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Pension v property

Malski
Posts: 177 Forumite


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 ?
Would this be recommendable ?
2012 Mortgage Free Wannabe # 69
Opening mortgage £126,000 19/05/00
Ended 2011 £31,019
:j£0.00 07/12/2012 :j
Never put socks in a toaster.
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Comments
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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.0
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was considering cashing in my private pension
You cannot cash in a pension.Would this be recommendable ?
As you cannot do it, then no.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
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 starter0 -
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OK guys thanks for the replies, that puts that to bed then.
Now need to think of another plan, lol2012 Mortgage Free Wannabe # 69Opening mortgage £126,000 19/05/00Ended 2011 £31,019:j£0.00 07/12/2012 :jNever put socks in a toaster.0 -
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.0 -
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.0 -
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 moment2012 Mortgage Free Wannabe # 69Opening mortgage £126,000 19/05/00Ended 2011 £31,019:j£0.00 07/12/2012 :jNever put socks in a toaster.0 -
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.0 -
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.0
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