How We Helped a 63-Year-Old to Keep £2 Million in His Pension While Buying a Property

by | Wednesday 31st Jan 2024 | Mortgage Case Studies

Oportfolio's advisors are experts in providing mortgages for people with apension

Oportfolio’s advisors are experts in providing mortgages for people with a pension

Meet our client who discovered us on Google – a 63-year-old, semi-retired individual with a whopping pension pot exceeding £2 million. His dream? To own a new home to enjoy his retirement years, without depleting his pension savings and strategically navigate the complexities of borrowing at an age when many think it’s impossible. Here’s how our advisors at Oportfolio Mortgages helped him to achieve his mortgage dreams.

The Challenge: Maximising Pension Pot and Property Purchase

Our client was determined to leave as much of his pension untouched to avoid the hefty 40% tax hit. Balancing this objective with the desire to buy a property, he questioned the cost-effectiveness of borrowing money at competitive rates rather than depleting his pension entirely.

Oportfolio’s Expert Advice: A Tailored Approach To Mortgages With a Pension

Our experienced senior mortgage advisor Jade Pinkerton stepped in, recognising the unique circumstances and potential hurdles. We meticulously crafted a mortgage strategy aligned with the client’s intentions, ensuring he could secure a property without sacrificing his long-term financial well-being. As we are not tax advisors, the client had to seek out his own advice regarding the tax side of the process.

Strategic Mortgage Options Explored

Jade came up with three potential options for the client and ran through all of them with him, making sure he understood everything that they would be exploring. This helped him to come to an informed decision ultimately. Here are the options we had:

  1. Mainstream Lenders Exploration (Option 1): Competitive rates, but income requirements posed challenges and most lenders would only go to a maximum age of 70 or 75 leaving only a short mortgage period. In the end, this was not a feasible option.
  2. Pension-Powered Mortgage (Option 2): Leveraging the £2 million pension in a SIPP, we unlocked a solution that aligned with the client’s goals:
  • Affordability exceeded requirements.
  • Interest-only option at approximately 5%.
  • Flexible repayment structure with zero penalties for early repayment.
  • Tailored to end before the client’s 80th birthday.
  1. Income-Free Lenders (Option 3): Explored private banking and ‘equity release‘ mortgages. Option 2 remained the optimal choice given the client’s circumstances.

Client’s Decision

Empowered by our comprehensive advice, the client chose to proceed with Option 2. This strategic move allowed him to retain a substantial portion of his pension while confidently stepping into his dream retirement property.

Conclusion: A Personalised Path to Financial Security in Retirement

Our client’s journey exemplifies the power of tailored mortgage advice. Oportfolio Mortgages not only guided him through intricate financial decisions but also provided a roadmap to homeownership that aligned seamlessly with his retirement aspirations. If you or anyone you know is in a similar situation to this client, you know who to come to. Call or email our team at Oportfolio today to set up a fee free initial mortgage consultation.

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