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What is a pension mortgage

what is a pension mortgage

Pension Plan mortgage

A pension mortgage is another investment mortgage. Each month you pay interest to your lender, while the actual loan remains the same. The loan is repaid at the end of the term from the tax-free lump sum that both private and company pensions provide on retirement.

While tax efficient, a pension mortgage is not flexible. Pension rules state that you can not touch your funds until you reach 50 - so that means you are unable to repay your mortgage before then.

There are other risks that you should also consider. A pension is intended to finance your retirement. By using part of your lump sum to pay your mortgage, you are reducing the funds available to you to live off later. You should also ask yourself how you would pay for your mortgage if you became unemployed and, consequently, unable to pay into a


As well as the above, it shouldn’t be forgotten that a pension fund is just another form of investment, so there is no guarantee that the tax free lump sum will be sufficient to repay the loan.

For more information please click on the type of mortgage you are interested in:

  • Repayment Mortgage - repay the whole loan amount back with interest
  • Interest Only Mortgage - repay only the interest on a mortgage
  • Endowment Mortgage - a combination of a loan and an investment
  • ISA Mortgage - combines and loan and an investment with an ISA
  • Pension Plan Mortgage - a tax efficient but non flexible option
  • Buy To Let Mortgages - for second property rentals
  • First Time Buyers - get on the property ladder
  • Spanish Mortgage (for holiday home) - to buy your dream holiday house!

Category: Credit

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