You make two payments per month. One to the lender to repay the interest on your borrowings and another into a personal pension plan. The aim is to build up your pension fund sufficiently to repay the loan and to provide you with a retirement income.

ADVANTAGES: Has tax advantages, as the contributions you make to the pension plan attract tax relief at the highest rate of tax you pay.

DISADVANTAGES: You must ensure your pension is well funded to ensure you have sufficient to repay your loan and provide for your retirement. The tax free lump sum which is paid on retirement is used to repay the mortgage loan, but there is no guarantee that there will be sufficient funds to do so.
Besides using a pension fund to repay a mortgage, there is less money available to help you fund your retirement.

Please mind that the pension fund cannot be accessed before age 50, and that this will increase to age 55 in 2010

Your home may be repossessed if you do not keep up repayments on your mortgage.

For mortgage advice we can charge a fee of £150 / 1% of the loan amount, or we can receive commission from the lender.

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122 Boutport Street | Barnstaple | Devon | England | EX31 1TD | Registered in England, No:04320209 |

South West Financial Planning Ltd is An Appointed Representative of Sage Financial Services Ltd., which is authorised and regulated by the Financial Services Authority.
SAGE FINANCIAL SERVICES LTD is entered on the FSA register (www.fsa.gov.uk/register/) under reference 150452
The FSA do not regulate some forms of mortgages or inheritance tax planning.
The advice and / or guidance contained within this site is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.