Would you …

[Newgolddream70]

Cash in a chunk of your pension to put down as a deposit on a house?

I did a really long post with all the numbers but it got a bit confusing. So whilst I appreciate the question may yield the ‘it depends ….’ comments, I want to know if there are any hard objections? I’m 54. Single Mum but working. Would only be able to make the numbers work with a large deposit and my pension pot is my only solution to access that level of cash.

Thinking to retirement, is it better to own outright with a low income or have more income but still paying rent (that’s increasing year on year)? Currently in shared ownership.

If you’re already 54, would doing this even enable you to be mortgage free by retirement?

Isn’t 55 the youngest you can take it? How far away is that?

and yes, aim to be mortgage free by retirement and make sure you have enough to live on in retirement after taking a lump out. Do a rough budget against your state and private pension forecast/projections.

How would you own it outright if you only put down a deposit?
How long would it take you to cover the rest of the mortgage on your low income?

Btw it’s really expensive to get an annuity that increases year on year, so when you look at your projections make sure you factor in getting reduced annuity income for your increasing rent scenario.

Sacrificing the compounding interest of ten years or more on that lump sum by taking out the sum next year would be my absolute last resort.

Can’t you staircase on your shared ownership property and eventually be mortgage-free that way? On balance, I think it’s better to have no mortgage and a small income. Rent costs are only going to increase.

I would have to get a mortgage to cover the shortfall, no doubt 15 years taking me up to 70.

What size chunk, and would you have to pay tax on it?

Maybe see if you can speak to a tax specialist accountant or financial adviser.

Don't forget, it's only the first 25% that's tax free. Is that enough? If it's a DB pension, this will trigger your monthly payments.

Have you taken into account the tax payable on it?
Have you worked out how much pension you will have left?
Have you calculated your outgoings in retirement and how you propose to cover those?

If you share some actual numbers, posters may be able to advise more.

How much retirement income would you have left? If comfortable, yes I would do that to get housing security. If you’d be relying on the state pension or close, no. You’d be better off renting and able to access housing benefit through UC.

I would.