I can hardly believe I am writing this, but our mortgage has been paid off after 25 years. We\u2019re just wondering what we might do with the approximately \u20ac800 per month that has been freed up. We\u2019re in our early 60s and still working. <\/p>\n
We don\u2019t know where to start.<\/p>\n
K.O\u2019M. <\/p>\n
*First up, congratulations. Regular readers will know my refrain about a mortgage being the cheapest money you will ever borrow \u2013 and it is true \u2013 but there is still an overwhelming feeling of relief <\/a>and wonder when a home loan is finally paid off.<\/p>\n Most of us move up the housing ladder<\/a> as our families grow, so it does tend to be at or close to retirement when the yoke of a mortgage is finally lifted. And given how younger people are, of financial necessity, starting that journey later in life than previous generations, there is little likelihood of that trend changing.<\/p>\n So here you are now with \u20ac800 a month that is not otherwise spoken for in the household budget. What are the options?<\/a><\/p>\n First up, without doubt, are your pensions<\/a>. One of the things that prevents people investing as much in their pensions as they should is the other financial burdens of typical family life \u2013 including the mortgage. It means very few of us \u201cmax out\u201d the size of our pension funds and the tax relief that goes with it.<\/p>\n The amount you can put into your pension while benefiting from tax relief rises as we get older. And once you turn 60, you are entitled to tax relief at your higher income tax rate on anything up to 40 per cent of your gross salary which is paid into your pension.<\/p>\n *If either of you is paying income tax at the higher 40 per cent rate, that \u20ac800 a month will translate into a \u20ac1,333 investment into your pension fund \u2013 or almost \u20ac16,000 over the course of a year. <\/p>\n Even over five years, that is \u20ac80,000 before any investment return, delivering a healthy boost to your income in retirement.<\/p>\n