive incentive and hopefully would gain from the pension investments or at least wouldn't lose as much as the tax relief. The reason I went for costing the mortgage sooner was that my job is not secure and I worried about the debt.

It is an indescribable relief to have got rid of the mortgage and it is very freeing. I can stop the pension contributions anytime but couldn't have done that with the mortgage.

Maybe stick it to the highest interest account and use the interest for overpayment