Pension Help

mattkirtley

Hi,

Im currently in a pension and have been for the last 10 years, Im looking at purchasing my first house and wondered if there are any ways the pension can be used against the mortgage...Im understand that theres a way it can be used for a commecial property but wondered if i can use it for a non commercial.

Thanks

dunstonh

wondered if there are any ways the pension can be used against the mortgage

Only as a pension mortgage and there isnt much chance of anyone doing that nowadays on advice basis!

However, in the sense you mean, no. money in a pension is for retirement. Hence why its called pension and not savings acount.

jamesd

You could go with an interest only mortgage and invest in a pension, then use the tax-free lump sum from the pension to pay off the mortgage. Since the tax-free lump sum is 25% of the pension that would leave a significant remaining pension investment. But that also means that you need to be investing significantly more than just the difference between interest only and repayment payment amounts 3.2 times as much as a basic rate tax payer to be cautious about it, though that would give a substantial surplus if the investments do well.

If you're over [STRIKE]55[/STRIKE] 50 you could use the tax free lump sum from a personal pension. In a few years that will [STRIKE]drop to 50[/STRIKE] rise to 55.

EdInvestor

jamesd wrote: »

If you're over 55 you could use the tax free lump sum from a personal pension. In a few years that will drop to 50.

Perhaps you mean that if you're over 50 you could use the tax free lump, in a few years it will rise to over 55?

jamesd

EdInvestor, thanks for the correction! I'll stop blushing at that mistake eventually...

bigbloke45

Do you want to buy a house or have something to live on when you retire?

You can't have both!

Keep these separate and you might just survive!

EdInvestor

bigbloke45 wrote: »

Do you want to buy a house or have something to live on when you retire?

You can't have both!

Who told you that?

Retired_I.F.A.

Probably Kermit told him at the same time as he told you both that one should never transfer from a final salary scheme.

Or was it Miss Piggy ?




Jamesd is describing a pension linked mortgage, the most tax effecient way to buy a house. The 3.2 times he mentions depends on assumptions as to growth though and takes no account of the existing ten years you have in a scheme and assumes level contributions.

Retired_I.F.A.

Hang on a mo it's such a mad statement only a mad muppet would say it so it had to be Animal surely?

Me no need pension me get royalties for life.

Retired_I.F.A.

btw thats all from me tonight folks I'm off for a game of snooker.

nighty night. :wave:

bigbloke45

I phrased that badly! What I meant is that you can't do both those things with the same money.

I enjoyed the ribbing, though.