Pension
mortgages, in the light of ‘A-day’ (pension drawdown day), are beginning to look more attractive. People on high salaries once again have valid reasons for considering a
pension-linked mortgage .
A-day imposed higher limits on annual contributions. This means that high earners can make provision for
pensions, and still save on their mortgages .
Tax relief can be up to 40 per cent. Professionals such as
solicitors,
barristers and
accountants could find
pension mortgage loans a decent option.
Pension mortgages have faced major criticisms in the past, particularly during fluctuations in the
stock market . One expert, from the Route Group, was reported as saying: "It could be attractive to higher-end earners. In recent years there has been a shift away from investment-backed mortgages because of the volatility. But it is something we should be looking at. We just hadn't thought of it up to now. It is a very
tax-efficient way of paying off a mortgage."
Taking out a pension-linked
loan could therefore come back into fashion.
Brokers are currently not considering pension
loans, but it could make sense to do so. Many mortgages are currently
interest-only, and the
FSA is now becoming concerned about how these are to be paid off. The appeal of pension-linked mortgages is in tax relief.
