Pension v property

Malski

Just looking for bit of advice. I am currently mortgage free but was considering cashing in my private pension, currently approx £40,000 to buy another property, or put towards one. With the view to rent it out, then hopefully with the mortgage payments or income from rent to try and pay off the mortgage on that house.

Would this be recommendable ?

Brian8888

Depends on the tax rate and penalty you have to pay to take out the pension. I think with the house option you will generate more return in the long run compared to leaving it in the pension. But if you only get out GBP 20k it might not be worth it paying the big tax right now.

dunstonh

was considering cashing in my private pension

You cannot cash in a pension.

Would this be recommendable ?

As you cannot do it, then no.

Daniel54

Malski wrote: »

Just looking for bit of advice. I am currently mortgage free but was considering cashing in my private pension, currently approx £40,000 to buy another property, or put towards one. With the view to rent it out, then hopefully with the mortgage payments or income from rent to try and pay off the mortgage on that house.

Would this be recommendable ?

You cannot just cash in your pension and if you are under 55 you cannot access any of it.If you are 55 or over and the value of your pension is £160,000 or more and you take your pension, then you could use the tax free lump sum in the manner you suggest .Otherwise this is a non starter

bigfreddiel

dunstonh wrote: »

You cannot cash in a pension.



As you cannot do it, then no.

looks like its game over then - heheheheheh

fj

Malski

OK guys thanks for the replies, that puts that to bed then.

Now need to think of another plan, lol

atush

Well I have a plan. Pay more into your pension as you no longer have a mortgage to pay.

as 40K would not buy a decent property anyway, and is far too little to retire on.

grey_gym_sock

i agree you need to invest more than that £40k towards retirement.

though it might be better to put it in S&S ISAs than in a pension - which is better depends on your tax band, and on what (if any) employer pension scheme you have access to.

Malski

Thanks guys.

Ideally I was looking to try and pay half the mortgage off on a property around £70/80 K then try and use the monthly rent to start paying that mortgage off that, then maybe once that's paid off look at then moving for another property, in the long run.

I have a S&S ISA as well at the moment

soperman

It is interesting that this type of enquiry is increasing again. The price of residential property in almost all areas outside London is still distressed whilst rentals appear to be much easier to secure with rental incomes firm.

I am not sure that dumping one asset for another is necessarily the correct course of action and in this instance you are too young to take any benefit from your pension plan.

A BTL mortgage is probably your only route.

jamesd

That helps to explain why such questions might be more common: distressed purchase prices and healthy rentals makes for a good time to buy.

The lowest cost mortgage route for BTL property is a mortgage secured on your own home. The mortgage money can be used to purchase the property that is let and the interest on the mortgage will be deductible from rental income because the purpose was to raise money for the BTL business. The property that is security doesn't matter, the purpose of the borrowing is what is relevant to the deductibility aspect.