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Any thoughts on paying into a pension vs overpaying on mortgage?
@joelanman My understanding is that it’s better with eggs in more than one basket. OTOH if it makes a meaningful difference to paying off your mortgage earlier, that opens other doors, so …
@joelanman Going to depend on your rates.
The advice I’ve read previously (I am not a financial advisor, this might be wrong / outdated/ just terrible and should not be classed as investment advice) is:
1) If your employer does pension matching, then max this out. It’s them giving you free money.
2) If you’re a higher rate income tax payer, max out your pension contributions via salary sacrifice, if you can afford it (currently £60,000 p.a. But you can also use up to 3 years of previous unused pension allowance) before savings or investments. You’ll save the 40% tax plus NI contributions, so better ‘return’ than savings. This is especially great for unexpected bonuses.
3) If your mortgage rate is fixed for a long term and lower than inflation, consider long term savings schemes / investments ‘if’ you can beat your mortgage rate.
4) If you’ve done all of the above, or it doesn’t apply, pay off the mortgage. You’ll save on interest and if you move to a lower Loan-to-value band you could save more on your next mortgage renewal.
Look for “Damien talks money” or “James Shack” on YouTube.
@Fishd Thanks this is great!
@joelanman No worries.
With regards to pensions, there must be a way to rank them ... the fees are the key thing but various firms operate in different ways. Some charge a fee per deposit, most charge management fees, some are high, some are low ... I've still not figured out what's best here and I'm considering professional (I.e. paid-for) advice ... but then, how to find a decent advisor ...???
Good luck!
@joelanman Oh,one thing I forgot about mortgages... overpayment allowances…
Some mortgages allow you to overpay a percentage of the REMAINING amount owed, some allow you to overpay a percentage of the ORIGINAL amount borrowed... check which yours is to better prepare your overpayment plans over the years...
However, depending on your mortgage rate, it might be beneficial to overpay MORE than your “allowed” amount and pay the associated penalty for doing so... again, rate dependant so break out the calculator.
@joelanman joe, can i interest you in a fantastic opportunity to be part of a new financial revolution? it involves doges which, i’m sure you’ll agree, are just excellent
@stevenjmesser Only if it involves a really slow database. Like super slow
@joelanman and would you like to pay a variable fee that’s higher when the database is slower?
@stevenjmesser Of course!
@stevenjmesser I'd like the database to be horrifically energy-inefficient and privilege those who give not one whit about their negative externalities, please
@rgarner @stevenjmesser I'd also like the fans of this database (overlooking for the moment how weird it is for a database to have fans) to be unbelievably obnoxious and shouty
@pikesley @stevenjmesser I'd also like them to describe the strategy for making money from this entire enterprise using an abbreviation of the name of an obnoxious ableist erstwhile Spurs and England striker
@jJoel I'm also wondering about this, but as I'm from Australia, it's probably different.
I put extra into both. FYI, contributions to pension (superannuation) comes out pre tax, which reduces taxable income (there are limits). My mortgage is fixed rate with a fee for early payment, so I tend to only make quarterly bulk payments.