You dont miss it until its gone

Hi All,

Bit of a dilemma in my personal financial world....

We are coming to the end of our old Virgin 1 style mortgage which had a really brilliant draw-down facility in which we used during renovations to our house and funding purchases. We essentially managed to clear the mortgage off early around 2 years ago and purposely left just a couple of hundred on the mortgage to avoid early repayment charges and keep the draw-down facility as a way of bridging higher value purchases, clearing any debt over the subsequent following months.
Having essentially paid off the mortgage early, I have been chucking the money into my pension to capitalise on the government tax-free pension allowance, and whilst I wont miss my mortgage, I will miss the draw-down facility which was really handy as a sort of financial reservoir.

I have several things coming up in the next year in which I will struggle to finance directly from my monthly wage (I have 4 years before I have to retire from my job) and am trying to work out the best way in which to finance up to 20k if needed.

I have a couple of options I am looking at, including one which explores the possibility of a draw-down option on one of my pensions and can draw on the tax-free portion and invest the tax-free lump-sum in a Every-day ISA and use that as a dip-in facility when my wage doesnt cover that months outgoings (and top up ISA when I have excess). This of course, may have implications on my ability to continue to receive the full Government tax benefits with my current levels of voluntary contributions whilst I am still working. (I have booked an appointment with my pension managing company to discuss this option).

Another way I am looking at is Equity Release Schemes on the house. I am more than a little wary of these types of loans however, especially as I have the ability to easily clear any monies owed in the remaining 4 years of paid income, but I really dont know much about these types of loans and the pit-falls in which to watch out for? Has anyone got any advice on these? (I know MSE gives some very clear warnings about these types of loans).

Alternatively, has anyone else got any other ideas on the best way to setting up access to a flexible platform that allows you to have essentially access to an overdraft facility up to an agreed amount in which you only get charged interest for the actual portion of money you are in debt for at any moment in time? 

Thanks for getting this far,



  • El_Torro
    El_Torro Posts: 1,429
    First Anniversary Name Dropper First Post
    edited 17 January at 10:26PM
    I might be missing something here but why don't you just get a new mortgage? Depending on your age you can borrow £20k and have flexibility on the term of the mortgage. 

    You can take money out of your pension too, up to 25% tax free. As long as you're only taking out tax free money this won't affect how much you can pay into your pension in future. This is only an issue if you draw any taxable income from your pension. You don't even have to take the full 25%, you can take less if you want. 

    I certainly wouldn't look at an equity release scheme, especially since you have other options open to you.
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