A buy- to- let with your pension?
A number of people have come into the office recently enquiring about investing their pension money in a buy to let property. The new rules regarding the cashing in of your pension pot can hardly have escaped anybody in that thoughtful position recently. Should I take it out and invest?
The answer varies wildly of course depending on your attitude to risk etc. but I have worked a small example below. We are always happy to discuss individual cases so if this is of interest please come into the office for a chat
If your pension is worth £200,000.00 then you can release £50,000.00 tax free
Purchase 2 bed property in Weymouth area for £160k – with a mortgage of £11000.00. The cost of the mortgage would be £210 per month at 2.29% (currently available on interest only). After you have taken into account agent’s fees for full management you would generate a yield on the cash invested of £413.00 per month or 9.9% per annum- quite a lot better than most savings accounts!!
If your pension pot is smaller than this then there may be tax implications and the return could be less but still worth thinking about!