Pension Mortgage Advice

A Pension Mortgage is very tax efficient but can have disadvantages...

Future eligibility

Pension mortgages can only be funded from a personal pension policy. If at some future time you decide to become a member of a company pension scheme, you would have to cease making payments into your personal pension plan and make alternative arrangements to repay your mortgage.

Affordability

Under current legislation only one-quarter of the pension fund can be take on retirement as a cash lump sum. The mortgage can only be repaid from the cash lump sum. Thus in order to fund a £50,000 mortgage, you would need to build a pension fund of £200,000.

More than 100 life assurance companies compete to offer pension products in the UK market and their performance varies greatly.

Three factors will determine the return that your policy achieves:

Risk-to-reward ratio
Investment performance
Charges