Pension Mortgage – Start Your New Life!

Some say that pension mortgages are rarely beneficial but before forming an opinion by hearsay it is better to scrutinize the matter. The most enticing part of the offer is that pension mortgage is paid out of the pension amount which is received by the beneficiary at the point of retirement.

Generally in all types of mortgages the borrower has to pay the full amount that is to be repaid but in the case of a pension mortgage government comes forward with indirect help. To every 78p paid by the contributory the government gives 22p. In the case of high rate tax payees the ratio drastically changes to 60:40. That apart the customer gets tax relief for opting for the pension plan.

Generally people are too much present oriented and do not want to burden today with the weight of tomorrow. But the wise will think about the day after and here comes in the question of pension. A pension mortgage is fundamentally an interest only mortgage. This means that less payment will be required. At the end of the repayment term the principal will remain as it is? Usually 25% of the pension amount can be encashed. It may be used to pay the mortgage itself.

On black and white there seems to be no flaw in the scheme. But the question is about what happens when the pension mortgage is paid. Is the road ahead as smooth as during the repayment term? The answer is negative. Retirement means loss of income. Age will not permit the person to search for new avenues of augmenting funds. At this stage, utilizing pension fund for paying pension mortgage will be disastrous. It will only reduce the available pension amount.

Another point to bear in mind that one cannot complete finally payment until the age of 50. The person cannot utilize that fund before that time. Therefore the pension will have to be repaid from other sources.

There is no surety of the fund being able to sustain the pension mortgage because the pension fund is linked to the stock market. So it is dependent on market whims.

Death or illness might cause repossession of the house to pay for the pension fund. To counter it the advice is to go for a life assurance policy.

There are many offering pension mortgage online but it is better to know the options before taking the leap.

Retired from Job? – Just apply a quote for your pension mortgage!