Making Cents: Am I better off paying off my mortgage? 

I was recently contacted by a reader in their late 40s who is in a stable job and a solid financial position, wondering what they should prioritise when it comes to their financial future. They expect to retire within the next 10 years and are considering upping their mortgage payments in order to be mortgage-free by retirement. They will have a public sector pension and also make Additional Voluntary Contributions (AVCs) which should give them a lump sum payout on retirement.

While clearing debt is almost always a good idea, there are a number of factors to consider when making a decision like this. Clearing a mortgage would obviously be a great goal to reach but other options could work out better financially. In this case, the reader is on a tracker mortgage, which means they are benefitting from a lower than average interest rate. They also soon turn 50, which has implications for how much tax relief they get on pension contributions. One of the significant advantages of pensions, when compared with other forms of saving, is the tax relief you can get on contributions, investment build-up and some benefits.