Can I get some sort of loan to access PCLS early?

ProDave

Complex situation. I will try and be brief.

We own our previous house outright, no mortgage. Value about £300K

We own our current new build under construction outright. About 3/4 complete and we are living in it. Value when complete about £250K. Value right now unknown.

We have run out of funds to complete the new house. Trying to find a way to raise funds.

Our previous house is let on a short assured tenancy to tenants who still say they want to buy it. But they have put back the expected purchase date twice now. We suspect they are struggling to raise finance and may never buy it. It is this delay that is causing our problem, we had expected them to have bought it by now and we would have finds to finish the new build and a decent extra pot of savings.

I have considered raising a small mortgage on the old house. I only need £20000. But the mortgage broker has said this is almost impossible because the last bit of information is the tenants are running the house as a B&B and he tells me a buy to let mortgage will not allow a business to be run from the property. So that one has hit a brick wall.

We cannot raise finance on the part built new house, For a self build mortgage the mortgage co expect to be involved from the start and the broker says nobody will take on an incomplete self build for a mortgage.

So now we get to the subject of the question. I have a deferred UKAEA defined benefit pension that is a civil service pension in all but name. In just 4 years, when I reach 60, it will give me a PCLS of in excess of £20K. But there is absolutely no flexibility and no provision to take that at anything other than age 60.

So is there any way to get a loan secured on that? I would want something on an interest only basis so I just pay the interest and the PCLS then repays the capital when I reach age 60.

It sounds like a watertight business plan, as the funds to pay off the loan are guaranteed on that date. Does such a scheme exist anyehere?

NoMore

Whats your current income like ? Couldn't you just get a personal loan for 20K even over a long term and then pay the remaining amount in 4 years with PCLS ?

ProDave

Income is very low. Both part time employed, me self employed. This is supposed to be semi retirement, finish the house and retire in a few years, but it's all gone wrong due to not selling the old house yet. I doubt we earn enough for a £20K personal loan and I suspect the interest rates are too high on that anyway. And I really don't want to go back to full time employment.

Our combined low incomes would definitely support a £20K mortgage if one was available. But I don't know how they work out salary multiples for a personal loan.

NoMore

Nuclear option (pun intended because of your pension), is to just kick the tenants out and sell the house anyway.

Seems to me there's no need for them to rush to buy it in the current situation.

ProDave

We have told them if they do not buy it by their latest deadline that is what will happen.

But it poses a hole in our income (loss of rent) and having to pay council tax on the empty house while we wait for it to sell, which probably won't be quick. So that really is the nuclear option.

lisyloo

Did you permit your tenants to run a business from the property.
If not tell them to stop and get a mortgage.
I’m pretty sure the min is £25k due to some legislation I can’t remember but I’d guess taking £25k isn’t an issue?

xylophone

Our previous house is let on a short assured tenancy to tenants who still say they want to buy it. But they have put back the expected purchase date twice now. We suspect they are struggling to raise finance and may never buy it

Get the house on the market and have done with shilly shallying?

ProDave

We ran the house as a B&B when we lived in it, and they wanted to continue that. We had much discussion with letting agents and solicitors at the time about whether to let it on a commercial rent, but were advised against that, and to let it on a SA tenancy with the "no business" clause removed. The property continues to be insured on a guest house policy and as far as the insurance is concerned we have just installed a live in manager.

lisyloo

Have you looked at a personal loan?

ermine

ProDave wrote: »

It sounds like a watertight business plan, as the funds to pay off the loan are guaranteed on that date. Does such a scheme exist anyehere?

You have discovered the problems of retiring early and having a low income - your capital assets matter not one whit to the finance industry, which always qualifies lending against income it seems.

Having said that, loan secured on a pension is the Google term you are looking for



Extreme Wealth Warning - there be sharks in this area



Caveat Emptor - in spades.

ProDave

ermine wrote: »

You have discovered the problems of retiring early and having a low income - your capital assets matter not one whit to the finance industry, which always qualifies lending against income it seems.

Having said that, loan secured on a pension is the Google term you are looking for



Extreme Wealth Warning - there be sharks in this area



Caveat Emptor - in spades.

Just had a read of some of that. Boy that sounds like a right scam.

I do NOT want to sign away a damned good pension in return for some short term cash.

All I want ts to be able to access the PCLS early. I want to retain the pen sion terms and the amount it pays for the period it pays.

I don't see why I can't just borrow an amount no greater than the PCLS knowing it will be repaid when the PCLS is paid out on a know date. I would then have the same pension as I expect, and when the house eventually sells, the proceeds from that will replace the lump sum I have borrowed and spent on the new house.

I had hoped I could find someone willing to loan on that basis at a realistic interest rate. Not someone that wants to fleece me and rob me of my pension.