Offset Mortgage & SIPP's

Sp4c3d

Hi all,

Does anyone know whether any lenders will allow you to offset your mortgage against a personal pension?

Love the concept of it, just cannot locate any lenders offering this facility.

Thanks in advance for your help.

holly_hobby

The mortgage debt is offset against capital held in another account with the same provider - not investments held within a SIPP (unless commerical property, and is a tax wrapper in itself), and hence you can't ( IMHO ) find a lender ...

Sorry if not the answer you hoped for ...

Hope this helps

Holly

getmore4less

You can offset using cash in ISAs.

I don't see any reason why cash within a SIPP could not be offset unless there are rules in the pension legislation that would prohibit this.


Don't think any lender/sipp provider currently offers this option

Thrugelmir

You would need to be funding the SIPP with a high level of contributions to demonstrate that a 25% lump sum could be extracted to repay the mortgage.

Hence why pension plans per se are not acceptable.

holly_hobby

Thrugelmir wrote: »

You would need to be funding the SIPP with a high level of contributions to demonstrate that a 25% lump sum could be extracted to repay the mortgage.

Hence why pension plans per se are not acceptable.

That's not offsetting - thats the basics of a "pension mortgage" (25% being equal to the TFLS available at NRA (subject to lifetime allowance) ) - which is not the OPs question as I understand it.

H

Thrugelmir

holly_hobby wrote: »

That's not offsetting - thats the basics of a "pension mortgage" (25% being equal to the TFLS available at NRA (subject to lifetime allowance) ) - which is not the OPs question as I understand it.

H

Thanks misread question.

holly_hobby

getmore4less wrote: »

You can offset using cash in ISAs.

I don't see any reason why cash within a SIPP could not be offset unless there are rules in the pension legislation that would prohibit this.


Don't think any lender/sipp provider currently offers this option

Depends upon if a cash element is allowed (not all (lower fee) SIPPS allow it), and if so, the permitted accounts under the SIPP rules, and if those providers operate an offset mge arrangement.

I would suggest the OP speak to his scheme provider, but pretty sure that mge offsetting under this format would not be a considertion.

The point re ISAs is a positive one, in that the OP (re desire to offset) may wish to consider instead of further cash investment into a SIPP (if thats part of their current scheme provision), they instead (& spouse if appropriate ) divert cash to an ISA, up to their max allowances, on an annual basis to provider with whom they have a suitable offset mge allowing such ISA offsetting.

Hope this helps

Hollly

Thrugelmir

holly_hobby wrote: »

I would suggest the OP speak to his scheme provider, but pretty sure that mge offsetting under this format would not be a considertion.

The crediting of the interest outside of the pension wrapper would constitute income. So break the rules of pension drawdown even if age permitting.

holly_hobby

As I said in my first post ... SIPP offsetting is as AFAIK not permittable for several reasons. (but not G60 - I don't want to be percived as giving specilist pension advice - and would rather the OP bottom out any advice with their provider)

If the OP desires a tax efficient medium which can enjoy the benefits of mge offsetting - an ISA is the vehicle to acheive this.

H

Thrugelmir

holly_hobby wrote: »

If the OP desires a tax efficient medium which can enjoy the benefits of mge offsetting - an ISA is the vehicle to acheive this.

H

ISA has limited annual contribution. So might as well use standard mortgage offset product. Few lenders offer an ISA offset as a product.

getmore4less

The main issue will be finding a institution that provides the relevent SIPP wrappers(with cash accounts) and also has a suitable mortgage product.


There would be no income under offsetting so that part of the pension rules would not be broken.(offset should work by netting, not cross credit to avoid income issues)


One of the lenders that allows cash ISAs is Barclays but they do not always have the most suitable mortgage product, recent years the fees have been larger than competative offset products. They also do SIPPs


One angle might be if you can get a loan from the SIPP but I have no idea how these work.