Pension Mortgage
A pension mortgage is a type of interest-only mortgage where the borrower uses their pension fund as the repayment vehicle to clear the mortgage debt at the end of the term.
With a pension mortgage, borrowers contribute to their pension fund throughout the mortgage term, aiming to build up sufficient funds to repay the capital amount borrowed. The key advantage of this approach is that it allows borrowers to benefit from tax relief on their pension contributions, making it a tax-efficient strategy.
When the mortgage term ends, the borrower can use their pension fund to pay off the outstanding mortgage balance. At that time, they can take up to 25% of their pension fund as a tax-free lump sum, which can be used to repay a significant portion of the mortgage debt. The remaining pension fund value, after taking the lump sum, can then be used to provide an income during retirement.
It's important for borrowers to carefully consider their pension contributions and the potential impact on their retirement income. Our goal is to provide bespoke advice, tailored to each client's financial circumstances and long-term goals, to ensure they make informed decisions about their pension mortgage and overall financial plan.
By offering personalized advice, Austin Friars Financial empowers clients to create a well-balanced approach that takes into account their current mortgage needs and their future financial security in retirement.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.