Pension Loan

Not2LateChum

Hi - I am deeply in credit card debt (£15k) and overdraft (£1k) and need to sort it out. I have house which I rent out which has around £50k in capital. However, I cannot get the tennant out for another 12 months.

I have two pension, one from my opted out Serps which has about £35k in it and the other (much larger £160k).

In these circumstances would a pensions loan against my smaller pension be a good thing? Are they good products.

Thanks
Not2LateChum

somethingcorporate

Evidently incorrect so please ignore

GlamGirlie

Hi

You would only be able to borrow against your pension if it was invested in a SIPP - self invested personal pension. These allow you to borrow up to 50% of the value of the pension.

Loans against SIPPs are more commonly used for purchasing commercial properties than debt clearance. The costs of a SIPP are high compared to other pensions so you would need to consider this carefully before committing to transferring your pensions into SIPPs.

GlamGirlie

somethingcorporate wrote: »

No - they are largely scams designed to catch a lot of fees for the company (that will soon do a runner with your money) and leave you with massive tax bills from HMRC (and probably no pension funds left).

Stay well clear.

What a sweeping statement!!! This is highly untrue - lending against SIPPs are excellent ways for businesses to purchase commercial assets, and the higher fees reflect the expertise involved.

If you are going to give advice to people on here, at least make it accurate!

Tixy

Are you unable to keep up repayments on the debts for another 12months or so until you can release the capital?

geoffky

"I can not get my tenant out" I bet you have been a great landlord and the thought that you have a great deal of effect on other peoples lives has never crossed your mind.
You sound like one of these landlords who should be taxed out of owning more than one house..People are not commodities.

Not2LateChum

geoffky wrote: »

"I can not get my tenant out" I bet you have been a great landlord and the thought that you have a great deal of effect on other peoples lives has never crossed your mind.
You sound like one of these landlords who should be taxed out of owning more than one house..People are not commodities.

If you would like the full facts, I gave up my £95000 per year job 7 years ago to work in the charity sector, now earning £8k per year. Our house was sold and we bought a small property to rent out for which we could then afford things like holidays, school trips for children etc. Over the past few years, ill health and bereavement, as well as redecorating the house has hit us hard, not least financially, and the current mortgage and housing markets leaves us with virtually no other options but to sell up. The phrase "I can not get my tenant out" may have come over all Rachman-like but this is simply a statement of the current terms of their contract with me and not as a result of any pressure put on our tenant. In fact she (not many landlords would rent to a single unemployed mother) is not aware of my predicament.

May I wish you well in your ambition to change the landscape of the tax system.

Not2LateChum

GlamGirlie wrote: »

Hi

You would only be able to borrow against your pension if it was invested in a SIPP - self invested personal pension. These allow you to borrow up to 50% of the value of the pension.

Loans against SIPPs are more commonly used for purchasing commercial properties than debt clearance. The costs of a SIPP are high compared to other pensions so you would need to consider this carefully before committing to transferring your pensions into SIPPs.

My SERPS is in a SIPP. I guess I am cautious about entering into such a loan but would still consider it. Could you recommend any reputable firms who do this?
Thanks
N2LC

Not2LateChum

Tixy wrote: »

Are you unable to keep up repayments on the debts for another 12months or so until you can release the capital?

I'm not sure. I still have some credit left on the cards and overdraft and, if they were to be exceeded I might be able to negotiate more time but the thought of interest being paid out for the whole year leaves me a bit cold. That said, I haven't missed payments and I do have some cash squirrelled away as a result of money left to us which I might be able to use as a bridge.

My biggest fear, of course, would be to sit tight, frighten off my current tenant and then not be able to sell the house while still paying a mortgage.

In the long term, I still have more assets than liabilities, so I should be counting my blesssings.

Thanks for prompting the question though - I can think on it further.
N2LC

Emmzi

you could sell with tenant in situ

you could offer her an incentive to leave

either may be a better deal financially

jumperjohn

You earned £95k a year, how did you not amass huge savings and pension? Could you get your job back?