Pension Mortgages

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Property as a pension

Building a property portfolio as a way of providing a pension, can be very effective. Currently only commercial property can be held in a SIPP (Self Invested Personal Pension).

Pensions are all about investing for the medium to long term and property investment makes most sense when viewed as a medium to long term investment. One of the reasons for this is that initial setup costs such as stamp duty on purchase, furnishing costs and selling costs can be amortised over several years of ownership.

Equity release 'to play bigger role in pensions'

Equity release is to play a greater role in the pension plan of the future, according to a new report.

Financial research firm Defaqto said that a combination of under-funded pensions, low annuity rates, demographic issues, pensioner debt and historically high levels of equity in the housing stock mean that equity release will become an "important alternative" for retirement planning.

Among the other factors driving equity release, it stated, are the desire to fund lifestyle aspirations, difficulties securing an adequate retirement income, low-income pensioners requiring funds for repairs and home improvements, inheritance tax planning and a desire to release equity as a gift to cover things such as school fees.

However, the firm stressed that equity release products are complex and said it was important for homeowners to consider all alternatives and to seek expert advice if they decide to go ahead with the option.

David Black, Defaqto's head of banking, commented: "Equity release will become an increasingly relevant option in future retirement planning. It clearly won't suit everyone but it will increasingly provide a solution for many people."

The latest figures from Halifax show that the average value of a property in the UK stands at £192,314.

Landlord Mortgages “Landlords are also looking for a way to unlock their property value in retirement, we are expecting more lenders to enter the Buy To Let Equity Release Mortgage Market in the coming years.”

Insurances Limited “Pension planning is becoming more and more reliant on ‘Property as a Pension’ so we are gearing up for massive growth in the Equity Release market.”

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