Pension Mortgages - Advice on Best UK Options

Pension Mortgages are growing in popularity among homebuyers, when planning for the final payment of their interest-only mortgage. Here we offer advice on the best options available.

What is a pension mortgage?

This is where you pay into a stakeholder pension whilst also repaying the interest on your mortgage. One quarter of the pension fund can be taken as a tax-free lump sum when you retire which, if large enough, can be used to repay your mortgage. You then receive a regular income from the remainder of the fund. A pension plan can also provide tax-relief on life assurance cover.
Click here to view our Interest Only Mortgages Directory

What are the risks?

As with any form of investment, pensions are not guaranteed to make you money and you therefore run the risk of owing more on you home than the fund is worth. If this happens, you will also have to deal with the added problem of having no income when you retire, so be absolutely certain that you are willing to risk both your mortgage and your retirement fund in one single investment. Make sure you regularly check how your fund is performing, and seek professional financial advice if you are concerned that your pension is not going to cover your mortgage debt.

Main advantage - tax-efficient use of savings.

Main disadvantage - there is no certainty that the final pension fund will be enough to cover the mortgage.

© AskFinancially.com 2008

Mortgages Intro

Ask About

> Interest only mortgages
> Endowment mortgages
> ISA mortgages
> Pension mortgages
> Interest only mortgage calculator
> Interest only mortgage rates