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Repaying your mortgage by way of using a pension
plan, you make regular contributions into a pension plan
and the amount you borrow is repaid from the lump sum you are able
to draw from the plan when you retire.
However, by using part of the lump sum to repay the mortgage,
there will be less money left over to provide an income for your
retirement.
You should ensure therefore, that there will be sufficient in your
pension plan to repay what you owe and also to provide you with
an income to maintain the standard of living that you require in
retirement.
Pension plan mortgages are currently a very tax
efficient arrangement as your pension contributions and the lump
sum which you use to repay your mortgage, are both tax free. However
this situation may be affected by any future changes to the tax
treatment on pensions.
It is recommended that you take out separate life cover to repay
the mortgage should you die within the mortgage
term.
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