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A good friend of mine is retiring soon and has a bit of a dilemma:

She can either take

a lump sum of £90K and a monthly retirement income of £13574 / year : £1131 / month

or a lump sump of £60K and A retirement income of £17693 / year : £1474 / month

she has a mortgage or rather 3 mortgages on the same property totalling £135K

Mortgage 1: £15500, tracker , interest currently at 1.45% (no early rep fees)

Mortgage 2: £98000, fixed , interest SVR 4.99% (no early repayment fees)

Mortgage 3: £22000, fixed until Dec 14, interest 4.9% (early repayment fees £666.90 until Dec 14)

the question is what should she do? take the larger lump sum and pay more of the mortgage off which does mean a lower mortgage and a lower monthly income or the smaller lump sum and a greater monthly mortgage but also a greater monthly income.

further considerations are, she has a debts of £18K which she will be paying off from the lump sum. Plus £10K into a stocks and shares ISA
for emergencies.

I would personally opt for the larger lump sum and pay off a greater part of the mortgage.

Any advice will be greatly appreciated

thank you
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