Paying for home improvements - small mortgage or pension drawdown?

[oldfatandtired1]

I am recently divorced and my consent order gave me 90% equity in FMH and a generous pension share which gives me and my ex equality of income in retirement. I have bought (fingers crossed!) a lovely new house, mortgage free. The house is small and would really benefit from a small conservatory at the back to be used as dining/extra sitting space.

I need to fund this. Would I be better taking out a small mortgage (c 20k) or taking 20k out of the pension? (I am 55 next week so can take 25% out per annum, tax free). My pension pot is c 250k so still plenty left. I work, and hope to continue doing so until state retirement age. Kids grown up and working away so no dependants now.

Money is cheap, I'd borrow if the repayments are affordable. £250k won't last long if you keep taking lumps out. It will not generate a huge income either

I've no intention of taking lumps out, it's purely to fund the conservatory. 250k is a pretty good pension pot though, my IFA tells me the average pot in the UK is 30k.

the average pot being 30k doesn't affect you though, your pot is what impacts you. £250k will kick of about 10k per annum without being eroded. I find my clients are quite surprised at how big a pot one requires for a substantial income.

I stand by the mortgage option being better, if you can borrow cheap money it's a better way to fund the improvement.

Could you not get a bank loan? The rates are good at present, less hassle than getting a mortgage and you should get enough to cover a conservatory? I wouldn't draw down a pension as you never know what the future holds.m

What are all the add-on costs of a mortgage - solicitor, surveyor, administration fee, etc etc. They will add a big percentage onto what is quite a small loan.

Yes, I did wonder about the add on costs of a mortgage. I don't really want to pay an arrangement fee on what will be a small loan. I'm minded to take it out of the pension and plough back what I would be paying in mortgage instalments? It is worth looking into a bank loan too.

£250k pension pot is not a lot in terms of comfortable lifestyle : its under £10k a year income

just get a simple secured loan