Pension mortgage is a type of mortgage in which the borrower repays interest only and also contributes to a pension plan designed to provide an eventual tax-free lump sum, part of which is used to repay the capital at the end of the mortgage period and the rest to provide a pension for the borrower's retirement. This is an extremely tax efficient way of repaying your mortgage that works. Pensions payments are tax free, so that is a big boost. It is also important to remember that you cannot draw down your pension until you are 60, so you cannot pay off your mortgage until this time.
This is typically for SSNIT-registered Salary Workers (Public/Private Sector). Acceptable repayment (investment) vehicles for capital payment include: Tier-2 Pension together with any of the following: Tier-3 Pension, Some other regulated Private Investment Plan. The return on any repayment (investment) vehicle must always be higher than 12.00% per annum.
No prior assignment of your repayment vehicle to us is not required as happens with some pension-backed mortgages.
Features / Benefits
• Low monthly repayments, only loan interest is paid and the principal loan capital or principal due at mortgage term and/or pension at age 60.
• Capital Reduction (Curtailment) allowed
Eligibility Requirements
Must be a SSNIT-registered salaried worker together with the other requirements here.
Differences between Pension Mortgage and Repayment Mortgage
The table below gives you a summary of the differences between the two
Related Mortgages
• Repayment Mortgage (Principal + Interest)
• All Other Residential Mortgages