25% Pension Lump Sum to Pay Off Mortgage: Worth It?

You can use up to 25% of your pension as a tax-free lump sum to pay off your mortgage.

Using the tax-free lump sum can save you money on mortgage interest, which is often higher than typical investment returns.

If you are near the minimum age to access your pension (currently 55, rising to 57), consider using your lump sum to pay down your mortgage before the rules change.

Check your pension rules, as some older schemes may still allow you to access your pension at 55.

Using your pension lump sum to pay off a mortgage can lower your monthly expenses in retirement.