Alternative to Capital Repayment

aimingforadebtfreelife

Can anyone advise if a pension plan is acceptable to banks generally to be allowed an interest only mortgage? I have a SIPP with Hargreaves Lansdown which im building up so as to take a lump sum on retirement - ie pay the mortgage off. Thank you.

yelf

yes. Just remember that only 25% can be taken, and depending on the investment fund depends on whether or not it could lose value.

getmore4less

Using a pension lump sum to pay off debt is a usefull way to avoid having to invest the lump sum and iccurring tax on any income generated. The down side is the pension is taxable.

Pensions are one option another is to make sure you use up your ISA allowances, this can also provide future tax free income.

A ballanced approach with long term planning in mind is important.

This is the order I would consider
Pension contibutions that are matched by free employer money.
ISA allowances
reducing debt(mortgage)/pension contributions that attract 40% tax.

Another option for a HRT payer are NSI tax free offerings to build up accessable funds, putting everything into a pension ties up money long term.