Hi all,
Just a short one today folks, but it’s very important…
I received an enquiry from someone concerned about their pension mortgage having been advised by their bank to take one of these vehicles out some years ago.
It really is two separate products though and therein lies our first problem. A pension is designed to create an income for you when you choose to retire whilst a mortgage is obviously a debt that will need repaid at some point.
Pension mortgages are designed so that the tax free lump sum is supposed to pay off the outstanding debt that has been taken out on an interest only basis. Like endowment mortgages there is an obvious risk with this in that it depends a great deal on your investment performance. If the funds under-perform then it makes it unlikely that you will have enough to pay off your debt at the end of the chosen term.
Not very nice.
However there is also another often unforeseen problem in that many of these may have been written only to age 50 as this was the earliest you could access your pension (except in some rare instances).
Changes to pension law mean that from April this year the earliest you can access any monies from your pension is age 55. In other words if you are not 50 before April this year then you will have to wait five years till you are 55 to access your pension. This would obviously have a serious effect on your financial planning for retirement.
If this relates to you, then you will need some urgent advice. Please just drop me a line and I’ll be only too happy to help guide you through what must be done as soon as possible.
Call me right away on 0800 321 3508
