Another paying off mortgage one

[Gingkogrower]

In brief: lump sum coming from early retirement which would pay off £92k mortgage ( with a rainy day sum leftover). Another 18m to run on current deal at 4.3%. ERP of c. £2700
Annual pension ok, not huge but definitely reasonable.
Heart wants to pay off mortgage but head not sure.
Investment Income is taxed, ISA only £20k/yr, PBs not terribly appealing.
Will pay max overpayment allowed this year and next if I don't pay off in full.
Another option is to keep a small mortgage (eg £40k) longer term & use cash to augment pension while 'young' and wanting to travel etc
Will downsize in 5-10 yrs. No inheritances ahead.
House needs cosmetic work c£10k. Ideally new roof as well but that's another £10k and not desperate.
One DC who has money for Uni/house deposit from a relative. LP with no financial support from ex.
Wwyd??

First off how old are you? You say early retirement but what we talking?

There's calculators online that will tell you whether it's worth paying the ERC. I suspect not as it's equivalent to about £150 pm over the remaining fixed term.

You need to compare with the difference between interest earned after tax and the cost of the mortgage. I suspect this will be smaller than the ERC.

I would pay off as much as I can without penalty and plan to pay the rest off when you can do so without paying the ERC.

look at your ERC terms carefully, what can you pay off and when. Sometimes if you pay off within the last few months of the deal, the penalty won't apply.

For other spending (home improvements, holidays) I'd use savings and possibly 0% credit cards, as would be cheaper than keeping a mortgage, but that depends on what rate your mortgage is and other things like what you can afford to save.

As your income is secure and you have a plan to downsize, realistically, the emergency fund you need will be small so I wouldn't bother keeping thousands in savings at the expense of travelling while I still can or improving my home/having in good repair for when the time comes to sell.

The other consideration is whether your retirement is 100% and final. Will doing a bit of casual part time work in your field be an option?

I'm 57 @FlutteryButterfly
@BarbaraofSeville that's really helpful - I need to sit down and do some maths. Hadn't occurred to me that ERP may not apply towards the end of my deal, will check.
I have zero intention of working in my former role ( or anything allied to it. Ex NHS & worn out) . I do feel far too young to never work again, just not sure what I'd do. Something P/T and less stressful. For now I want to do nothing!
I'm struggling with the idea of spending money knowing no more money is coming in, ever. However I want to enjoy life having worked incredibly hard & put significant sums into my pension (AVCs etc)

I'm struggling with the idea of spending money knowing no more money is coming in, ever

But you have your pension, so you do have money coming in, and you've said it will be reasonable, and it will increase when you get your state pension. Guaranteed, every month, for life, unlike when working when you could be off sick, sacked, made redundant.

And you have scope to downsize, which will reduce even more money. You're in a very very fortunate position, that you have worked for, granted, but better than a lot of people, especially those a decade or two younger than you ever will be.

@BarbaraofSeville You are right of course. For various reasons I've always worried about being self sufficient. I've achieved that & need to enjoy it and worry less.

I've just retired and will be living off savings for a year before my state pension kicks in; I'm delaying taking my main pension until I need to. I get you, it's a very wobbly feeling not having anything I recognise as "income".

If you have an ERP and would check that and it lasts for 18 months I would put money to pay off mortgage in a fixed interest bond which can get around 6% on atm, higher than mortgage rate but on do an amount you definitely won't need access for. I would then pay off mortgage. Wouldn't do premium bonds.

your NHS pension is index linked so should keep up with cost of living; it depends how many years before retirement you may find because of macleod ruling and when you started paying into NHS pension that when you started normal retirement age is 60 so if younger than 60 reductons are from 60 not fron 67 I started my NHS pension in 1991 so can take it all at 60 i actually took it at 55 and I do bits part time in a different field to make up the amount it is less than waiting till 60 there is only tax on a pension no NI