This is a common question I get asked all the time. It is difficult to balance the budget when you have so much to fund out of your net pay. Of course there are the usual expenditures like mortgage, food, bills, travel etc.

When you have a bit extra though, or a lump sum of cash that you feel could be put to better use, then it often comes down to whether you should invest the money for long term growth, or pay off your mortgage.

More often than not I tell my clients that it comes down to the basic numbers. If you think you will earn a better return by investing the money than you will by paying off the mortgage, then that is usually the way to go.

The ‘numbers’ are slightly more complicated depending on whether you are thinking of paying into a Pension, an ISA or just saving the money in a Savings Account, because of the tax implications of each route.

The other consideration is how much risk you are comfortable with. Paying off the mortgage is the low risk option, you know for sure that it will save you money in interest payments. Plus it makes you feel good when you’ve got less debt. But if you are happy taking some risk then you could get a better return by investing it.

One final consideration is that if all you do is continue to pay off your mortgage and not save for retirement, then you may have paid off your mortgage and own your home outright by the time you are coming up to retirement, but at that stage you may have little to keep you going when you want to stop working.

So again, it really comes down to that balancing act and ensuring that you keep all of the plates spinning as best you can.

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Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on