Why consider a Pension Mortgage
Pension mortgages have become a very attractive way to invest in property since new retirement regulations were introduced in April 1999. In the past, you could only take part of your retirement fund as cash, and the balance had to be used to buy an annuity which would pay you an income for the rest of your life. This restricted the amount of money available to pay off a mortgage when you retired.
Under the new retirement regulations if you have a personal pension or are a director with more than 5% shareholding in your company you can take 25% of your pension fund tax free at retirement. However you are no longer obliged to buy an annuity with the balance. Instead you have the option of putting your money into new retirement investment products called Approved Retirement Funds (ARF), or of withdrawing money as cash.
So, if 25% of your retirement fund is not sufficient to cover your mortgage, you can withdraw some of the balance and use it to repay the loan. Any cash in excess of the 25% tax-free sum will be taxed at your marginal rate of income tax. Unless you have a guaranteed annual income of at least €12,697 you must leave €63,487 invested in an Approved Minimum Retirement Fund until age 75 as security for your retirement. The balance is available for you to invest or withdraw as you choose.
Paying off your pension mortgage - how it works
