Mortgage on SIPP income?

[moorfield]

Something I'm mulling for the future is funding a mortgage from SIPP income (from an underlying portfolio of ITs). Ballpark £10k pa repayment on <20% LTV.

I assume this would need handling by a specialist mortgage broker? I haven't seen this discussed before (did have a quick look through old threads), has anyone done/is doing similar?

[ikethespike]

If the SIPP income is surplus to normal expenditure then a lender may possibly view the income as reliable or more so, than income from employment.

[Gerry557]

Most mortgage providers have age limits that might be more of an issue. I think there are some who do specialise, often interest only well into old age. I assume it's some sort of IHT planning.

I was asked all sorts of stupid questions about my dividend income. Such as only UK funds counted not overseas. So a south east Asia fund wasn't allowed but Vodafone income was.

I don't know much about them but presumed there would be an increase in the average cost for doing so.

Hopefully something will be highlighted in this thread.

[moorfield]

Most mortgage providers have age limits that might be more of an issue. I think there are some who do specialise, often interest only well into old age. I assume it's some sort of IHT planning.

Not really, just flying a kite at the moment. A lot depends on how the tax landscape evolves over the next few years.

[Gerry557]

I would talk to a mortgage broker to see if anything would be in your scope and give indications of what you might have to comply with.

The mainstream providers like clear deposits and LTVs, x times earning ie an employed person and a mortgage that ends before retirement age.

Often done over the phone following a script and struggle with anything outside the norm.

You would think that some early retires that are relatively well off would be a good set of people to provide a service for. Times might change.

[Charlottesquare]

I would talk to a mortgage broker to see if anything would be in your scope and give indications of what you might have to comply with.

The mainstream providers like clear deposits and LTVs, x times earning ie an employed person and a mortgage that ends before retirement age.

Often done over the phone following a script and struggle with anything outside the norm.

You would think that some early retires that are relatively well off would be a good set of people to provide a service for. Times might change.

I expect the issue for lenders might be that unless you have an annuity you can stop the pension income at your discretion.

Having said that my father retired at 55 and carried on with an interest only mortgage on one of his properties until circa 75 when the bank got shirty and pressed for repayment, but that was a small debt of 27k, properties were worth over £300k at time, they held standard securities over both properties and there was pledged and deposited with bank share certs re securities worth over £50k plus two or three friendly society life policies. He wanted the borrowings to leverage investments (a poor decision) and was so put out with the bank that he cashed out some cash ISAs with the self same bank and used those funds to repay them-left and right pockets springs to mind.

[Gerry557]

Well even someone working can loose their job. I would have thought that payment on time and the ability to pay would make more sense.

Some people have decent pensions or lots of other income so affordability shouldn't be an issue. Times change and sometimes banks are a bit slow to move with the times.

Even when they do try to modernise it sometimes fails. I know someone who had difficulty with their mortgage application as the online ID bit couldn't cope with identical twins and kept requesting the second person's photo.

[TwmSionCati]

... funding a mortgage from SIPP income ... Ballpark £10k pa repayment on <20% LTV.
I assume this would need handling by a specialist mortgage broker? ... anyone done/is doing similar?

<20% LTV? Hmmm! Perhaps a bit tight. But on 50% LTV we got 6%pa repayment, interest-only, from Legal & General Home Finance last December (through a “specialist mortgage broker” who charged us K£2 — wasn’t worth that, but LGHF won’t deal directly). They could see from the bank statements that our SIPP income is sufficiently surplus to our expenditure to be reliable, as ikethespike says.

We’re “well into old age” — 80, and 15 years retired: the times they are a-changin’, as Gerry557 hopes.

TSC

[TwmSionCati]

<20% LTV? Hmmm! Perhaps a bit tight. But

Sorry! Ignore that remark: I read "<" as ">"!

TSC