Working in the public sector gives you something many private sector workers envy: job security and a guaranteed pension for retirement. But does that financial stability mean you should prioritise clearing your mortgage faster?
The employment security advantage
If you're employed by the NHS, teaching, civil service, or local authority, you face a unique decision about mortgage overpayments. Your steady income and strong job security make it easier to commit to regular monthly overpayments without the redundancy concerns that affect many private sector workers.
According to recent data, Santander customers overpaid £2.2 billion on their mortgages in 2024 , showing how popular this strategy has become across all employment sectors.
When early repayment makes financial sense
Your mortgage interest rate determines whether overpaying delivers real value. If you're paying 4.5% on your home loan but savings accounts only offer 3%, directing spare cash towards your mortgage reduces the total interest you'll pay over the loan term.
Most lenders allow you to overpay up to 10% of your outstanding balance annually without penalty charges. On a £200,000 mortgage, that's £20,000 in the first year. Even modest overpayments accumulate significant savings over time, potentially cutting years off your mortgage term.
Public sector workers often receive predictable salary increases through established pay scales, making it easier to plan regular overpayments that grow alongside your income.
The retirement planning perspective
Your defined benefit pension scheme provides guaranteed income in retirement based on your salary and years of service. Paying off your mortgage before retirement eliminates a major monthly expense, reducing the income you'll need from your pension.
For someone retiring at 66 with a mortgage paid off at 60, that's six years of housing costs saved before you even reach retirement age.
Finding your personal balance
Consider your retirement timeline carefully. If you're 45 with 20 years until retirement, aggressive mortgage overpayments could see you mortgage-free well before leaving work.
However, your emergency fund deserves attention, too. Mortgage overpayments are permanent – you can't easily recover that money if unexpected expenses arise. Maintaining accessible savings alongside mortgage overpayments provides crucial financial flexibility.
Getting tailored guidance
The experienced advisers at Public Sector Mortgage, based in London at 100 Bishopsgate, understand the unique circumstances public sector workers face when making these decisions. They can help you create a clear plan that aligns your lifestyle goals with your financial resources.
Whether you're just starting your career or approaching retirement, professional advice helps you maximize both your mortgage strategy and pension benefits. Contact Public Sector Mortgage today to discuss what works best for your situation.
