Due to lifes ups and downs I find that I will still have a mortgage to pay when I retire in three and half years time. I am so worried it is ruining my life. I do have a private pension that I have been paying into and would like to know if I can use this to pay off the outstanding amount of my mortgage. I have been to a financial advisor but he was not very helpful I have to say.
2006-06-21 23:12:33 · 3 answers · asked by wildwind 2 in Business & Finance ➔ Personal Finance
You can take a tax free lump sum from your pension when you reach retirement.
This is usually up to 25% of your total pension fund.
A few years ago, self employed people were encouraged to use a pension as a repayment method for a loan/mortgage, this was because of the huge tax advantages provided by pensions.
If you take the lump sum, the amount of pension you receive each year will be reduced.
Ask your pension company for a forecast, it is fairly easy for them to give you an illustration.
Good luck.
2006-06-22 10:49:53 · answer #1 · answered by Anonymous · 2⤊ 0⤋
You left out some very important information.
1) the amount of pension (monthly)
2) the expected amount of payout from the pension if you cash-out now
3) the interest rate on mortgage
4) the amount due on the mortgage in total
5) the amount due on the mortgage monthly.
6) the amount of money you need to take care of bills monthly (total expenses).
7) The age you expect to live to, given your current health
All of these factors majorly impact your decision.
You might want to consider refinancing the mortgage (assuming a decent credit history) so that you will have more take-home pay after paying a now smaller mortgage (spread over time).
If you use the pension to pay off the mortgage -- you may still have problems paying for the upkeep on the house OR trying to feed yourself if you happen to live longer than the years calculated in the pension plan.
If you cash out the pension -- the company will give you a present value payment that is SMALLER than the total dollar amount of payments that you would have received had you been getting a monthly pension payment.
We need more info. . .
2006-06-21 23:26:34 · answer #2 · answered by DaMan 5 · 0⤊ 0⤋
If you have more equity than your loan and you're over 62 you can get a reverse mortgage.
2006-06-23 07:17:48 · answer #3 · answered by matchew318 2 · 0⤊ 0⤋
Hummm!
I'm sure if you can do it, you'll probably have pretty hefty fines to pay.
2006-06-21 23:16:45 · answer #4 · answered by Anonymous · 0⤊ 0⤋