Pension Mortgage

Pension Mortgage

Do you need to buy new commercial premises?  

An alternative to borrowing from the bank or funding a property purchase out of company resources for expansion is to use your pension fund to buy the commercial property.  Your business could then pay rent to your pension fund as a tenant and the rent would be offset against your business tax bill as a legitimate commercial expense.

Both Self Invested Personal Pension Plans and Small Self Administered Pension Scheme (SSAS) are able to purchase commercial property.

Buying Outright - No Mortgage:

A pension fund can buy commercial premises up to 100% of the value of the pension fund.  In simple terms, if your pension fund has £100,000 in it, it could purchase a commercial property for £100,000.

Buying With A Mortgage:

A pension fund can buy commercial premises with a mortgage.  The pension fund is allowed to borrow money from any lender, bank or building society. 

There is no monetary limit on the amount a pension fund can borrow except that the maximum that a pension fund can borrow is 50% of the value of the pension fund itself. 

In simple terms, if your pension fund has £100,000 in it, it could borrow £50,000.  Meaning that the pension fund could purchase commercial premises in the sum of £150,000.

Contact us now if you have a pension fund that you may consider converting or would like to set up a new pension scheme that would be able to buy commercial property.

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