Q: My wife and I are approaching retirement, within six months of each other. We currently have two mortgages, both relatively small. While my wife has hit the maximum on her pension contributions, I have not. We are wondering if it would be a better to put a lump sum on one of the mortgages to clear it, or to put this money into my pension?
A: It is always a difficult decision as to how much you can balance saving and paying off debt. You should consider getting an overall financial review which will look at your pension, mortgage, other savings and talk to you about your plans for retirement, according to Jerry Moriarty, CEO of the Irish Association of Pension Funds.
There are lots of factors to take into account, such as whether the mortgage is a tracker and on a very low interest rate, the tax relief you can get on your pension, the funds you can invest your pension in and the charges on those, Mr Moriarty added. It is worth paying for some time with an independent adviser who can bring you through all this and recommend the best course of action for you, he said.
Meeting loan repayments is a priority to ensure you keep your credit rating intact. But if you have money left over you should build up a rainy-day fund.
You must ask yourself if you mind the responsibility and work involved in letting a property and whether or not you think it will appreciate in value.
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