Pension Mortgage

ekkygirl

Hi All

I know that there is no such thing as a pension mortgage but thats what it was sold to us as. We were to pay just the interest on the loan and when it matured we would used to 25% tax free lump sum to pay off the original morgage (£55,000) amount. Fast forward 30 years and we are now told that the whole amount payable to us in a pension form (68,000)is just over the amount of mortgage so 25% would not have paid off the original loan (we since took out a repayment mortgage which ends this year)

I realise times have been tough but wondered if we would have any grounds to dispute the advice at the time and the outcome. If for example large bits of out payments were paying the morgage broker as bonus's. Sorry if I sound like I dont know whatr Im talking about thyis is because I dont

Thanks for any advice

kingstreet

The tax-free cash from a personal pension or S226 retirement annuity was a popular way for the self-employed to repay an interest-only mortgage.

It was imperative the planholder ensured the contributions were enough to ensure the tax-free cash would be sufficient to repay the mortgage in question.

Investment returns, on which the necessary pension fund would be built have been poor as we've found with endowments over the last few years. Unfortunately, lack of investment return is not a ground on which you can base a complaint. If the plan was effected before regulation started in 1988/9, you will also not be able to complain, simply due to the lack of consumer protection at the time.

You were wise in changing to a repayment mortgage. I suggest you enjoy the proceeds of the pension plan which are no longer required to repay the mortgage.

The_J

What you were sold was perfectly reasonable. As you and I know, predicting the future is impossible (especially with pensions because it depends on income, career developments, investment returns and personal choice) so on an annual basis it would have made sense to keep an eye on both the mortgage balance, the projected pension lump sum, and conduct the mortgage accordingly.

It appears you have done this by switching to repayment.

Thrugelmir

ekkygirl wrote: »

Fast forward 30 years and we are now told that the whole amount payable to us in a pension form (68,000)is just over the amount of mortgage so 25% would not have paid off the original loan (we since took out a repayment mortgage which ends this year)

Did you not think to increase your contributions in line with inflation? A fund of £68,000 over a 30 year time frame suggests a low level of contributions ( i.e. 360 months).

ekkygirl

Thrugelmir wrote: »

Did you not think to increase your contributions in line with inflation? A fund of £68,000 over a 30 year time frame suggests a low level of contributions ( i.e. 360 months).

Read my original post and you will see that we did just that! Thanks for your input tho'