using a pension to buy a home

curious35

Hi, new member. Hoping someone is able to offer any advice here.

I am looking to buy a house with the intention of renting it out. I have some money stashed away in a pension, I wanted to know if it is legal and possible to use that money to invest into an asset rather than it just sit there for the next 20+ years.

To clarify, I am 35. As I understand you can't unlock your pension until you are 55. Are there any legal ways round this? Such as taking a loan against your pension fund, or transferring it to something you can then use to put down a deposit?

dunstonh

I wanted to know if it is legal and possible to use that money to invest into an asset rather than it just sit there for the next 20+ years.

Surely it is the house that just sits there. Not a pension.

No, you can not invest in residential property within a pension.

As I understand you can't unlock your pension until you are 55. Are there any legal ways round this?

no

Such as taking a loan against your pension fund, or transferring it to something you can then use to put down a deposit?

Not in the way you want.

kidmugsy

You could look at shares or funds that invest in residential property e.g. Grainger, Hearthstone, and presumably others.

curious35

thanks both for the advise

Surely it is the house that just sits there. Not a pension.

True in the literal sense, but a deposit on a BTL can grow to the value of the property over time while still being an asset that can bring in money (if managed properly) where as my previous work place pension pot does just sit there and will only grow by putting in my own money. Which is what I meant by "just sitting there." Hopefully that makes more sense then how I previously stated it.

So if it is not possible to use my pension money to go towards a property, are there any other options to use a pension towards an asset?

Sea_Shell

A pension IS an asset, and a very worthwhile one. Your future self will thank you for keeping it. As Kidmugsy said, you could look to transfer your pension to a fund that invests in residential property, if that's the asset class you want.

AnotherJoe

curious35 wrote: »

thanks both for the advise



True in the literal sense, but a deposit on a BTL can grow to the value of the property over time while still being an asset that can bring in money (if managed properly) where as my previous work place pension pot does just sit there and will only grow by putting in my own money. Which is what I meant by "just sitting there." Hopefully that makes more sense then how I previously stated it.

So if it is not possible to use my pension money to go towards a property, are there any other options to use a pension towards an asset?

In the long term it should grow because its invested. If its not invested, but purely in cash, then you need to sort your pension out.

MEM62

curious35 wrote: »

my previous work place pension pot does just sit there and will only grow by putting in my own money.

Incorrect, your pension will be invested and will be growing as will any further contributions you make.

Property can be useful as part of a larger portfolio of investments but is not suitable as the prime investment for most of us.

Newnoel

I think also that commercial (as opposed to residential) property can be held within a SIPP.

lisyloo

where as my previous work place pension pot does just sit there and will only grow by putting in my own money

I don't know what type of pension you have but usually it's invested and grows (and generally is a lot let effort than keeping up a property).


It can go up by more of less than property but generally it's less effort and can be more diverse e.g. you can spread your investsments to lots of places in the world and in many types of asset class rather than a single property.

Newnoel

Good point lisyloo


I believe one of the benefits of commercial propertry within a SIPP, is that you could take out a mortgage against it to leverage it up.

steampowered

Newnoel wrote: »

Good point lisyloo

I believe one of the benefits of commercial propertry within a SIPP, is that you could take out a mortgage against it to leverage it up.

The Op could achieve the same result by investing in heavily indebted companies.

Of course, investing in companies with high debt levels comes with a high level of risk.