Is this a crazy idea?

loveka

My partner can take 25% of his pension pot now.

We are thinking of using it to pay for an extension on our tiny house. We are still in a first time buyers house 16 years after moving in! Moving is not an option- we love the area and our house. Also moving costs about 17k apparently, plus the additional cost of a bigger house. So this would be the cheapest way of getting an extra room.

Our thinking is that it will increase the value of the house, so if we had to sell it to pay for care- very distant future hopefully!- we will sort of be using the money as a pension, in a very roundabout way.

We really do need more room, an extension would really be life-changing for us. But are we nuts to use the pension pot for this?

zaax

Yes, mortgage rates are so low extend it.

xylophone

How old are you and your husband?

When do you become eligible for state pension?

Do you have a pension other than state pension?

Good_bad_and_ugly

Loveka,

Is that a Ford Ka by any chance?!

Advisers and just about everyone else knows the price of everything and the value of nothing. If you want your pension to transform your life for the better, that sounds great to me!

I would sit down with someone though, and map out all your options. For instance, would a loan or mortgage top up be cheaper, and could you service the debt by crystalising fillets of your pension tax free cash?

There may be benefits to doing it that way. There are lots of options, sit down with an adviser - I'm sure you'll get some good food for thought here.

loveka

He is 55 I am 49. He gets state pension at 65 I think, me at 67.

I have a very small private pension, we also have a buy to let which we bought 'as a pension'.

We can't extend our mortgage as it is an endowment mortgage. We pay higher rates because of this- crap advice when we bought our house! Our endowment is on track to pay our mortgage off though.

loveka

Yes,Ford Ka!

atush

I'd get rid of the BTL that you pay tax on the income and gains, or re-mtg that to pay for your extension. MTG costs for BTL are tax deductible.

IMHO you are property heavy and pension lite so I dont rec using your pension in this case. In your case i'd put more into pension.

xylophone

If you sold the BTL, would you have enough to extend your property, pay into your pensions, invest in ISAs for each of you?

You can invest in property funds within an ISA/SIPP.

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Re new state pension

https://www.gov.uk/new-state-pension/overview

jamesd

Nothing in law prevents you from extending the term of an endowment mortgage, it's just a case of whether your mortgage lender will let you. Since they are interest only many places no longer offer that option. However, there are smaller building societies that do still offer interest only mortgages that may be suitable and lower cost than what you have now.