adding a pension fund to a mortage

stagwaffe

I guess its not possible seeing as its not a pension mortgage , i just wondered as ive a mortgage with 14 years left and a paid up pension sitting twiddling its thumbs. (the mortgage is a nice cheap Tracker so i dont want to restart)Thanks , Pat

mania112

You are unable to receive a benefit from your pension until the age of 55, that will include using it to pay off your mortgage.

stagwaffe

Sorry , misunderstood , i meant adding it to the policy as with a pension mortgage , where the pension fund(policy) is deemed to be worth ?? quid and is used to buy a house. I have a mortgage of 70K and a pension paid up pension fund of @25k doing nothing , twud be nice to throw the pension at the mortgage

grey_gym_sock

i don't think i get it, either ... do you mean move to a more a expensive house, using the pension fund as backing for the mortgage? or buy an extra house?

stagwaffe

I have a normal mortgage with 70k /14 years to run , i also have a paid up pension with 25k ish in the pot . i was wondering if the pension policy could be committed to the mortgage , thus meaning i have to pay less . Same house .

grey_gym_sock

ah ... there's not much mileage in that ...

at least in theory, you could use the lump sum you expect to get from the pension - generally 25% i.e. £6.25k - to get a part interest-only mortgage - i.e. £6.25k interest-only mortgage, with £63.5k repayment mortgage - which would reduce your monthly payments very slightly.

though some lenders (e.g. nationwide) won't do interest-only at all now, some (i think this was lloyds group) only consider pension pot worth at least £1m (!), ...

so doubtful if you could achieve that, and the effect would be small, since most of the mortgage would still be repayment.

stagwaffe

Thanks , i didnt know how they calculated what the fund was worth to them in actual ££ . As it happens my mortgage is split repayment /interest only . Right i'll go and buy a drawing board .

Cheers

System

If it were commercial premises you were taking about, not domestic housing, then yes, a self-invested pension plan could buy part of the premises, enabling you to pay off part of the mortgage. But you would still have to pay a commercial rent to the pension provider for the proportion of the premises it owned.

But you are not allowed to invest your pension in any asset that gives you personal benefit , such as a house.