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Together they have built up £150,000 in equity in their flat, with an outstanding mortgage of £195,000. Their two-year fixed-rate mortgage at 1.54pc costs them £859 a month and ends in May.

At current rates, a remortgage deal will likely increase the monthly payments to £1,150.

Mr Davies, 41, and Ms Batchelor, 35, enjoy their lifestyle and say they would rather spend money now that they can enjoy it rather than squirrelling it away in a pension, but would still like a comfortable retirement and know they need to start thinking about it.

Luke Ashton, private client director, Brooks Macdonald

Mr Davies and Ms Batchelor have done really well to build up equity in property and substantial levels of savings.

First things first, as basic-rate taxpayers, they can earn up to £1,000 of interest tax-free with the personal savings allowance. But since they have a lot of savings, they might be earning more than that and paying tax on their savings.

As a quick win, a simple way to avoid this is to move their savings into cash Isas, each using their annual £20,000 allowance; interest earned in an Isa is tax-free.

They should always have a “rainy day fund” of cash in deposit, which can cover at least six months of their usual expenditure. Employed people often have various protections from work, but self-employed people may not.

They have a mortgage and other expenses, so something they should give thought to is getting life insurance, critical illness or income protection policies in case they get seriously ill, or worse.

No matter what option they choose, they should remember that while interest rates are likely to drop from current levels, no-one currently is predicting them to fall as low as they were from late 2008 to autumn 2022. So, they should plan based on interest rates being higher than they have been in the last 16 years.

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