Can I cash pension at 25

Live84

Hello all,

I’m in the process of buying my first home but my MA has advised me if I was to have 15% deposit then I would have an offer for a mortgage because of certain criteria. I have £24000 deposit which is 10% of the property but need to get another £10000. Now I can save another £5000 in the time provided but cannot get the other £5000 for the 15%.

Now I’m in a defined pension contribution fund and have been for 8 years. The value of the pension is about £16,000 right now so was wondering if it’s possible to release some of this for my deposit or is it pretty much impossible :rotfl:

Thanks

Carrot007

Maybe if you had a terminal illness. But then you would not be being offered a mortgage.

ColdIron

Pretty much impossible unless you are retiring due to ill health or your life expectancy is less than a year. This is a strength of pensions and your older self will be thankful for it

https://www.gov.uk/early-retirement-pension/personal-and-workplace-pensions

Brynsam

If you do find someone willing to help you 'liberate' your pension, there will be a 55% tax charge (because it is classed as an unauthorised payment, given you are not yet age 55) and you are likely to have to pay fees of about half the amount you extract - so yes, it is possible, but will actually cost you more in taxes and fees than the amount you liberate!

Alexland

Is it just a deposit problem or also a credit and/or affordability issue? For example is your credit good enough to borrow the £5k from someone flexible like Zopa over 5 years at a low APR and if so would your mortgage lender consider it affordable against your income to pay back both the personal loan and the 85% mortgage?

Alex

Dotty13

The minimum age to access your pension is usually 55. There are some special circumstances that will allow you to access this sooner, but needing the money for a house deposit is not one of them.

Malthusian

Brynsam wrote: »

If you do find someone willing to help you 'liberate' your pension, there will be a 55% tax charge (because it is classed as an unauthorised payment, given you are not yet age 55) and you are likely to have to pay fees of about half the amount you extract

This is a perennial myth.

No legitimate scheme will allow you to liberate your pension, because if they made a habit of unauthorised payments the *entire* scheme would be closed down by HMRC, a 40% deregistration charge would apply on the entire scheme, and all the members (not just you) and the trustees would be royally screwed.

The illegitimate ones will take the *entire* pension and you will be liable to pay 55% of any bones they threw you.

It is not a case of "you can only withdraw your pension by paying a 55% tax charge and huge fees". Some people will be desperate or dumb enough to think they still want to do it. You can't withdraw your pension. Simple as that. (Unless ill health or other exemptions apply.)

Malthusian

As for the OP's issue, can you not take out a relatively short term deal, overpay as much as is affordable and penalty free, then get a new deal in two years taking advantage of the lower LTV?

Terry_Towelling

It's not completely clear from OP whether there is a mortgage offer on the table at all. OP are you saying you need a 15% deposit to get a mortgage offer or are you saying a 15% deposit will give you a substantially better mortgage offer than you are currently getting with your 10% deposit?

If you are in fact saying a bigger deposit gets you a better deal, then how much better in terms of monthly repayments and are you sure about the maths? An extra 5% is an extra £12K, so you would be £7K short even if you managed to save £5K between now and then.

If you had to take the (presumed) less favourable deal, how long would the £5K (that you plan to save) last if used to meet (and hopefully exceed) the higher monthly repayments. Could it last long enough and actually create an overpayment that would enable you to renegotiate terms in a couple of years (as suggested by Malthusian)?

It is important to remember that paying for a property takes a long time and what you agree now is not the end of it. There should be plenty of opportunity to change things further down the line. In the longer term the few pounds extra interest paid now may not be so big an issue if you renegotiate as soon as you can. However, if the deal is not actually affordable as it stands then you need to think very carefully before doing anything.