Monthly payments to the lender consist of interest only and the outstanding mortgage remains the same. You make payments to a separate investment with the aim of producing enough capital to repay the mortgage in full at the end of the term. There are a number of different investments that can be used. You can also use a combination of them. Advantages Tax relief on contributions. Part of the fund can be taken as tax-free cash, which is used to repay the mortgage. Favourable tax treatment of funds A sum can be built up which can be used to provide an income in retirement. Disadvantages Benefits can normally only be taken between ages 50 and 75 The amount of tax-free cash you can take is limited by legislation. Using the tax-free cash to repay your mortgage will reduce your pensions benefits. As the pension is designed primarily to produce income in retirement you will need to actively monitor any targeted cash amount to repay your mortgage. There are limits on pensions contributions. Click here now to find out how we can help you through the mortgage mine field to the best deal for YOU!
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Your home may be repossessed if you do not keep up repayments on your mortgage.