Financial and emotional decision

[Rightplace]

I am a woman in my mid 50s. I am divorced and live alone in a flat in London, in an area that I love but I do not have any friends nearby so am a bit isolated. Although I shared the flat with my (abusive) ex-husband for a short time, I do love it here and the area and it feels for the first time in my life something just for me.

I have a pension that I can take 25% of soon. This 25% would completely cover my outstanding mortgage debt. Should I do this and pay it off?
I am paying roughly £400 a month on just interest on my mortgage loan.

However I am asset rich and cash poor. I just about manage each month. I have no savings but I have asset in a property that brings me in a wage each month. (I know how lucky I am). I also work part time online in between looking after my large and needy dog. I should add that Ive worked very long hours all my life until now where I'm trying to slow down a bit.

An option is also to move closer to my daughter and downsize which would pay off my mortgage and keep my pension pot. But there’s something freeing and about being in London for me. I would love to be going on holidays and out the occasion of the evening but don’t know anyone here.

My daughter lives an hour or so away from me and although I miss her, I don’t want to be overly needy of her time as she has her own life. She has mild autism and I try help guide her. She lives with her boyfriend, is a creative but is struggling to work.My mind is on her a lot regarding life and finances and perhaps in 10 years time I will sell my asset to make sure she can have a comfortable life. But then may have to work more..

Any guidance would be greatly appreciated.

I should add my daughter lives with her boyfriend and is 26.

Personally for me I would move and enjoy being nearer to your daughter with the ability to go on holiday and enjoy your money. There a big wide world out there

I agree with previous poster. I don't see the benefit of paying a mortgage to live in London when you're not going out and socialising.
Better to hold onto your pension lump sum, move and pay the mortgage off. Move closer to friends and family

I'd do the opposite!
Your happy in London
Pay the mortgage, starts savings buy more importantly live you life
Even if things change drastically you'll have money in the house to move and have retirement pot

Is your needy dog going to be a constraint for going on holidays? Who would look after it?

I would take the 25% and pay off the mortgage.

The key thing is this is not a decision you have to make now. You own an asset you can sell when you are ready to downsize. Enjoy living in London for now but also think about and research options for 10/15/20 years time.

Think about what it is that you like about where you live, could you find this in a less expensive part of the country? I live in a village now having lived in London all my life, and the sense of community is like nothing else over experienced before. I have a whole new set of wonderful and interesting friends.
I would seek up and move out of London personally. There are other cosmopolitan place to live that are cheaper and nicer and you can still visit London.

I would stay in London with everything on your doorstep

OP your daughter is only 26 and struggling to find work. She's likely to move elsewhere, it would be silly for you to make a permanent move to be nearer to her.

Stay in London

FWIW I would also stay in London. There’s no guarantee that your daughter will stay in the same place, and if you move in retirement you run a high risk of being stuck in the wrong place. People will also be able to get to London easily, and there’s so much to do on your door step that I really think you’d miss it if you moved. £400 a month in interest is almost £5k a year, so I assume you are talking about a lump sum in the region of £100k. That must mean there’s £300k left, which while only giving £12k ish a year when combined with the state pension isn’t completely on the breadline. I reckon if you don’t have housing costs is cheaper to live in London that not. You won’t need a car for starters.

I think I'd stay. It might be different if your daughter was older, more settled, or had kids and you wanted to be close to grandchildren. But at her age she's finding her way in life and there's no real need for you to be physically close to her.

Plus her situation could change very very quickly. Her relationship might end, she may not stay in that area long term, especially is she's renting and has no real ties there. If you moved there, she could later move away and you'd be left behind.

Before you decide about the pension please get some financial advice before you do anything.

If you like London and your flat that's a lot to risk in moving. Find ways to make living here better and less lonely. Try to find cheap & free group things to do and make some friends through for example MeetUp or a night class. Or something dog related like agility? (I'm your age and also in London so I do know how it can feel sometimes re socialising when you don't know many/any people).

I make sure I see my daughter once a week. She comes to me or I go to see her. (I always repay her costs as don’t want that to be a barrier). There is always the risk my daughter may move. She does like to stay and has a room.
Thank you for all your replies…yes I will try a meet up group and try and get out more. Winter with the dog always feels harder. But will look into dog care again and maybe take on a bit more work.
It’s so hard when life completely changes from what you’d thought it would be like.

If you use the lump sum to pay off the mortgage what does that do to your pension?

Personally I think I would go ahed and pay off the mortgage. It sounds like you enjoy living in London, so maybe once you fully own the property you will feel more ready.

Your DD has a room, so if things don't work out for her she can move back in.

It would reduce my pension by almost a third but I would have no mortgage payments left to pay. So could put some savings by and feel a bit freer for now.

A central London flat is all the security your DD will ever need. Can you sell the asset and rent out your London flat? Move closer to your daughter and see how it goes?

Join a club to meet friends.
I joined the WI and now have 2 very dear friends who I would never have met without the WI plus other members I go to the theatre with.
SPICE are also very active in London. You may not be looking for someone but I have friends who continue with their membership without being single!

I’d pay off the mortgage and make a plan to build a social life in London. Volunteering, part-time office work, WI, ParkRun, whatever.

I’d put aside some of the monthly savings from not having a mortgage into a high interest account which can be used to help your daughter if necessary in future.

One hour away from your daughter is still quite close.

If your circumstances or priorities change you can sell up at any time.

I'd pay it off and get out there doing things with the extra money (as well as putting some by). I don't think I'd move as being central would be key for me and you see your daughter often enough. Maybe if her life circumstances change that could be a step down the ways, but for now I'd take advantage of living somewhere with lots going on.

I wouldn't pay off the mortgage but try to retain the pension pot intact as long as possible on the basis that the growth is likely to be greater than the mortgage interest. I would increase my hours for a bit if finances were tight.

That said it would depend on what it would do to my retirement income I.e. if the pension were big enough not to have a tight retirement once the lump sum was taken I would be doing that instead.