Use pension to buy a property?

Raptor1

Hi, I'm 55, my wife is 50. I have my pension in a flexible draw down plan. We are renting at the moment. We really don't want to be renting when we are older so are considering using some of my pension to buy a house. I will have to pay tax on some of this, and this will leave me with a pot of about £30k after the purchase. What would you do, renting is hard and having to move every couple of years is getting harder (we've moved 3 times in the last 3 years)
The tax liability is about 40k, but I figure the property will make this back in the long run.
Any answers appreciated, thanks.

Edinburgh_Pooch

Completely understand how you feel. I rented for a few years and whilst I loved the house I worried constantly about being asked to leave. If you can still afford to fund your retirement after you buy a house then yes I would go ahead and do it. This will give you peace of mind and save you money on wasted rent and constant moving costs. It is annoying to pay the tax but you are gaining something worthwhile with it. Could you buy somewhere with 2 bedrooms in case you need to rent out a room to put some money back into your pension savings? If you are going to work for a few more years so you have enough to retire on / or till state pension age then yes I would buy somewhere modest but with a spare bedroom. Alternatively do you have enough funds to buy two very small properties? ( I own 2 small flats in Edinburgh, one that I live in and 1 that I rent out to fund part of my pension when I retire. I am 45 just now).

Brynsam

Raptor1 wrote: »

We really don't want to be renting when we are older so are considering using some of my pension to buy a house.

I think you've answered your own question, as people so often do: you want to own your home. Explore the options for funding the purchase, including the possibility of a mortgage (and yes, you probably do need financial advice for this one) for at least part of the purchase price.

Raptor1

We've actually had an offer accepted on a 3 bed semi in a location we wanted to move to. The survey has come back fine too. It needs a bit of work but 10k would cover it and there's no immediate rush for a lot of it.That would add about 30k to the value looking at other properties in the area.
This is a sanity check post really, just wanted to see what others thought. Thanks for your reply.
If we stay renting there's never going to be a retirement, at least with a property we can possibly go part time one day. That's how I look at it.

Raptor1

Thanks, will look into it

ProDave

Look at the maths. It might make more sense to just take the tax free 25% and then get a mortgage. Leave the pension money to draw more slowly at a time when you are in a lower tax band or even under the tax threshold. The saving in tax that way might make the mortgage option look cheap.

Raptor1

ProDave wrote: »

Look at the maths. It might make more sense to just take the tax free 25% and then get a mortgage. Leave the pension money to draw more slowly at a time when you are in a lower tax band or even under the tax threshold. The saving in tax that way might make the mortgage option look cheap.

Thanks, we are both self employed, and this house is 100 miles from where we are at the moment, This will mean my wife will have to find other work, mine I can continue to do but with about a 50% reduction in revenue until I built my local business back up. Not sure where we'd stand on getting a mortgage. I will check it out though.