According to calculations by financial provider Hargreaves Lansdown, paying off your mortgage could add £200,000 to your pension fund.

The data indicates that a person who is aged 50, paying an average monthly mortgage payment of £633, could add £218,548 to their pension fund by the time they reach the age of 65 if they paid off their mortgage and paid the same monthly amount into their pension. If a person aged 55 paid off their mortgage and added the monthly payment to their pension pot over the next decade, it would add £125,676 to their retirement fund.

The senior pensions analyst at Hargreaves Lansdown, Nathan Long, stated that those who are approaching the day when their mortgage is finally paid off will face the decision of whether to save or splurge. However, he added that redirecting the mortgage payment into a pension fund could make retirement easier, as tax relief adds to your pension pot.

However, if you are not likely to pay off your mortgage until you are 60, you could still make a huge difference to pension savings. Adding £633 every month to a pension pot over a period of five years would add £54,500, which is sufficient to add £2,924 a year to income.

If you would like to be able to pay off your mortgage early so that you can boost your pension, consult a CeMAP qualified mortgage advisor to make sure you have the lowest interest rate deal, so you can overpay on a regular basis.

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